Document:

AGREEMENT

This agreement is between Higher Education Services, LLC (HES) and Western
Institute of Science and Health (WISH).

Whereas. HES is desirous to develop a degree distance education program to be
offered Over the internet in allied health, and

Whereas, WISH is a degree granting institution, licensed in the slate of
California and accredited by Accrediting Bureau for Health Education Schools,
and offers residential programs b allied health and is desirous to offer online
distance Education programs,

Therefore, these two institutions have agreed to work together to develop such
programs for HES

The activity will take place during the period from July 1, 2002 through June
30, 2003.

WISH shall be responsible for developing the courses selected mutually, placing
the courses on the internet, providing an electronic platform, having the
courses approved and accredited, teaching the courses to five students, and
making changes, revisions, deletions, and additions to the program as needed

HES will pay WISH a monthly fee of $40,000 during the months of July, 2003 to
May. 2004, and a payment of $14,803.68 in the month of June. In addition, HES
will reimburse WISH for certain expenses related to the development aspect as
mutually accepted.

This agreement may be canceled by granting either party thirty days written
notice. The agreement may also be extended beyond the June 30, 2003 date if so
desired by the individual parties.

APPROVED FOR WESTERN INSTITUTE OF SCIENCE AND HEALTH

  /s/                                   /s/
---------------------------------     ------------------------------------------
Charles Newman, CEO                   David H- Weaver- CFO

APPROVED HIGHER EDUCATION SERVICES, LLC

  /s/
---------------------------------
Charles Newman, Managing MemberFORM 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 F
                                  (Fixed Rate)

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

                        10% SPARQS(R) DUE APRIL 15, 2006
                            MANDATORILY EXCHANGEABLE
                          FOR SHARES OF COMMON STOCK OF
                              APPLE COMPUTER, INC.

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

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

Maturity Date...................   April 15, 2006, subject to acceleration as
                                   described below in "Price Event Acceleration"
                                   and "Alternate

                                      A-2
<PAGE>

                                   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..........   July 15, 2005, October 15, 2005, January 15,
                                   2006 and the Maturity Date.

                                   If the scheduled Maturity Date is postponed
                                   due to a Market Disruption Event or
                                   otherwise, the Issuer shall pay interest on
                                   the Maturity Date as postponed rather than on
                                   April 15, 2006, but no interest will accrue
                                   on this SPARQS or on such payment during the
                                   period from or after the scheduled Maturity
                                   Date.

                                      A-3
<PAGE>

Record Date.....................   Notwithstanding the definition of "Record
                                   Date" on page 23 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
                                   September , 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 (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

                                       A-4
<PAGE>

                                   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.

                                   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

                                      A-5
<PAGE>

                                   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..........   April 5, 2006; provided that if April 5, 2006
                                   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 September ,
                                   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 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.

                                      A-6
<PAGE>

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 Apple Computer, Inc.
                                   ("Apple Stock") at the Exchange Ratio, and
                                   the Issuer shall deliver with respect to each
                                   $        principal amount of this SPARQS an
                                   amount of Apple Stock equal to the Exchange
                                   Ratio.

                                   The amount of Apple 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 Apple 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 Apple 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 Apple Stock (or of any other
                                   securities included in Exchange Property, if
                                   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

                                      A-7
<PAGE>

                                   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
                                   Apple 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 Apple Stock (or any Exchange Property) and
                                   cash in respect of interest and any
                                   fractional share of Apple 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 Outstanding under, and as
                                   defined in, the Senior Indenture, except with
                                   respect to the holder's right to receive the
                                   Apple Stock (and, if applicable, any Exchange
                                   Property) and any cash in respect of interest
                                   and any fractional share of Apple Stock (or
                                   any

                                      A-8
<PAGE>

                                   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 Apple 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 Apple 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 Apple Stock due
                                   with respect to this SPARQS, as described
                                   above, but the Issuer shall pay cash in lieu
                                   of delivering any fractional share of Apple
                                   Stock in an amount equal to the corresponding
                                   fractional Closing Price of such fraction of
                                   a share of Apple Stock as determined by the
                                   Calculation Agent as of the second scheduled
                                   Trading Day prior to maturity of this SPARQS.

                                      A-9
<PAGE>

Exchange Ratio..................   1.0, subject to adjustment for corporate
                                   events relating to Apple Computer, Inc.
                                   ("Apple") described under "Antidilution
                                   Adjustments" below.

Closing Price...................   The Closing Price for one share of Apple
                                   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 Apple 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 Apple Stock (or
                                      any such other security) is listed or
                                      admitted to trading,

                                   o  if Apple 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 Apple 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 Apple 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 official
                                   closing price, as applicable, is not
                                   available pursuant to the preceding sentence,
                                   then the Closing Price for one share of Apple
                                   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

                                      A-10
<PAGE>

                                   Market Disruption Event (as defined below) or
                                   otherwise, the last reported sale price or
                                   Nasdaq official closing price, as applicable,
                                   for Apple 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 Apple 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 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

                                      A-11
<PAGE>

                                   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 Apple 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 Apple
                                   Stock.

                                   2. If Apple Stock is subject (i) to a stock
                                   dividend (issuance of additional shares of
                                   Apple Stock) that is given ratably to all
                                   holders of shares of Apple Stock or (ii) to a
                                   distribution of Apple Stock as a result of
                                   the triggering of any provision of the
                                   corporate charter of Apple, then once the
                                   dividend has become effective and Apple 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 Apple
                                   Stock and (ii) the prior Exchange Ratio.

                                   3. If Apple issues rights or warrants to all
                                   holders of Apple Stock to subscribe for or
                                   purchase Apple Stock at an exercise price per
                                   share less than the Closing Price of Apple
                                   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 shares of
                                   Apple Stock outstanding immediately prior to
                                   the issuance of such rights or warrants plus
                                   the number of additional shares of Apple
                                   Stock offered for subscription or purchase
                                   pursuant to such rights or warrants and the
                                   denominator of which shall be the number of
                                   shares of Apple Stock outstanding immediately
                                   prior to the issuance of such rights or
                                   warrants plus the number of additional shares
                                   of Apple Stock which the aggregate offering
                                   price of the total number of shares of Apple
                                   Stock so offered for subscription or purchase
                                   pursuant to such rights or warrants would
                                   purchase at the

                                      A-12
<PAGE>

                                   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
                                   Apple 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
                                   Apple Stock of any cash dividend or special
                                   dividend or distribution that is identified
                                   by Apple 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 Apple as
                                   an extraordinary or special dividend or
                                   distribution) distributed per share of Apple
                                   Stock over the immediately preceding cash
                                   dividend or other cash distribution, if any,
                                   per share of Apple 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 Apple
                                   Stock on the Trading Day preceding the
                                   "ex-dividend date" (that is, the day on and
                                   after which transactions in Apple 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
                                   dividend or distribution per share of Apple
                                   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 Apple Stock includes an
                                   Extraordinary Dividend, the Exchange Ratio
                                   with respect to Apple 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

                                      A-13
<PAGE>

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

                                      A-14
<PAGE>

                                   date for the distribution of such spinoff
                                   stock) shall be determined in accordance with
                                   the following:

                                      (a) if Apple Stock continues to be
                                      outstanding, Apple 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 Apple Stock, the number of shares of
                                      the New Stock received with respect to one
                                      share of Apple Stock multiplied by the
                                      Exchange Ratio for Apple 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 Apple Stock, as determined
                                         by the Calculation Agent in its sole
                                         discretion on the effective date of
                                         such Reorganization Event (the
                                         "Non-Stock Exchange Property Value"),
                                         by holders of Apple Stock is less than
                                         25% of the Closing Price of Apple Stock
                                         on the Trading Day immediately prior to
                                         the effective date of such
                                         Reorganization Event, a number of
                                         shares of Apple 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 Apple
                                         Stock and any such New Stock, and with
                                         an aggregate value equal to the
                                         Non-Stock

                                      A-15
<PAGE>

                                         Exchange Property Value multiplied by
                                         the Exchange Ratio in effect for Apple
                                         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 Apple
                                         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 Apple Stock on the
                                         Trading Day immediately prior to the
                                         effective date relating to such
                                         Reorganization Event or, if Apple 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 Apple 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 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 Apple; 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

                                      A-16
<PAGE>

                                         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
                                         Apple. 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 Apple
                                         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, Apple Stock at the
                                          Exchange Ratio then in effect; and

                                      (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.

                                      A-17
<PAGE>

                                   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
                                   "Apple 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 "Apple
                                   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 Apple 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 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.

                                      A-18
<PAGE>

                                   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
                                   paragraph 5 above, upon written request by
                                   the holder of this SPARQS.

Market Disruption Event.........   Market Disruption Event means, with respect
                                   to Apple Stock:

                                      (i) a suspension, absence or material
                                      limitation of trading of Apple Stock on
                                      the primary market for Apple 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 Apple Stock as a
                                      result of which the reported trading

                                      A-19
<PAGE>

                                      prices for Apple 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
                                      Apple 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 April 15, 2006, Mandatorily
                                      Exchangeable for Shares of Common Stock of
                                      Apple Computer, Inc.

                                   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
                                   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 Apple 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 Apple Stock and (5) a suspension,

                                      A-20
<PAGE>

                                   absence or material limitation of trading on
                                   the primary securities market on which
                                   options contracts related to Apple 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 Apple 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.

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"),
                                   Apple Stock at maturity and (ii) allows the
                                   Issuer, upon

                                      A-21
<PAGE>

                                   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
                                   Apple Stock pursuant to the Terminable
                                   Forward Contract (the "Deposit"), which
                                   Deposit bears a quarterly compounded yield of
                                   % per annum.

                                      A-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 Apple 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

                                      A-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

                                      A-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.

                                      A-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, N.A.,
    as Trustee

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

                                      A-26
<PAGE>

                                     REVERSE OF SECURITY

     This Note is one of a duly authorized issue of Senior Global Medium-Term
Notes, Series F, having maturities more than nine months from the date of issue
(the "Notes") of the Issuer. The Notes are issuable under a Senior Indenture,
dated as of November 1, 2004, between the Issuer and JPMorgan Chase Bank, N.A.
(formerly known as JPMorgan Chase 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, N.A. 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

                                      A-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

                                      A-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

                                      A-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

                                      A-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

                                      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

                                      A-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

                                      A-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

                                      A-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.

                                      A-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.

                                   ----------

                                      A-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.

                                      A-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.

                                      A-38

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00081-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00081-of-00352.parquet"}]]