FORM OF FIXED RATE SENIOR NOTE

REGISTERED                                                      REGISTERED
No. FXR                                                         U.S. $
                                                                CUSIP:

     Unless this certificate is presented by an authorized representative of The
Depository Trust Company (55 Water Street, New York, New York) to the issuer or
its agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or such other name as requested
by an authorized representative of The Depository Trust Company and any payment
is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof,
Cede & Co., has an interest herein.


<PAGE>


                                 MORGAN STANLEY
                    SENIOR GLOBAL MEDIUM-TERM NOTES, SERIES C
                                  (Fixed Rate)

                          STOCK PARTICIPATION ACCRETING
               REDEMPTION QUARTERLY-PAY SECURITIES(SM) ("SPARQS")

                       10% SPARQS(R) DUE NOVEMBER 1, 2005
                            MANDATORILY EXCHANGEABLE
                          FOR SHARES OF COMMON STOCK OF
                       THE GOODYEAR TIRE & RUBBER COMPANY

<TABLE>
<S>                           <C>                          <C>                          <C>
--------------------------------------------------------------------------------------------------------------------
ORIGINAL ISSUE DATE:          INITIAL REDEMPTION DATE:     INTEREST RATE:       per     MATURITY DATE: See
                                 See "Morgan Stanley Call     annum (equivalent to $       "Maturity Date" below.
                                 Right" below.                per annum per SPARQS)
--------------------------------------------------------------------------------------------------------------------
INTEREST ACCRUAL DATE:        INITIAL REDEMPTION           INTEREST PAYMENT DATE(S):    OPTIONAL REPAYMENT
                                 PERCENTAGE: See "Morgan      See "Interest Payment        DATE(S):  N/A
                                 Stanley Call Right" and      Dates" below.
                                 "Call Price" below.
--------------------------------------------------------------------------------------------------------------------
SPECIFIED CURRENCY: U.S.      ANNUAL REDEMPTION            INTEREST PAYMENT PERIOD:     APPLICABILITY OF MODIFIED
   dollars                       PERCENTAGE REDUCTION: N/A    Quarterly                    PAYMENT UPON
                                                                                           ACCELERATION OR
                                                                                           REDEMPTION: See
                                                                                           "Alternate Exchange
                                                                                           Calculation in Case of
                                                                                           an Event of Default"
                                                                                           below.
--------------------------------------------------------------------------------------------------------------------
IF SPECIFIED CURRENCY OTHER   REDEMPTION NOTICE PERIOD:    APPLICABILITY OF ANNUAL      If yes, state Issue Price:
   THAN U.S. DOLLARS, OPTION     At least 10 days but no      INTEREST PAYMENTS: N/A       N/A
   TO ELECT PAYMENT IN U.S.      more than 30 days.  See
   DOLLARS: N/A                  "Morgan Stanley Call
                                 Right" and "Morgan
                                 Stanley Notice Date"
                                 below.

--------------------------------------------------------------------------------------------------------------------
EXCHANGE RATE AGENT: N/A      TAX REDEMPTION AND PAYMENT   PRICE APPLICABLE UPON        ORIGINAL YIELD TO
                                 OF ADDITIONAL AMOUNTS:       OPTIONAL REPAYMENT: N/A      MATURITY: N/A
                                 N/A

--------------------------------------------------------------------------------------------------------------------
OTHER PROVISIONS: See below.  IF YES, STATE INITIAL
                                 OFFERING DATE: N/A
--------------------------------------------------------------------------------------------------------------------
</TABLE>

For the purposes of this SPARQS, the tenth paragraph of Section 2.08 of the
Amended and Restated Indenture, dated as of May 1, 1999, between the Issuer and
JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank) as Trustee,
shall not apply.


                                       2
<PAGE>


Issue Price...............   $           per each $           principal amount
                             of this SPARQS

Maturity Date.............   November 1, 2005, subject to acceleration as
                             described below in "Price Event Acceleration" and
                             "Alternate Exchange Calculation in Case of an Event
                             of Default" and subject to extension if the Final
                             Call Notice Date is postponed in accordance with
                             the following paragraph.

                             If the Final Call Notice Date is postponed because
                             it is not a Trading Day or due to a Market
                             Disruption Event or otherwise and the Issuer
                             exercises the Morgan Stanley Call Right, the
                             Maturity Date shall be postponed so that the
                             Maturity Date will be the tenth calendar day
                             following the Final Call Notice Date. See "Final
                             Call Notice Date" below.

                             In the event that the Final Call Notice Date is
                             postponed because it is not a Trading Day or due to
                             a Market Disruption Event or otherwise, the Issuer
                             shall give notice of such postponement as promptly
                             as possible, and in no case later than two Business
                             Days following the scheduled Final Call Notice
                             Date, (i) to the holder of this SPARQS by mailing
                             notice of such postponement by first class mail,
                             postage prepaid, to the holder's last address as it
                             shall appear upon the registry books, (ii) to the
                             Trustee by telephone or facsimile confirmed by
                             mailing such notice to the Trustee by first class
                             mail, postage prepaid, at its New York office and
                             (iii) to The Depository Trust Company (the
                             "Depositary") by telephone or facsimile confirmed
                             by mailing such notice to the Depositary by first
                             class mail, postage prepaid. Any notice that is
                             mailed in the manner herein provided shall be
                             conclusively presumed to have been duly given,
                             whether or not the holder of this SPARQS receives
                             the notice. Notice of the date to which the
                             Maturity Date has been rescheduled as a result of
                             postponement of the Final Call Notice Date, if
                             applicable, shall be included in the Issuer's
                             notice of exercise of the Morgan Stanley Call
                             Right.

Interest Payment Dates....   February 1, 2005, May 1, 2005, August 1, 2005 and
                             the Maturity Date.

                             If the scheduled Maturity Date is postponed due to
                             a Market Disruption Event or otherwise, the Issuer
                             shall


                                       3
<PAGE>


                             pay interest on the Maturity Date as postponed
                             rather than on November 1, 2005, but no interest
                             will accrue on this SPARQS or on such payment
                             during the period from or after the scheduled
                             Maturity Date.

Record Date...............   Notwithstanding the definition of "Record Date" on
                             page 22 hereof, the Record Date for each Interest
                             Payment Date, including the Interest Payment Date
                             scheduled to occur on the Maturity Date, shall be
                             the date 5 calendar days prior to such scheduled
                             Interest Payment Date, whether or not that date is
                             a Business Day; provided, however, that in the
                             event that the Issuer exercises the Morgan Stanley
                             Call Right, no Interest Payment Date shall occur
                             after the Morgan Stanley Notice Date, except for
                             any Interest Payment Date for which the Morgan
                             Stanley Notice Date falls on or after the
                             "ex-interest" date for the related interest
                             payment, in which case the related interest payment
                             shall be made on such Interest Payment Date; and
                             provided, further, that accrued but unpaid interest
                             payable on the Call Date, if any, shall be payable
                             to the person to whom the Call Price is payable.
                             The "ex-interest" date for any interest payment is
                             the date on which purchase transactions in the
                             SPARQS no longer carry the right to receive such
                             interest payment.

                             In the event that the Issuer exercises the Morgan
                             Stanley Call Right and the Morgan Stanley Notice
                             Date falls before the "ex-interest" date for an
                             interest payment, so that as a result a scheduled
                             Interest Payment Date will not occur, the Issuer
                             shall cause the Calculation Agent to give notice to
                             the Trustee and to the Depositary, in each case in
                             the manner and at the time described in the second
                             and third paragraphs under "Morgan Stanley Call
                             Right" below, that no Interest Payment Date will
                             occur after such Morgan Stanley Notice Date.

Denominations.............   $            and integral multiples thereof

Morgan Stanley Call
Right.....................   On any scheduled Trading Day on or after April ,
                             2005 or on the Maturity Date (including the
                             Maturity Date as it may be extended and regardless
                             of whether the Maturity Date is a Trading Day), the
                             Issuer may call the SPARQS, in whole but not in
                             part, for mandatory exchange for the Call Price
                             paid in cash


                                       4
<PAGE>


                             (together with accrued but unpaid interest) on the
                             Call Date.

                             On the Morgan Stanley Notice Date, the Issuer shall
                             give notice of the Issuer's exercise of the Morgan
                             Stanley Call Right (i) to the holder of this SPARQS
                             by mailing notice of such exercise, specifying the
                             Call Date on which the Issuer shall effect such
                             exchange, by first class mail, postage prepaid, to
                             the holder's last address as it shall appear upon
                             the registry books, (ii) to the Trustee by
                             telephone or facsimile confirmed by mailing such
                             notice to the Trustee by first class mail, postage
                             prepaid, at its New York office and (iii) to the
                             Depositary in accordance with the applicable
                             procedures set forth in the Blanket Letter of
                             Representations prepared by the Issuer. Any notice
                             which is mailed in the manner herein provided shall
                             be conclusively presumed to have been duly given,
                             whether or not the holder of this SPARQS receives
                             the notice. Failure to give notice by mail or any
                             defect in the notice to the holder of any SPARQS
                             shall not affect the validity of the proceedings
                             for the exercise of the Morgan Stanley Call Right
                             with respect to any other SPARQS.

                             The notice of the Issuer's exercise of the Morgan
                             Stanley Call Right shall specify (i) the Call Date,
                             (ii) the Call Price payable per SPARQS, (iii) the
                             amount of accrued but unpaid interest payable per
                             SPARQS on the Call Date, (iv) whether any
                             subsequently scheduled Interest Payment Date shall
                             no longer be an Interest Payment Date as a result
                             of the exercise of the Morgan Stanley Call Right,
                             (v) the place or places of payment of such Call
                             Price, (vi) that such delivery will be made upon
                             presentation and surrender of this SPARQS, (vii)
                             that such exchange is pursuant to the Morgan
                             Stanley Call Right and (viii) if applicable, the
                             date to which the Maturity Date has been extended
                             due to a Market Disruption Event as described under
                             "Maturity Date" above.

                             The notice of the Issuer's exercise of the Morgan
                             Stanley Call Right shall be given by the Issuer or,
                             at the Issuer's request, by the Trustee in the name
                             and at the expense of the Issuer.


                                       5
<PAGE>


                             If this SPARQS is so called for mandatory exchange
                             by the Issuer, then the cash Call Price and any
                             accrued but unpaid interest on this SPARQS to be
                             delivered to the holder of this SPARQS shall be
                             delivered on the Call Date fixed by the Issuer and
                             set forth in its notice of its exercise of the
                             Morgan Stanley Call Right, upon delivery of this
                             SPARQS to the Trustee. The Issuer shall, or shall
                             cause the Calculation Agent to, deliver such cash
                             to the Trustee for delivery to the holder of this
                             SPARQS.

                             If this SPARQS is not surrendered for exchange on
                             the Call Date, it shall be deemed to be no longer
                             Outstanding under, and as defined in, the Senior
                             Indenture after the Call Date, except with respect
                             to the holder's right to receive cash due in
                             connection with the Morgan Stanley Call Right.

Morgan Stanley Notice
Date......................   The scheduled Trading Day on which the Issuer
                             issues its notice of mandatory exchange, which must
                             be at least 10 but not more than 30 days prior to
                             the Call Date.

Final Call Notice Date....   October 22, 2005; provided that if October 22, 2005
                             is not a Trading Day or if a Market Disruption
                             Event occurs on such day, the Final Call Notice
                             Date will be the immediately succeeding Trading Day
                             on which no Market Disruption Event occurs.

Call Date.................   The day specified in the Issuer's notice of
                             mandatory exchange, on which the Issuer shall
                             deliver cash to the holder of this SPARQS, for
                             mandatory exchange, which day may be any scheduled
                             Trading Day on or after April     , 2005 or the
                             Maturity Date (including the Maturity Date as it
                             may be extended and regardless of whether the
                             Maturity Date is a scheduled Trading Day). See
                             "Maturity Date" above.

Call Price................   The Call Price with respect to any Call Date is an
                             amount of cash per each $       principal amount of
                             this SPARQS, as calculated by the Calculation
                             Agent, such that the sum of the present values of
                             all cash flows on each $ principal amount of this
                             SPARQS to and including the Call Date (i.e., the
                             Call Price and all of the interest payments,
                             including accrued and unpaid interest payable on
                             the Call Date), discounted to the Original Issue
                             Date from the applicable payment date


                                       6
<PAGE>


                             at the Yield to Call rate of   % per annum computed
                             on the basis of a 360-day year of twelve 30-day
                             months, equals the Issue Price, as determined by
                             the Calculation Agent.

Exchange at Maturity......   At maturity, subject to a prior call of this
                             SPARQS for cash in an amount equal to the Call
                             Price by the Issuer as described under "Morgan
                             Stanley Call Right" above or any acceleration of
                             the SPARQS, upon delivery of this SPARQS to the
                             Trustee, each $        principal amount of this
                             SPARQS shall be applied by the Issuer as payment
                             for a number of shares of the common stock of The
                             Goodyear Tire & Rubber Company ("Goodyear Stock")
                             at the Exchange Ratio, and the Issuer shall
                             deliver with respect to each $ principal amount of
                             this SPARQS an amount of Goodyear Stock equal to
                             the Exchange Ratio.

                             The amount of Goodyear Stock to be delivered at
                             maturity shall be subject to any applicable
                             adjustments (i) to the Exchange Ratio (including,
                             as applicable, any New Stock Exchange Ratio or any
                             Basket Stock Exchange Ratio, each as defined in
                             paragraph 5 under "Antidilution Adjustments" below)
                             and (ii) in the Exchange Property, as defined in
                             paragraph 5 under "Antidilution Adjustments" below,
                             to be delivered instead of, or in addition to, such
                             Goodyear Stock as a result of any corporate event
                             described under "Antidilution Adjustments" below,
                             in each case, required to be made through the close
                             of business on the third Trading Day prior to
                             maturity.

                             The Issuer shall, or shall cause the Calculation
                             Agent to, provide written notice to the Trustee at
                             its New York Office and to the Depositary, on which
                             notice the Trustee and Depositary may conclusively
                             rely, on or prior to 10:30 a.m. on the Trading Day
                             immediately prior to maturity of this SPARQS (but
                             if such Trading Day is not a Business Day, prior to
                             the close of business on the Business Day preceding
                             maturity of this SPARQS), of the amount of Goodyear
                             Stock (or the amount of Exchange Property) or cash
                             to be delivered with respect to each $ principal
                             amount of this SPARQS and of the amount of any cash
                             to be paid in lieu of any fractional share of
                             Goodyear Stock (or of any other securities included
                             in Exchange Property, if


                                       7
<PAGE>


                             applicable); provided that if the maturity date of
                             this SPARQS is accelerated (x) because of a Price
                             Event Acceleration (as described under "Price Event
                             Acceleration" below) or (y) because of an Event of
                             Default Acceleration (as defined under "Alternate
                             Exchange Calculation in Case of an Event of
                             Default" below), the Issuer shall give notice of
                             such acceleration as promptly as possible, and in
                             no case later than (A) in the case of an Event of
                             Default Acceleration, two Trading Days following
                             such deemed maturity date or (B) in the case of a
                             Price Event Acceleration, 10:30 a.m. on the Trading
                             Day immediately prior to the date of acceleration
                             (as defined under "Price Event Acceleration"
                             below), (i) to the holder of this SPARQS by mailing
                             notice of such acceleration by first class mail,
                             postage prepaid, to the holder's last address as it
                             shall appear upon the registry books, (ii) to the
                             Trustee by telephone or facsimile confirmed by
                             mailing such notice to the Trustee by first class
                             mail, postage prepaid, at its New York office and
                             (iii) to the Depositary by telephone or facsimile
                             confirmed by mailing such notice to the Depositary
                             by first class mail, postage prepaid. Any notice
                             that is mailed in the manner herein provided shall
                             be conclusively presumed to have been duly given,
                             whether or not the holder of this SPARQS receives
                             the notice. If the maturity of this SPARQS is
                             accelerated, no interest on the amounts payable
                             with respect to this SPARQS shall accrue for the
                             period from and after such accelerated maturity
                             date; provided that the Issuer has deposited with
                             the Trustee the Goodyear Stock, the Exchange
                             Property or any cash due with respect to such
                             acceleration by such accelerated maturity date.

                             The Issuer shall, or shall cause the Calculation
                             Agent to, deliver any such shares of Goodyear Stock
                             (or any Exchange Property) and cash in respect of
                             interest and any fractional share of Goodyear Stock
                             (or any Exchange Property) and cash otherwise due
                             upon any acceleration described above to the
                             Trustee for delivery to the holder of this Note.
                             References to payment "per SPARQS" refer to each $
                             principal amount of this SPARQS.

                             If this SPARQS is not surrendered for exchange at
                             maturity, it shall be deemed to be no longer


                                       8
<PAGE>


                             Outstanding under, and as defined in, the Senior
                             Indenture, except with respect to the holder's
                             right to receive the Goodyear Stock (and, if
                             applicable, any Exchange Property) and any cash in
                             respect of interest and any fractional share of
                             Goodyear Stock (or any Exchange Property) and any
                             other cash due at maturity as described in the
                             preceding paragraph under this heading.

Price Event Acceleration..   If on any two consecutive Trading Days during the
                             period prior to and ending on the third Business
                             Day immediately preceding the Maturity Date, the
                             product of the Closing Price per share of Goodyear
                             Stock and the Exchange Ratio is less than $2.00,
                             the Maturity Date of this SPARQS shall be deemed to
                             be accelerated to the third Business Day
                             immediately following such second Trading Day (the
                             "date of acceleration"). Upon such acceleration,
                             the holder of each $      principal amount of this
                             SPARQS shall receive per SPARQS on the date of
                             acceleration:

                                 (i) a number of shares of Goodyear Stock at the
                                 then current Exchange Ratio;

                                 (ii)accrued but unpaid interest on each $
                                 principal amount of this SPARQS to but
                                 excluding the date of acceleration; and

                                 (iii) an amount of cash as determined by the
                                 Calculation Agent equal to the sum of the
                                 present values of the remaining scheduled
                                 payments of interest on each $      principal
                                 amount of this SPARQS (excluding the amounts
                                 included in clause (ii) above) discounted to
                                 the date of acceleration. The present value of
                                 each remaining scheduled payment will be based
                                 on the comparable yield that the Issuer would
                                 pay on a non-interest bearing, senior
                                 unsecured debt obligation of the Issuer having
                                 a maturity equal to the term of each such
                                 remaining scheduled payment, as determined by
                                 the Calculation Agent.

No Fractional Shares......   Upon delivery of this SPARQS to the Trustee at
                             maturity, the Issuer shall deliver the aggregate
                             number of shares of Goodyear Stock due with respect
                             to this SPARQS, as described above, but the Issuer
                             shall pay cash in lieu of delivering any fractional
                             share of


                                       9
<PAGE>


                             Goodyear Stock in an amount equal to the
                             corresponding fractional Closing Price of such
                             fraction of a share of Goodyear Stock as determined
                             by the Calculation Agent as of the second scheduled
                             Trading Day prior to maturity of this SPARQS.

Exchange Ratio............   1.0, subject to adjustment for corporate events
                             relating to The Goodyear Tire & Rubber Company
                             ("Goodyear") described under "Antidilution
                             Adjustments" below.

Closing Price.............   The Closing Price for one share of Goodyear Stock
                             (or one unit of any other security for which a
                             Closing Price must be determined) on any Trading
                             Day (as defined below) means:

                             o   if Goodyear Stock (or any such other security)
                                 is listed or admitted to trading on a national
                                 securities exchange, the last reported sale
                                 price, regular way, of the principal trading
                                 session on such day on the principal United
                                 States securities exchange registered under the
                                 Securities Exchange Act of 1934, as amended
                                 (the "Exchange Act"), on which Goodyear Stock
                                 (or any such other security) is listed or
                                 admitted to trading,

                             o   if Goodyear Stock (or any such other security)
                                 is a security of the Nasdaq National Market
                                 (and provided that the Nasdaq National Market
                                 is not then a national securities exchange),
                                 the Nasdaq official closing price published by
                                 The Nasdaq Stock Market, Inc. on such day, or

                             o   if Goodyear Stock (or any such other security)
                                 is neither listed or admitted to trading on any
                                 national securities exchange nor a security of
                                 the Nasdaq National Market but is included in
                                 the OTC Bulletin Board Service (the "OTC
                                 Bulletin Board") operated by the National
                                 Association of Securities Dealers, Inc. (the
                                 "NASD"), the last reported sale price of the
                                 principal trading session on the OTC Bulletin
                                 Board on such day.

                             If Goodyear Stock (or any such other security) is
                             listed or admitted to trading on any national
                             securities exchange or is a security of the Nasdaq
                             National Market but the last reported sale price or
                             Nasdaq


                                       10
<PAGE>


                             official closing price, as applicable, is not
                             available pursuant to the preceding sentence, then
                             the Closing Price for one share of Goodyear Stock
                             (or one unit of any such other security) on any
                             Trading Day will mean the last reported sale price
                             of the principal trading session on the
                             over-the-counter market as reported on the Nasdaq
                             National Market or the OTC Bulletin Board on such
                             day. If, because of a Market Disruption Event (as
                             defined below) or otherwise, the last reported sale
                             price or Nasdaq official closing price, as
                             applicable, for Goodyear Stock (or any such other
                             security) is not available pursuant to either of
                             the two preceding sentences, then the Closing Price
                             for any Trading Day will be the mean, as determined
                             by the Calculation Agent, of the bid prices for
                             Goodyear Stock (or any such other security)
                             obtained from as many recognized dealers in such
                             security, but not exceeding three, as will make
                             such bid prices available to the Calculation Agent.
                             Bids of MS & Co. or any of its affiliates may be
                             included in the calculation of such mean, but only
                             to the extent that any such bid is the highest of
                             the bids obtained. The term "security of the Nasdaq
                             National Market" will include a security included
                             in any successor to such system, and the term OTC
                             Bulletin Board Service will include any successor
                             service thereto.

Trading Day...............   A day, as determined by the Calculation Agent, on
                             which trading is generally conducted on the New
                             York Stock Exchange, Inc. ("NYSE"), the American
                             Stock Exchange LLC, the Nasdaq National Market, the
                             Chicago Mercantile Exchange and the Chicago Board
                             of Options Exchange and in the over-the-counter
                             market for equity securities in the United States.

Calculation Agent.........   MS & Co. and its successors.

                             All calculations with respect to the Exchange Ratio
                             and Call Price for the SPARQS shall be made by the
                             Calculation Agent and shall be rounded to the
                             nearest one hundred-thousandth, with five
                             one-millionths rounded upward (e.g., .876545 would
                             be rounded to .87655); all dollar amounts related
                             to the Call Price resulting from such calculations
                             shall be rounded to the nearest ten-thousandth,
                             with five one hundred-thousandths rounded upward
                             (e.g., .76545 would be


                                       11
<PAGE>


                             rounded to .7655); and all dollar amounts paid with
                             respect to the Call Price on the aggregate number
                             of SPARQS shall be rounded to the nearest cent,
                             with one-half cent rounded upward.

                             All determinations made by the Calculation Agent
                             shall be at the sole discretion of the Calculation
                             Agent and shall, in the absence of manifest error,
                             be conclusive for all purposes and binding on the
                             holder of this SPARQS, the Trustee and the Issuer.

Antidilution Adjustments..   The Exchange Ratio shall be adjusted as follows:

                             1. If Goodyear Stock is subject to a stock split or
                             reverse stock split, then once such split has
                             become effective, the Exchange Ratio shall be
                             adjusted to equal the product of the prior Exchange
                             Ratio and the number of shares issued in such stock
                             split or reverse stock split with respect to one
                             share of Goodyear Stock.

                             2. If Goodyear Stock is subject (i) to a stock
                             dividend (issuance of additional shares of Goodyear
                             Stock) that is given ratably to all holders of
                             shares of Goodyear Stock or (ii) to a distribution
                             of Goodyear Stock as a result of the triggering of
                             any provision of the corporate charter of Goodyear,
                             then once the dividend has become effective and
                             Goodyear Stock is trading ex-dividend, the Exchange
                             Ratio shall be adjusted so that the new Exchange
                             Ratio shall equal the prior Exchange Ratio plus the
                             product of (i) the number of shares issued with
                             respect to one share of Goodyear Stock and (ii) the
                             prior Exchange Ratio.

                             3. If Goodyear issues rights or warrants to all
                             holders of Goodyear Stock to subscribe for or
                             purchase Goodyear Stock at an exercise price per
                             share less than the Closing Price of Goodyear Stock
                             on both (i) the date the exercise price of such
                             rights or warrants is determined and (ii) the
                             expiration date of such rights or warrants, and if
                             the expiration date of such rights or warrants
                             precedes the maturity of this SPARQS, then the
                             Exchange Ratio shall be adjusted to equal the
                             product of the prior Exchange Ratio and a fraction,
                             the numerator of which shall be the number of


                                       12
<PAGE>


                             shares of Goodyear Stock outstanding immediately
                             prior to the issuance of such rights or warrants
                             plus the number of additional shares of Goodyear
                             Stock offered for subscription or purchase pursuant
                             to such rights or warrants and the denominator of
                             which shall be the number of shares of Goodyear
                             Stock outstanding immediately prior to the issuance
                             of such rights or warrants plus the number of
                             additional shares of Goodyear Stock which the
                             aggregate offering price of the total number of
                             shares of Goodyear Stock so offered for
                             subscription or purchase pursuant to such rights or
                             warrants would purchase at the Closing Price on the
                             expiration date of such rights or warrants, which
                             shall be determined by multiplying such total
                             number of shares offered by the exercise price of
                             such rights or warrants and dividing the product so
                             obtained by such Closing Price.

                             4. There shall be no adjustments to the Exchange
                             Ratio to reflect cash dividends or other
                             distributions paid with respect to Goodyear Stock
                             other than distributions described in paragraph 2,
                             paragraph 3 and clauses (i), (iv) and (v) of the
                             first sentence of paragraph 5 and Extraordinary
                             Dividends. "Extraordinary Dividend" means each of
                             (a) the full amount per share of Goodyear Stock of
                             any cash dividend or special dividend or
                             distribution that is identified by Goodyear as an
                             extraordinary or special dividend or distribution,
                             (b) the excess of any cash dividend or other cash
                             distribution (that is not otherwise identified by
                             Goodyear as an extraordinary or special dividend or
                             distribution) distributed per share of Goodyear
                             Stock over the immediately preceding cash dividend
                             or other cash distribution, if any, per share of
                             Goodyear Stock that did not include an
                             Extraordinary Dividend (as adjusted for any
                             subsequent corporate event requiring an adjustment
                             hereunder, such as a stock split or reverse stock
                             split) if such excess portion of the dividend or
                             distribution is more than 5% of the Closing Price
                             of Goodyear Stock on the Trading Day preceding the
                             "ex-dividend date" (that is, the day on and after
                             which transactions in Goodyear Stock on an
                             organized securities exchange or trading system no
                             longer carry the right to receive that cash
                             dividend or other cash distribution) for the
                             payment of such cash dividend or other cash
                             distribution (such Closing Price, the "Base Closing
                             Price") and (c) the full cash value of any non-cash


                                       13
<PAGE>


                             dividend or distribution per share of Goodyear
                             Stock (excluding Marketable Securities, as defined
                             in paragraph 5 below). Subject to the following
                             sentence, if any cash dividend or distribution of
                             such other property with respect to Goodyear Stock
                             includes an Extraordinary Dividend, the Exchange
                             Ratio with respect to Goodyear Stock shall be
                             adjusted on the ex-dividend date so that the new
                             Exchange Ratio shall equal the product of (i) the
                             prior Exchange Ratio and (ii) a fraction, the
                             numerator of which is the Base Closing Price, and
                             the denominator of which is the amount by which the
                             Base Closing Price exceeds the Extraordinary
                             Dividend. If any Extraordinary Dividend is at least
                             35% of the Base Closing Price, then, instead of
                             adjusting the Exchange Ratio, the amount payable
                             upon exchange at maturity shall be determined as
                             described in paragraph 5 below, and the
                             Extraordinary Dividend shall be allocated to
                             Reference Basket Stocks in accordance with the
                             procedures for a Reference Basket Event as
                             described in clause (c)(ii) of paragraph 5 below.
                             The value of the non-cash component of an
                             Extraordinary Dividend shall be determined on the
                             ex-dividend date for such distribution by the
                             Calculation Agent, whose determination shall be
                             conclusive in the absence of manifest error. A
                             distribution on Goodyear Stock described in clause
                             (i), (iv) or (v) of the first sentence of paragraph
                             5 below shall cause an adjustment to the Exchange
                             Ratio pursuant only to clause (i), (iv) or (v) of
                             the first sentence of paragraph 5, as applicable.

                             5. Any of the following shall constitute a
                             Reorganization Event: (i) Goodyear Stock is
                             reclassified or changed, including, without
                             limitation, as a result of the issuance of any
                             tracking stock by Goodyear, (ii) Goodyear has been
                             subject to any merger, combination or consolidation
                             and is not the surviving entity, (iii) Goodyear
                             completes a statutory exchange of securities with
                             another corporation (other than pursuant to clause
                             (ii) above), (iv) Goodyear is liquidated, (v)
                             Goodyear issues to all of its shareholders equity
                             securities of an issuer other than Goodyear (other
                             than in a transaction described in clause (ii),
                             (iii) or (iv) above) (a "spinoff stock") or (vi)
                             Goodyear Stock is the subject of a tender or
                             exchange offer or going private transaction on all
                             of the


                                       14
<PAGE>


                             outstanding shares. If any Reorganization Event
                             occurs, in each case as a result of which the
                             holders of Goodyear Stock receive any equity
                             security listed on a national securities exchange
                             or traded on The Nasdaq National Market (a
                             "Marketable Security"), other securities or other
                             property, assets or cash (collectively "Exchange
                             Property"), the amount payable upon exchange at
                             maturity with respect to each $ principal amount of
                             this SPARQS following the effective date for such
                             Reorganization Event (or, if applicable, in the
                             case of spinoff stock, the ex-dividend date for the
                             distribution of such spinoff stock) shall be
                             determined in accordance with the following:

                                 (a) if Goodyear Stock continues to be
                                 outstanding, Goodyear Stock (if applicable, as
                                 reclassified upon the issuance of any tracking
                                 stock) at the Exchange Ratio in effect on the
                                 third Trading Day prior to the scheduled
                                 Maturity Date (taking into account any
                                 adjustments for any distributions described
                                 under clause (c)(i) below); and

                                 (b) for each Marketable Security received in
                                 such Reorganization Event (each a "New Stock"),
                                 including the issuance of any tracking stock or
                                 spinoff stock or the receipt of any stock
                                 received in exchange for Goodyear Stock, the
                                 number of shares of the New Stock received with
                                 respect to one share of Goodyear Stock
                                 multiplied by the Exchange Ratio for Goodyear
                                 Stock on the Trading Day immediately prior to
                                 the effective date of the Reorganization Event
                                 (the "New Stock Exchange Ratio"), as adjusted
                                 to the third Trading Day prior to the scheduled
                                 Maturity Date (taking into account any
                                 adjustments for distributions described under
                                 clause (c)(i) below); and

                                 (c) for any cash and any other property or
                                 securities other than Marketable Securities
                                 received in such Reorganization Event (the
                                 "Non-Stock Exchange Property"),

                                    (i) if the combined value of the amount of
                                    Non-Stock Exchange Property received per
                                    share of Goodyear Stock, as determined by
                                    the Calculation Agent in its sole discretion
                                    on the effective date of such Reorganization
                                    Event


                                       15
<PAGE>


                                    (the "Non-Stock Exchange Property Value"),
                                    by holders of Goodyear Stock is less than
                                    25% of the Closing Price of Goodyear Stock
                                    on the Trading Day immediately prior to the
                                    effective date of such Reorganization Event,
                                    a number of shares of Goodyear Stock, if
                                    applicable, and of any New Stock received in
                                    connection with such Reorganization Event,
                                    if applicable, in proportion to the relative
                                    Closing Prices of Goodyear Stock and any
                                    such New Stock, and with an aggregate value
                                    equal to the Non-Stock Exchange Property
                                    Value multiplied by the Exchange Ratio in
                                    effect for Goodyear Stock on the Trading Day
                                    immediately prior to the effective date of
                                    such Reorganization Event, based on such
                                    Closing Prices, in each case as determined
                                    by the Calculation Agent in its sole
                                    discretion on the effective date of such
                                    Reorganization Event; and the number of such
                                    shares of Goodyear Stock or any New Stock
                                    determined in accordance with this clause
                                    (c)(i) shall be added at the time of such
                                    adjustment to the Exchange Ratio in
                                    subparagraph (a) above and/or the New Stock
                                    Exchange Ratio in subparagraph (b) above, as
                                    applicable, or

                                    (ii) if the Non-Stock Exchange Property
                                    Value is equal to or exceeds 25% of the
                                    Closing Price of Goodyear Stock on the
                                    Trading Day immediately prior to the
                                    effective date relating to such
                                    Reorganization Event or, if Goodyear Stock
                                    is surrendered exclusively for Non-Stock
                                    Exchange Property (in each case, a
                                    "Reference Basket Event"), an initially
                                    equal-dollar weighted basket of three
                                    Reference Basket Stocks (as defined below)
                                    with an aggregate value on the effective
                                    date of such Reorganization Event equal to
                                    the Non-Stock Exchange Property Value
                                    multiplied by the Exchange Ratio in effect
                                    for Goodyear Stock on the Trading Day
                                    immediately prior to the effective date of
                                    such Reorganization Event. The "Reference
                                    Basket Stocks" shall be the three stocks
                                    with the largest market capitalization among
                                    the stocks that then comprise the S&P 500
                                    Index (or, if publication


                                       16
<PAGE>


                                    of such index is discontinued, any successor
                                    or substitute index selected by the
                                    Calculation Agent in its sole discretion)
                                    with the same primary Standard Industrial
                                    Classification Code ("SIC Code") as
                                    Goodyear; provided, however, that a
                                    Reference Basket Stock shall not include any
                                    stock that is subject to a trading
                                    restriction under the trading restriction
                                    policies of Morgan Stanley or any of its
                                    affiliates that would materially limit the
                                    ability of Morgan Stanley or any of its
                                    affiliates to hedge the SPARQS with respect
                                    to such stock (a "Hedging Restriction");
                                    provided further that if three Reference
                                    Basket Stocks cannot be identified from the
                                    S&P 500 Index by primary SIC Code for which
                                    a Hedging Restriction does not exist, the
                                    remaining Reference Basket Stock(s) shall be
                                    selected by the Calculation Agent from the
                                    largest market capitalization stock(s)
                                    within the same Division and Major Group
                                    classification (as defined by the Office of
                                    Management and Budget) as the primary SIC
                                    Code for Goodyear. Each Reference Basket
                                    Stock shall be assigned a Basket Stock
                                    Exchange Ratio equal to the number of shares
                                    of such Reference Basket Stock with a
                                    Closing Price on the effective date of such
                                    Reorganization Event equal to the product of
                                    (a) the Non-Stock Exchange Property Value,
                                    (b) the Exchange Ratio in effect for
                                    Goodyear Stock on the Trading Day
                                    immediately prior to the effective date of
                                    such Reorganization Event and (c) 0.3333333.

                             Following the allocation of any Extraordinary
                             Dividend to Reference Basket Stocks pursuant to
                             paragraph 4 above or any Reorganization Event
                             described in this paragraph 5, the amount payable
                             upon exchange at maturity with respect to each $
                             principal amount of this SPARQS shall be the sum
                             of:

                                (x) if applicable, Goodyear Stock at the
                                    Exchange Ratio then in effect; and


                                       17
<PAGE>


                                (y) if applicable, for each New Stock, such New
                                    Stock at the New Stock Exchange Ratio then
                                    in effect for such New Stock; and

                                (z) if applicable, for each Reference Basket
                                    Stock, such Reference Basket Stock at the
                                    Basket Stock Exchange Ratio then in effect
                                    for such Reference Basket Stock.

                             In each case, the applicable Exchange Ratio
                             (including for this purpose, any New Stock Exchange
                             Ratio or Basket Stock Exchange Ratio) shall be
                             determined by the Calculation Agent on the third
                             Trading Day prior to the scheduled Maturity Date.

                             For purposes of paragraph 5 above, in the case of a
                             consummated tender or exchange offer or
                             going-private transaction involving Exchange
                             Property of a particular type, Exchange Property
                             shall be deemed to include the amount of cash or
                             other property paid by the offeror in the tender or
                             exchange offer with respect to such Exchange
                             Property (in an amount determined on the basis of
                             the rate of exchange in such tender or exchange
                             offer or going-private transaction). In the event
                             of a tender or exchange offer or a going-private
                             transaction with respect to Exchange Property in
                             which an offeree may elect to receive cash or other
                             property, Exchange Property shall be deemed to
                             include the kind and amount of cash and other
                             property received by offerees who elect to receive
                             cash.

                             Following the occurrence of any Reorganization
                             Event referred to in paragraphs 4 or 5 above, (i)
                             references to "Goodyear Stock" under "No Fractional
                             Shares," "Closing Price" and "Market Disruption
                             Event" shall be deemed to also refer to any New
                             Stock or Reference Basket Stock, and (ii) all other
                             references in this SPARQS to "Goodyear Stock" shall
                             be deemed to refer to the Exchange Property into
                             which this SPARQS is thereafter exchangeable and
                             references to a "share" or "shares" of Goodyear
                             Stock shall be deemed to refer to the applicable
                             unit or units of such Exchange Property, including
                             any New Stock or Reference Basket Stock, unless the
                             context otherwise requires. The New Stock Exchange
                             Ratio(s) or Basket Stock Exchange Ratios resulting
                             from any Reorganization Event described in
                             paragraph 5 above


                                       18
<PAGE>


                             or similar adjustment under paragraph 4 above shall
                             be subject to the adjustments set forth in
                             paragraphs 1 through 5 hereof.

                             If a Reference Basket Event occurs, the Issuer
                             shall, or shall cause the Calculation Agent to,
                             provide written notice to the Trustee at its New
                             York office, on which notice the Trustee may
                             conclusively rely, and to DTC of the occurrence of
                             such Reference Basket Event and of the three
                             Reference Basket Stocks selected as promptly as
                             possible and in no event later than five Business
                             Days after the date of the Reference Basket Event.

                             No adjustment to any Exchange Ratio (including for
                             this purpose, any New Stock Exchange Ratio or
                             Basket Stock Exchange Ratio) shall be required
                             unless such adjustment would require a change of at
                             least 0.1% in the Exchange Ratio then in effect.
                             The Exchange Ratio resulting from any of the
                             adjustments specified above will be rounded to the
                             nearest one hundred-thousandth, with five
                             one-millionths rounded upward. Adjustments to the
                             Exchange Ratios will be made up to the close of
                             business on the third Trading Day prior to the
                             Maturity Date.

                             No adjustments to the Exchange Ratio or method of
                             calculating the Exchange Ratio shall be made other
                             than those specified above.

                             The Calculation Agent shall be solely responsible
                             for the determination and calculation of any
                             adjustments to the Exchange Ratio, any New Stock
                             Exchange Ratio or Basket Stock Exchange Ratio or
                             method of calculating the Exchange Property Value
                             and of any related determinations and calculations
                             with respect to any distributions of stock, other
                             securities or other property or assets (including
                             cash) in connection with any corporate event
                             described in paragraphs 1 through 5 above, and its
                             determinations and calculations with respect
                             thereto shall be conclusive in the absence of
                             manifest error.

                             The Calculation Agent shall provide information as
                             to any adjustments to the Exchange Ratio or to the
                             method of calculating the amount payable upon
                             exchange at maturity of the SPARQS made pursuant to


                                       19
<PAGE>


                             paragraphs 1 through 5 above upon written request
                             by any holder of this SPARQS.

Market Disruption Event...   "Market Disruption Event" means, with respect to
                             Goodyear Stock:

                                (i) a suspension, absence or material limitation
                                of trading of Goodyear Stock on the primary
                                market for Goodyear Stock for more than two
                                hours of trading or during the one-half hour
                                period preceding the close of the principal
                                trading session in such market; or a breakdown
                                or failure in the price and trade reporting
                                systems of the primary market for Goodyear Stock
                                as a result of which the reported trading prices
                                for Goodyear Stock during the last one-half hour
                                preceding the close of the principal trading
                                session in such market are materially
                                inaccurate; or the suspension, absence or
                                material limitation of trading on the primary
                                market for trading in options contracts related
                                to Goodyear Stock, if available, during the
                                one-half hour period preceding the close of the
                                principal trading session in the applicable
                                market, in each case as determined by the
                                Calculation Agent in its sole discretion; and

                                (ii)a determination by the Calculation Agent in
                                its sole discretion that any event described in
                                clause (i) above materially interfered with the
                                ability of the Issuer or any of its affiliates
                                to unwind or adjust all or a material portion of
                                the hedge with respect to the SPARQS due
                                November 1, 2005, Mandatorily Exchangeable for
                                Shares of Common Stock of The Goodyear Tire &
                                Rubber Company.

                             For purposes of determining whether a Market
                             Disruption Event has occurred: (1) a limitation on
                             the hours or number of days of trading shall not
                             constitute a Market Disruption Event if it results
                             from an announced change in the regular business
                             hours of the relevant exchange, (2) a decision to
                             permanently discontinue trading in the relevant
                             options contract shall not constitute a Market
                             Disruption Event, (3) limitations pursuant to NYSE
                             Rule 80A (or any applicable rule or regulation
                             enacted or promulgated by the NYSE, any other
                             self-regulatory organization or the Securities and
                             Exchange Commission of scope


                                       20
<PAGE>


                             similar to NYSE Rule 80A as determined by the
                             Calculation Agent) on trading during significant
                             market fluctuations shall constitute a suspension,
                             absence or material limitation of trading, (4) a
                             suspension of trading in options contracts on
                             Goodyear Stock by the primary securities market
                             trading in such options, if available, by reason of
                             (x) a price change exceeding limits set by such
                             securities exchange or market, (y) an imbalance of
                             orders relating to such contracts or (z) a
                             disparity in bid and ask quotes relating to such
                             contracts shall constitute a suspension, absence or
                             material limitation of trading in options contracts
                             related to Goodyear Stock and (5) a suspension,
                             absence or material limitation of trading on the
                             primary securities market on which options
                             contracts related to Goodyear Stock are traded
                             shall not include any time when such securities
                             market is itself closed for trading under ordinary
                             circumstances.

Alternate Exchange
Calculation in Case of
  an Event of Default.....   In case an event of default with respect to the
                             SPARQS shall have occurred and be continuing, the
                             amount declared due and payable per each $
                             principal amount of this SPARQS upon any
                             acceleration of this SPARQS (an "Event of Default
                             Acceleration") shall be determined by the
                             Calculation Agent and shall be an amount in cash
                             equal to the lesser of (i) the product of (x) the
                             Closing Price of Goodyear Stock (and/or the value
                             of any Exchange Property) as of the date of such
                             acceleration and (y) the then current Exchange
                             Ratio and (ii) the Call Price calculated as though
                             the date of acceleration were the Call Date (but in
                             no event less than the Call Price for the first
                             Call Date), in each case plus accrued but unpaid
                             interest to but excluding the date of acceleration;
                             provided that if the Issuer has called the SPARQS
                             in accordance with the Morgan Stanley Call Right,
                             the amount declared due and payable upon any such
                             acceleration shall be an amount in cash for each $
                             principal amount of this SPARQS equal to the Call
                             Price for the Call Date specified in the Issuer's
                             notice of mandatory exchange, plus accrued but
                             unpaid interest to but excluding the date of
                             acceleration.


                                       21
<PAGE>


Treatment of SPARQS for
United States Federal
  Income Tax Purposes.....       The Issuer, by its sale of this SPARQS, and
                                 the holder of this SPARQS (and any successor
                                 holder of, or holder of a beneficial interest
                                 in, this SPARQS), by its respective purchase
                                 hereof, agree (in the absence of an
                                 administrative determination or judicial
                                 ruling to the contrary) to characterize each
                                 $       principal amount of this SPARQS for all
                                 tax purposes as an investment unit consisting
                                 of (A) a terminable contract (the "Terminable
                                 Forward Contract") that (i) requires the
                                 holder of this SPARQS (subject to the Morgan
                                 Stanley Call Right) to purchase, and the
                                 Issuer to sell, for an amount equal to $ (the
                                 "Forward Price"), Goodyear Stock at maturity
                                 and (ii) allows the Issuer, upon exercise of
                                 the Morgan Stanley Call Right, to terminate
                                 the Terminable Forward Contract by returning
                                 to such holder the Deposit (as defined below)
                                 and paying to such holder an amount of cash
                                 equal to the difference between the Deposit
                                 and the Call Price and (B) a deposit with the
                                 Issuer of a fixed amount of cash, equal to the
                                 Issue Price per each $ principal amount of
                                 this SPARQS, to secure the holder's obligation
                                 to purchase Goodyear Stock pursuant to the
                                 Terminable Forward Contract (the "Deposit"),
                                 which Deposit bears a quarterly compounded
                                 yield of   % per annum.


                                       22
<PAGE>


     Morgan Stanley, a Delaware corporation (together with its successors and
assigns, the "Issuer"), for value received, hereby promises to pay to CEDE &
CO., or registered assignees, the amount of Goodyear Stock (or other Exchange
Property), as determined in accordance with the provisions set forth under
"Exchange at Maturity" above, due with respect to the principal sum of U.S.
$         (UNITED STATES DOLLARS       ) on the Maturity Date specified above
(except to the extent redeemed or repaid prior to maturity) and to pay interest
thereon at the Interest Rate per annum specified above, from and including the
Interest Accrual Date specified above until the principal hereof is paid or
duly made available for payment weekly, monthly, quarterly, semiannually or
annually in arrears as specified above as the Interest Payment Period on each
Interest Payment Date (as specified above), commencing on the Interest Payment
Date next succeeding the Interest Accrual Date specified above, and at maturity
(or on any redemption or repayment date); provided, however, that if the
Interest Accrual Date occurs between a Record Date, as defined below, and the
next succeeding Interest Payment Date, interest payments will commence on the
second Interest Payment Date succeeding the Interest Accrual Date to the
registered holder of this Note on the Record Date with respect to such second
Interest Payment Date; and provided, further, that if this Note is subject to
"Annual Interest Payments," interest payments shall be made annually in arrears
and the term "Interest Payment Date" shall be deemed to mean the first day of
March in each year.

     Interest on this Note will accrue from and including the most recent date
to which interest has been paid or duly provided for, or, if no interest has
been paid or duly provided for, from and including the Interest Accrual Date,
until but excluding the date the principal hereof has been paid or duly made
available for payment. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, subject to certain exceptions
described herein, be paid to the person in whose name this Note (or one or more
predecessor Notes) is registered at the close of business on the date 15
calendar days prior to such Interest Payment Date (whether or not a Business Day
(as defined below)) (each such date, a "Record Date"); provided, however, that
interest payable at maturity (or any redemption or repayment date) will be
payable to the person to whom the principal hereof shall be payable. As used
herein, "Business Day" means any day, other than a Saturday or Sunday, (a) that
is neither a legal holiday nor a day on which banking institutions are
authorized or required by law or regulation to close (x) in The City of New York
or (y) if this Note is denominated in a Specified Currency other than U.S.
dollars, euro or Australian dollars, in the principal financial center of the
country of the Specified Currency, or (z) if this Note is denominated in
Australian dollars, in Sydney and (b) if this Note is denominated in euro, that
is also a day on which the Trans-European Automated Real-time Gross Settlement
Express Transfer System ("TARGET") is operating (a "TARGET Settlement Day").

     Payment of the principal of this Note, any premium and the interest due at
maturity (or any redemption or repayment date), unless this Note is denominated
in a Specified Currency other than U.S. dollars and is to be paid in whole or in
part in such Specified Currency, will be made in immediately available funds
upon surrender of this Note at the office or agency of the Paying Agent, as
defined on the reverse hereof, maintained for that purpose in the Borough of
Manhattan, The City of New York, or at such other paying agency as the Issuer
may determine, in U.S. dollars. U.S. dollar payments of interest, other than
interest due at maturity or on any date of redemption or repayment, will be made
by U.S. dollar check mailed to the address of the


                                       23
<PAGE>


person entitled thereto as such address shall appear in the Note register. A
holder of U.S. $10,000,000 (or the equivalent in a Specified Currency) or more
in aggregate principal amount of Notes having the same Interest Payment Date,
the interest on which is payable in U.S. dollars, shall be entitled to receive
payments of interest, other than interest due at maturity or on any date of
redemption or repayment, by wire transfer of immediately available funds if
appropriate wire transfer instructions have been received by the Paying Agent in
writing not less than 15 calendar days prior to the applicable Interest Payment
Date.

     If this Note is denominated in a Specified Currency other than U.S.
dollars, and the holder does not elect (in whole or in part) to receive payment
in U.S. dollars pursuant to the next succeeding paragraph, payments of interest,
principal or any premium with regard to this Note will be made by wire transfer
of immediately available funds to an account maintained by the holder hereof
with a bank located outside the United States if appropriate wire transfer
instructions have been received by the Paying Agent in writing, with respect to
payments of interest, on or prior to the fifth Business Day after the applicable
Record Date and, with respect to payments of principal or any premium, at least
ten Business Days prior to the Maturity Date or any redemption or repayment
date, as the case may be; provided that, if payment of interest, principal or
any premium with regard to this Note is payable in euro, the account must be a
euro account in a country for which the euro is the lawful currency, provided,
further, that if such wire transfer instructions are not received, such payments
will be made by check payable in such Specified Currency mailed to the address
of the person entitled thereto as such address shall appear in the Note
register; and provided, further, that payment of the principal of this Note, any
premium and the interest due at maturity (or on any redemption or repayment
date) will be made upon surrender of this Note at the office or agency referred
to in the preceding paragraph.

     If so indicated on the face hereof, the holder of this Note, if denominated
in a Specified Currency other than U.S. dollars, may elect to receive all or a
portion of payments on this Note in U.S. dollars by transmitting a written
request to the Paying Agent, on or prior to the fifth Business Day after such
Record Date or at least ten Business Days prior to the Maturity Date or any
redemption or repayment date, as the case may be. Such election shall remain in
effect unless such request is revoked by written notice to the Paying Agent as
to all or a portion of payments on this Note at least five Business Days prior
to such Record Date, for payments of interest, or at least ten calendar days
prior to the Maturity Date or any redemption or repayment date, for payments of
principal, as the case may be.

     If the holder elects to receive all or a portion of payments of principal
of, premium, if any, and interest on this Note, if denominated in a Specified
Currency other than U.S. dollars, in U.S. dollars, the Exchange Rate Agent (as
defined on the reverse hereof) will convert such payments into U.S. dollars. In
the event of such an election, payment in respect of this Note will be based
upon the exchange rate as determined by the Exchange Rate Agent based on the
highest bid quotation in The City of New York received by such Exchange Rate
Agent at approximately 11:00 a.m., New York City time, on the second Business
Day preceding the applicable payment date from three recognized foreign exchange
dealers (one of which may be the Exchange Rate Agent unless such Exchange Rate
Agent is an affiliate of the Issuer) for the purchase by the quoting dealer of
the Specified Currency for U.S. dollars for settlement on such payment date in
the amount of the Specified Currency payable in the absence of such an election
to such holder


                                       24
<PAGE>


and at which the applicable dealer commits to execute a contract. If such bid
quotations are not available, such payment will be made in the Specified
Currency. All currency exchange costs will be borne by the holder of this Note
by deductions from such payments.

     Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.

     Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Note shall
not be entitled to any benefit under the Senior Indenture, as defined on the
reverse hereof, or be valid or obligatory for any purpose.


                                       25
<PAGE>


     IN WITNESS WHEREOF, the Issuer has caused this Note to be duly executed.

DATED:                                 MORGAN STANLEY


                                       By:
                                            ------------------------------------
                                            Name:
                                            Title:


TRUSTEE'S CERTIFICATE
   OF AUTHENTICATION

This is one of the Notes referred
   to in the within-mentioned
   Senior Indenture.

JPMORGAN CHASE BANK,
   as Trustee


By:
    -----------------------------
    Authorized Officer


                                       26
<PAGE>


                               REVERSE OF SECURITY

     This Note is one of a duly authorized issue of Senior Global Medium-Term
Notes, Series C, having maturities more than nine months from the date of issue
(the "Notes") of the Issuer. The Notes are issuable under an Amended and
Restated Senior Indenture, dated as of May 1, 1999, between the Issuer and
JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), as Trustee
(the "Trustee," which term includes any successor trustee under the Senior
Indenture) (as may be amended or supplemented from time to time, the "Senior
Indenture"), to which Senior Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities of the Issuer, the Trustee and holders of the
Notes and the terms upon which the Notes are, and are to be, authenticated and
delivered. The Issuer has appointed JPMorgan Chase Bank at its corporate trust
office in The City of New York as the paying agent (the "Paying Agent," which
term includes any additional or successor Paying Agent appointed by the Issuer)
with respect to the Notes. The terms of individual Notes may vary with respect
to interest rates, interest rate formulas, issue dates, maturity dates, or
otherwise, all as provided in the Senior Indenture. To the extent not
inconsistent herewith, the terms of the Senior Indenture are hereby incorporated
by reference herein.

     Unless otherwise indicated on the face hereof, this Note will not be
subject to any sinking fund and, unless otherwise provided on the face hereof in
accordance with the provisions of the following two paragraphs, will not be
redeemable or subject to repayment at the option of the holder prior to
maturity.

     If so indicated on the face hereof, this Note may be redeemed in whole or
in part at the option of the Issuer on or after the Initial Redemption Date
specified on the face hereof on the terms set forth on the face hereof, together
with interest accrued and unpaid hereon to the date of redemption. If this Note
is subject to "Annual Redemption Percentage Reduction," the Initial Redemption
Percentage indicated on the face hereof will be reduced on each anniversary of
the Initial Redemption Date by the Annual Redemption Percentage Reduction
specified on the face hereof until the redemption price of this Note is 100% of
the principal amount hereof, together with interest accrued and unpaid hereon to
the date of redemption. Notice of redemption shall be mailed to the registered
holders of the Notes designated for redemption at their addresses as the same
shall appear on the Note register not less than 30 nor more than 60 calendar
days prior to the date fixed for redemption or within the Redemption Notice
Period specified on the face hereof, subject to all the conditions and
provisions of the Senior Indenture. In the event of redemption of this Note in
part only, a new Note or Notes for the amount of the unredeemed portion hereof
shall be issued in the name of the holder hereof upon the cancellation hereof.

     If so indicated on the face of this Note, this Note will be subject to
repayment at the option of the holder on the Optional Repayment Date or Dates
specified on the face hereof on the terms set forth herein. On any Optional
Repayment Date, this Note will be repayable in whole or in part in increments of
$1,000 or, if this Note is denominated in a Specified Currency other than U.S.
dollars, in increments of 1,000 units of such Specified Currency (provided that
any remaining principal amount hereof shall not be less than the minimum
authorized denomination hereof) at the option of the holder hereof at a price
equal to 100% of the principal amount to be repaid, together with interest
accrued and unpaid hereon to the date of repayment, provided that


                                       27
<PAGE>


if this Note is issued with original issue discount, this Note will be repayable
on the applicable Optional Repayment Date or Dates at the price(s) specified on
the face hereof. For this Note to be repaid at the option of the holder hereof,
the Paying Agent must receive at its corporate trust office in the Borough of
Manhattan, The City of New York, at least 15 but not more than 30 calendar days
prior to the date of repayment, (i) this Note with the form entitled "Option to
Elect Repayment" below duly completed or (ii) a telegram, telex, facsimile
transmission or a letter from a member of a national securities exchange or the
National Association of Securities Dealers, Inc. or a commercial bank or a trust
company in the United States setting forth the name of the holder of this Note,
the principal amount hereof, the certificate number of this Note or a
description of this Note's tenor and terms, the principal amount hereof to be
repaid, a statement that the option to elect repayment is being exercised
thereby and a guarantee that this Note, together with the form entitled "Option
to Elect Repayment" duly completed, will be received by the Paying Agent not
later than the fifth Business Day after the date of such telegram, telex,
facsimile transmission or letter; provided, that such telegram, telex, facsimile
transmission or letter shall only be effective if this Note and form duly
completed are received by the Paying Agent by such fifth Business Day. Exercise
of such repayment option by the holder hereof shall be irrevocable. In the event
of repayment of this Note in part only, a new Note or Notes for the amount of
the unpaid portion hereof shall be issued in the name of the holder hereof upon
the cancellation hereof.

     Interest payments on this Note will include interest accrued to but
excluding the Interest Payment Dates or the Maturity Date (or any earlier
redemption or repayment date), as the case may be. Unless otherwise provided on
the face hereof, interest payments for this Note will be computed and paid on
the basis of a 360-day year of twelve 30-day months.

     In the case where the Interest Payment Date or the Maturity Date (or any
redemption or repayment date) does not fall on a Business Day, payment of
interest, premium, if any, or principal otherwise payable on such date need not
be made on such date, but may be made on the next succeeding Business Day with
the same force and effect as if made on the Interest Payment Date or on the
Maturity Date (or any redemption or repayment date), and no interest on such
payment shall accrue for the period from and after the Interest Payment Date or
the Maturity Date (or any redemption or repayment date) to such next succeeding
Business Day.

     This Note and all the obligations of the Issuer hereunder are direct,
unsecured obligations of the Issuer and rank without preference or priority
among themselves and pari passu with all other existing and future unsecured and
unsubordinated indebtedness of the Issuer, subject to certain statutory
exceptions in the event of liquidation upon insolvency.

     This Note, and any Note or Notes issued upon transfer or exchange hereof,
is issuable only in fully registered form, without coupons, and, if denominated
in U.S. dollars, unless otherwise stated above, is issuable only in
denominations of U.S. $1,000 and any integral multiple of U.S. $1,000 in excess
thereof. If this Note is denominated in a Specified Currency other than U.S.
dollars, then, unless a higher minimum denomination is required by applicable
law, it is issuable only in denominations of the equivalent of U.S. $1,000
(rounded to an integral multiple of 1,000 units of such Specified Currency), or
any amount in excess thereof which is an integral multiple of 1,000 units of
such Specified Currency, as determined by reference to the noon dollar buying
rate in The City of New York for cable transfers of such Specified Currency


                                       28
<PAGE>


published by the Federal Reserve Bank of New York (the "Market Exchange Rate")
on the Business Day immediately preceding the date of issuance.

     The Trustee has been appointed registrar for the Notes, and the Trustee
will maintain at its office in The City of New York a register for the
registration and transfer of Notes. This Note may be transferred at the
aforesaid office of the Trustee by surrendering this Note for cancellation,
accompanied by a written instrument of transfer in form satisfactory to the
Issuer and the Trustee and duly executed by the registered holder hereof in
person or by the holder's attorney duly authorized in writing, and thereupon the
Trustee shall issue in the name of the transferee or transferees, in exchange
herefor, a new Note or Notes having identical terms and provisions and having a
like aggregate principal amount in authorized denominations, subject to the
terms and conditions set forth herein; provided, however, that the Trustee will
not be required (i) to register the transfer of or exchange any Note that has
been called for redemption in whole or in part, except the unredeemed portion of
Notes being redeemed in part, (ii) to register the transfer of or exchange any
Note if the holder thereof has exercised his right, if any, to require the
Issuer to repurchase such Note in whole or in part, except the portion of such
Note not required to be repurchased, or (iii) to register the transfer of or
exchange Notes to the extent and during the period so provided in the Senior
Indenture with respect to the redemption of Notes. Notes are exchangeable at
said office for other Notes of other authorized denominations of equal aggregate
principal amount having identical terms and provisions. All such exchanges and
transfers of Notes will be free of charge, but the Issuer may require payment of
a sum sufficient to cover any tax or other governmental charge in connection
therewith. All Notes surrendered for exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Issuer and the Trustee and
executed by the registered holder in person or by the holder's attorney duly
authorized in writing. The date of registration of any Note delivered upon any
exchange or transfer of Notes shall be such that no gain or loss of interest
results from such exchange or transfer.

     In case this Note shall at any time become mutilated, defaced or be
destroyed, lost or stolen and this Note or evidence of the loss, theft or
destruction thereof (together with the indemnity hereinafter referred to and
such other documents or proof as may be required in the premises) shall be
delivered to the Trustee, the Issuer in its discretion may execute a new Note of
like tenor in exchange for this Note, but, if this Note is destroyed, lost or
stolen, only upon receipt of evidence satisfactory to the Trustee and the Issuer
that this Note was destroyed or lost or stolen and, if required, upon receipt
also of indemnity satisfactory to each of them. All expenses and reasonable
charges associated with procuring such indemnity and with the preparation,
authentication and delivery of a new Note shall be borne by the owner of the
Note mutilated, defaced, destroyed, lost or stolen.

     The Senior Indenture provides that (a) if an Event of Default (as defined
in the Senior Indenture) due to the default in payment of principal of, premium,
if any, or interest on, any series of debt securities issued under the Senior
Indenture, including the series of Senior Medium-Term Notes of which this Note
forms a part, or due to the default in the performance or breach of any other
covenant or warranty of the Issuer applicable to the debt securities of such
series but not applicable to all outstanding debt securities issued under the
Senior Indenture shall have occurred and be continuing, either the Trustee or
the holders of not less than 25% in


                                       29
<PAGE>


aggregate principal amount of the outstanding debt securities of each affected
series, voting as one class, by notice in writing to the Issuer and to the
Trustee, if given by the securityholders, may then declare the principal of all
debt securities of all such series and interest accrued thereon to be due and
payable immediately and (b) if an Event of Default due to a default in the
performance of any other of the covenants or agreements in the Senior Indenture
applicable to all outstanding debt securities issued thereunder, including this
Note, or due to certain events of bankruptcy, insolvency or reorganization of
the Issuer, shall have occurred and be continuing, either the Trustee or the
holders of not less than 25% in aggregate principal amount of all outstanding
debt securities issued under the Senior Indenture, voting as one class, by
notice in writing to the Issuer and to the Trustee, if given by the
securityholders, may declare the principal of all such debt securities and
interest accrued thereon to be due and payable immediately, but upon certain
conditions such declarations may be annulled and past defaults may be waived
(except a continuing default in payment of principal or premium, if any, or
interest on such debt securities) by the holders of a majority in aggregate
principal amount of the debt securities of all affected series then outstanding.

     If the face hereof indicates that this Note is subject to "Modified Payment
upon Acceleration or Redemption," then (i) if the principal hereof is declared
to be due and payable as described in the preceding paragraph, the amount of
principal due and payable with respect to this Note shall be limited to the
aggregate principal amount hereof multiplied by the sum of the Issue Price
specified on the face hereof (expressed as a percentage of the aggregate
principal amount) plus the original issue discount amortized from the Interest
Accrual Date to the date of declaration, which amortization shall be calculated
using the "interest method" (computed in accordance with generally accepted
accounting principles in effect on the date of declaration), (ii) for the
purpose of any vote of securityholders taken pursuant to the Senior Indenture
prior to the acceleration of payment of this Note, the principal amount hereof
shall equal the amount that would be due and payable hereon, calculated as set
forth in clause (i) above, if this Note were declared to be due and payable on
the date of any such vote and (iii) for the purpose of any vote of
securityholders taken pursuant to the Senior Indenture following the
acceleration of payment of this Note, the principal amount hereof shall equal
the amount of principal due and payable with respect to this Note, calculated as
set forth in clause (i) above.

     If the face hereof indicates that this Note is subject to "Tax Redemption
and Payment of Additional Amounts," this Note may be redeemed, as a whole, at
the option of the Issuer at any time prior to maturity, upon the giving of a
notice of redemption as described below, at a redemption price equal to 100% of
the principal amount hereof, together with accrued interest to the date fixed
for redemption (except that if this Note is subject to "Modified Payment upon
Acceleration or Redemption," such redemption price would be limited to the
aggregate principal amount hereof multiplied by the sum of the Issue Price
specified on the face hereof (expressed as a percentage of the aggregate
principal amount) plus the original issue discount amortized from the Interest
Accrual Date to the date of redemption, which amortization shall be calculated
using the "interest method" (computed in accordance with generally accepted
accounting principles in effect on the date of redemption) (the "Amortized
Amount")), if the Issuer determines that, as a result of any change in or
amendment to the laws, or any regulations or rulings promulgated thereunder, of
the United States or of any political subdivision or taxing authority thereof or
therein affecting taxation, or any change in official position regarding the
application or


                                       30
<PAGE>


interpretation of such laws, regulations or rulings, which change or amendment
becomes effective on or after the Initial Offering Date hereof, the Issuer has
or will become obligated to pay Additional Amounts, as defined below, with
respect to this Note as described below. Prior to the giving of any notice of
redemption pursuant to this paragraph, the Issuer shall deliver to the Trustee
(i) a certificate stating that the Issuer is entitled to effect such redemption
and setting forth a statement of facts showing that the conditions precedent to
the right of the Issuer to so redeem have occurred, and (ii) an opinion of
independent legal counsel satisfactory to the Trustee to such effect based on
such statement of facts; provided that no such notice of redemption shall be
given earlier than 60 calendar days prior to the earliest date on which the
Issuer would be obligated to pay such Additional Amounts if a payment in respect
of this Note were then due.

     Notice of redemption will be given not less than 30 nor more than 60
calendar days prior to the date fixed for redemption or within the Redemption
Notice Period specified on the face hereof, which date and the applicable
redemption price will be specified in the notice.

     If the face hereof indicates that this Note is subject to "Tax Redemption
and Payment of Additional Amounts," the Issuer will, subject to certain
exceptions and limitations set forth below, pay such additional amounts (the
"Additional Amounts") to the holder of this Note who is a United States Alien as
may be necessary in order that every net payment of the principal of and
interest on this Note and any other amounts payable on this Note, after
withholding or deduction for or on account of any present or future tax,
assessment or governmental charge imposed upon or as a result of such payment by
the United States, or any political subdivision or taxing authority thereof or
therein, will not be less than the amount provided for in this Note to be then
due and payable. The Issuer will not, however, make any payment of Additional
Amounts to any such holder who is a United States Alien for or on account of:

          (a) any present or future tax, assessment or other governmental charge
     that would not have been so imposed but for (i) the existence of any
     present or former connection between such holder, or between a fiduciary,
     settlor, beneficiary, member or shareholder of such holder, if such holder
     is an estate, a trust, a partnership or a corporation for United States
     federal income tax purposes, and the United States, including, without
     limitation, such holder, or such fiduciary, settlor, beneficiary, member or
     shareholder, being or having been a citizen or resident thereof or being or
     having been engaged in a trade or business or present therein or having, or
     having had, a permanent establishment therein or (ii) the presentation by
     or on behalf of the holder of this Note for payment on a date more than 15
     calendar days after the date on which such payment became due and payable
     or the date on which payment thereof is duly provided for, whichever occurs
     later;

          (b) any estate, inheritance, gift, sales, transfer, excise or personal
     property tax or any similar tax, assessment or governmental charge;

          (c) any tax, assessment or other governmental charge imposed by reason
     of such holder's past or present status as a personal holding company or
     foreign personal holding company or controlled foreign corporation or
     passive foreign investment company with respect to the United States or as
     a corporation which accumulates earnings to avoid United States federal
     income tax or as a private foundation or other tax-exempt organization or a


                                       31
<PAGE>


     bank receiving interest under Section 881(c)(3)(A) of the Internal Revenue
     Code of 1986, as amended;

          (d) any tax, assessment or other governmental charge that is payable
     otherwise than by withholding or deduction from payments on or in respect
     of this Note;

          (e) any tax, assessment or other governmental charge required to be
     withheld by any Paying Agent from any payment of principal of, or interest
     on, this Note, if such payment can be made without such withholding by any
     other Paying Agent in a city in Western Europe;

          (f) any tax, assessment or other governmental charge that would not
     have been imposed but for the failure to comply with certification,
     information or other reporting requirements concerning the nationality,
     residence or identity of the holder or beneficial owner of this Note, if
     such compliance is required by statute or by regulation of the United
     States or of any political subdivision or taxing authority thereof or
     therein as a precondition to relief or exemption from such tax, assessment
     or other governmental charge;

          (g) any tax, assessment or other governmental charge imposed by reason
     of such holder's past or present status as the actual or constructive owner
     of 10% or more of the total combined voting power of all classes of stock
     entitled to vote of the Issuer or as a direct or indirect subsidiary of the
     Issuer; or

          (h) any combination of items (a), (b), (c), (d), (e), (f) or (g).

In addition, the Issuer shall not be required to make any payment of Additional
Amounts (i) to any such holder where such withholding or deduction is imposed on
a payment to an individual and is required to be made pursuant to any law
implementing or complying with, or introduced in order to conform to, any
European Union Directive on the taxation of savings; or (ii) by or on behalf of
a holder who would have been able to avoid such withholding or deduction by
presenting this Note or the relevant coupon to another Paying Agent in a member
state of the European Union. Nor shall the Issuer pay Additional Amounts with
respect to any payment on this Note to a United States Alien who is a fiduciary
or partnership or other than the sole beneficial owner of such payment to the
extent such payment would be required by the laws of the United States (or any
political subdivision thereof) to be included in the income, for tax purposes,
of a beneficiary or settlor with respect to such fiduciary or a member of such
partnership or a beneficial owner who would not have been entitled to the
Additional Amounts had such beneficiary, settlor, member or beneficial owner
been the holder of this Note.

     The Senior Indenture permits the Issuer and the Trustee, with the consent
of the holders of not less than a majority in aggregate principal amount of the
debt securities of all series issued under the Senior Indenture then outstanding
and affected (voting as one class), to execute supplemental indentures adding
any provisions to or changing in any manner the rights of the holders of each
series so affected; provided that the Issuer and the Trustee may not, without
the consent of the holder of each outstanding debt security affected thereby,
(a) extend the final maturity of any such debt security, or reduce the principal
amount thereof, or reduce the rate or extend the time of payment of interest
thereon, or reduce any amount payable on redemption thereof, or change the
currency of payment thereof, or modify or amend the provisions for


                                       32
<PAGE>


conversion of any currency into any other currency, or modify or amend the
provisions for conversion or exchange of the debt security for securities of the
Issuer or other entities or for other property or the cash value of the property
(other than as provided in the antidilution provisions or other similar
adjustment provisions of the debt securities or otherwise in accordance with the
terms thereof), or impair or affect the rights of any holder to institute suit
for the payment thereof or (b) reduce the aforesaid percentage in principal
amount of debt securities the consent of the holders of which is required for
any such supplemental indenture.

     Except as set forth below, if the principal of, premium, if any, or
interest on this Note is payable in a Specified Currency other than U.S. dollars
and such Specified Currency is not available to the Issuer for making payments
hereon due to the imposition of exchange controls or other circumstances beyond
the control of the Issuer or is no longer used by the government of the country
issuing such currency or for the settlement of transactions by public
institutions within the international banking community, then the Issuer will be
entitled to satisfy its obligations to the holder of this Note by making such
payments in U.S. dollars on the basis of the Market Exchange Rate on the date of
such payment or, if the Market Exchange Rate is not available on such date, as
of the most recent practicable date; provided, however, that if the euro has
been substituted for such Specified Currency, the Issuer may at its option (or
shall, if so required by applicable law) without the consent of the holder of
this Note effect the payment of principal of, premium, if any, or interest on,
any Note denominated in such Specified Currency in euro in lieu of such
Specified Currency in conformity with legally applicable measures taken pursuant
to, or by virtue of, the Treaty establishing the European Community, as amended.
Any payment made under such circumstances in U.S. dollars or euro where the
required payment is in an unavailable Specified Currency will not constitute an
Event of Default. If such Market Exchange Rate is not then available to the
Issuer or is not published for a particular Specified Currency, the Market
Exchange Rate will be based on the highest bid quotation in The City of New York
received by the Exchange Rate Agent at approximately 11:00 a.m., New York City
time, on the second Business Day preceding the date of such payment from three
recognized foreign exchange dealers (the "Exchange Dealers") for the purchase by
the quoting Exchange Dealer of the Specified Currency for U.S. dollars for
settlement on the payment date, in the aggregate amount of the Specified
Currency payable to those holders or beneficial owners of Notes and at which the
applicable Exchange Dealer commits to execute a contract. One of the Exchange
Dealers providing quotations may be the Exchange Rate Agent unless the Exchange
Rate Agent is an affiliate of the Issuer. If those bid quotations are not
available, the Exchange Rate Agent shall determine the market exchange rate at
its sole discretion.

     The "Exchange Rate Agent" shall be Morgan Stanley & Co. Incorporated,
unless otherwise indicated on the face hereof.

     All determinations referred to above made by, or on behalf of, the Issuer
or by, or on behalf of, the Exchange Rate Agent shall be at such entity's sole
discretion and shall, in the absence of manifest error, be conclusive for all
purposes and binding on holders of Notes and coupons.

     So long as this Note shall be outstanding, the Issuer will cause to be
maintained an office or agency for the payment of the principal of and premium,
if any, and interest on this Note as herein provided in the Borough of
Manhattan, The City of New York, and an office or agency in


                                       33
<PAGE>


said Borough of Manhattan for the registration, transfer and exchange as
aforesaid of the Notes. The Issuer may designate other agencies for the payment
of said principal, premium and interest at such place or places (subject to
applicable laws and regulations) as the Issuer may decide. So long as there
shall be such an agency, the Issuer shall keep the Trustee advised of the names
and locations of such agencies, if any are so designated. If any European Union
Directive on the taxation of savings comes into force, the Issuer will, to the
extent possible as a matter of law, maintain a Paying Agent in a member state of
the European Union that will not be obligated to withhold or deduct tax pursuant
to any such Directive or any law implementing or complying with, or introduced
in order to conform to, such Directive.

     With respect to moneys paid by the Issuer and held by the Trustee or any
Paying Agent for payment of the principal of or interest or premium, if any, on
any Notes that remain unclaimed at the end of two years after such principal,
interest or premium shall have become due and payable (whether at maturity or
upon call for redemption or otherwise), (i) the Trustee or such Paying Agent
shall notify the holders of such Notes that such moneys shall be repaid to the
Issuer and any person claiming such moneys shall thereafter look only to the
Issuer for payment thereof and (ii) such moneys shall be so repaid to the
Issuer. Upon such repayment all liability of the Trustee or such Paying Agent
with respect to such moneys shall thereupon cease, without, however, limiting in
any way any obligation that the Issuer may have to pay the principal of or
interest or premium, if any, on this Note as the same shall become due.

     No provision of this Note or of the Senior Indenture shall alter or impair
the obligation of the Issuer, which is absolute and unconditional, to pay the
principal of, premium, if any, and interest on this Note at the time, place, and
rate, and in the coin or currency, herein prescribed unless otherwise agreed
between the Issuer and the registered holder of this Note.

     Prior to due presentment of this Note for registration of transfer, the
Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the
holder in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and none of the Issuer, the
Trustee or any such agent shall be affected by notice to the contrary.

     No recourse shall be had for the payment of the principal of, premium, if
any, or the interest on this Note, for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Senior Indenture or any
indenture supplemental thereto, against any incorporator, shareholder, officer
or director, as such, past, present or future, of the Issuer or of any successor
corporation, either directly or through the Issuer or any successor corporation,
whether by virtue of any constitution, statute or rule of law or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.

     This Note shall for all purposes be governed by, and construed in
accordance with, the laws of the State of New York.

     As used herein, the term "United States Alien" means any person who is, for
United States federal income tax purposes, (i) a nonresident alien individual,
(ii) a foreign corporation, (iii) a nonresident alien fiduciary of a foreign
estate or trust or (iv) a foreign partnership one or


                                       34
<PAGE>


more of the members of which is, for United States federal income tax purposes,
a nonresident alien individual, a foreign corporation or a nonresident alien
fiduciary of a foreign estate or trust.

     All terms used in this Note which are defined in the Senior Indenture and
not otherwise defined herein shall have the meanings assigned to them in the
Senior Indenture.


                                       35
<PAGE>


                                  ABBREVIATIONS

     The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

              TEN COM  -  as tenants in common
              TEN ENT  -  as tenants by the entireties
              JT TEN   -  as joint tenants with right of survivorship and not as
                          tenants in common


     UNIF GIFT MIN ACT -                              Custodian
                          ---------------------------           ----------------
                                    (Minor)                           (Cust)

     Under Uniform Gifts to Minors Act
                                       -----------------------------------------
                                                      (State)

     Additional abbreviations may also be used though not in the above list.


                           -------------------------


                                       36
<PAGE>


     FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto


----------------------------------------
[PLEASE INSERT SOCIAL SECURITY OR OTHER
     IDENTIFYING NUMBER OF ASSIGNEE]

--------------------------------------------------------------------------------


--------------------------------------------------------------------------------


--------------------------------------------------------------------------------
    [PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE]

the within Note and all rights thereunder, hereby irrevocably constituting and
appointing such person attorney to transfer such note on the books of the
Issuer, with full power of substitution in the premises.

Dated:
      ------------------

NOTICE:    The signature to this assignment must correspond with the name as
           written upon the face of the within Note in every particular without
           alteration or enlargement or any change whatsoever.


                                       37
<PAGE>


                            OPTION TO ELECT REPAYMENT

     The undersigned hereby irrevocably requests and instructs the Issuer to
repay the within Note (or portion thereof specified below) pursuant to its terms
at a price equal to the principal amount thereof, together with interest to the
Optional Repayment Date, to the undersigned at



--------------------------------------------------------------------------------


--------------------------------------------------------------------------------


--------------------------------------------------------------------------------
         (Please print or typewrite name and address of the undersigned)


     If less than the entire principal amount of the within Note is to be
repaid, specify the portion thereof which the holder elects to have repaid:
______________________; and specify the denomination or denominations (which
shall not be less than the minimum authorized denomination) of the Notes to be
issued to the holder for the portion of the within Note not being repaid (in the
absence of any such specification, one such Note shall be issued for the portion
not being repaid): __________________.


Dated:
       ----------------------------------   ------------------------------------
                                            NOTICE: The signature on this Option
                                            to Elect Repayment must correspond
                                            with the name as written upon the
                                            face of the within instrument in
                                            every particular without alteration
                                            or enlargement.






                                       38