Document:

EXHIBIT 4.1

                             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.

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

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

                       7% SPARQS(R) DUE JANUARY 30, 2005
                            MANDATORILY EXCHANGEABLE
                         FOR SHARES OF COMMON STOCK OF
                              ANALOG DEVICES, INC.

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

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

Maturity Date..............  January 30, 2005, subject to acceleration as
                             described below in "Price Event Acceleration" and
                             "Alternate Exchange Calculation in Case of an
                             Event of Default"

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                             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.....

                             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 January 30, 2005, but no
                             interest will accrue on this SPARQS or on such
                             payment during the period from or after the
                             scheduled Maturity Date.

Record Date................  Notwithstanding the definition of "Record Date" on
                             page 21 hereof, the Record Date for each Interest
                             Payment Date, including the Interest Payment Date
                             scheduled to

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                             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 July   ,
                             2004 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 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

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<PAGE>

                             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 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

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<PAGE>

                             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.....  January 20, 2005; provided that if January 20,
                             2005 is not a Trading Day or if a Market
                             Disruption Event occurs on such day, the Final
                             Call Notice Date will be the immediately
                             succeeding Trading Day on which no Market
                             Disruption Event occurs.

Call Date..................  The day specified in the Issuer's notice of
                             mandatory exchange, on which the Issuer shall
                             deliver cash to the holder of this SPARQS, for
                             mandatory exchange, which day may be any scheduled
                             Trading Day on or after July   , 2004 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.

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

                             The amount of Analog Devices Stock to be delivered
                             at

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<PAGE>

                             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 Analog Devices 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 Analog Devices 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
                             Analog Devices 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
                             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

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<PAGE>

                             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 Analog
                             Devices 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 Analog
                             Devices Stock (or any Exchange Property) and cash
                             in respect of interest and any fractional share of
                             Analog Devices 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 Analog Devices Stock (and, if
                             applicable, any Exchange Property) and any cash in
                             respect of interest and any fractional share of
                             Analog Devices Stock (or any Exchange Property)
                             and any other cash due at maturity as described in
                             the preceding paragraph under this heading.

Price Event Acceleration...  If on any two consecutive Trading Days during the
                             period prior to and ending on the third Business
                             Day immediately preceding the Maturity Date, the
                             product of the Closing Price per share of Analog
                             Devices Stock and the Exchange Ratio is less than
                             $.40, 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 Analog Devices Stock
                                at the then current Exchange Ratio;

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<PAGE>

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

Exchange Ratio.............  .2, subject to adjustment for corporate events
                             relating to Analog Devices, Inc. ("Analog
                             Devices") described under "Antidilution
                             Adjustments" below.

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

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                             o if Analog Devices 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 Analog Devices Stock (or any such other
                             security) is not listed or admitted to trading on
                             any national securities exchange or 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 Analog Devices 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 Analog Devices Stock (or one unit of any
                             such other security) on any Trading Day will mean
                             the last reported sale price of the principal
                             trading session on the over-the-counter market as
                             reported on the Nasdaq National Market or the OTC
                             Bulletin Board on such day. If, because of a
                             Market Disruption Event (as defined below) or
                             otherwise, the last reported sale price or Nasdaq
                             official closing price, as applicable, for Analog
                             Devices 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 Analog
                             Devices 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.

                                      A-10
<PAGE>

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 conclusive for all purposes and binding on the
                             holder of this SPARQS and the Issuer.

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

                                  1. If Analog Devices 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 Analog Devices Stock.

                                  2. If Analog Devices Stock is subject (i) to
                             a stock dividend (issuance of additional shares of
                             Analog Devices Stock) that is given ratably to all
                             holders of shares of Analog Devices Stock or (ii)
                             to a distribution of Analog Devices Stock as a
                             result of the triggering of any provision of the
                             corporate charter of Analog Devices, then once the
                             dividend has become effective and Analog Devices
                             Stock is trading ex-dividend, the Exchange Ratio
                             shall be adjusted so that the new Exchange Ratio
                             shall

                                      A-11
<PAGE>

                             equal the prior Exchange Ratio plus the
                             product of (i) the number of shares issued with
                             respect to one share of Analog Devices Stock and
                             (ii) the prior Exchange Ratio.

                                  3. If Analog Devices issues rights or
                             warrants to all holders of Analog Devices Stock to
                             subscribe for or purchase Analog Devices Stock at
                             an exercise price per share less than the Closing
                             Price of Analog Devices 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 Analog
                             Devices Stock outstanding immediately prior to the
                             issuance of such rights or warrants plus the
                             number of additional shares of Analog Devices
                             Stock offered for subscription or purchase
                             pursuant to such rights or warrants and the
                             denominator of which shall be the number of shares
                             of Analog Devices Stock outstanding immediately
                             prior to the issuance of such rights or warrants
                             plus the number of additional shares of Analog
                             Devices Stock which the aggregate offering price
                             of the total number of shares of Analog Devices
                             Stock so offered for subscription or purchase
                             pursuant to such rights or warrants would purchase
                             at the Closing Price on the expiration date of
                             such rights or warrants, which shall be determined
                             by multiplying such total number of shares offered
                             by the exercise price of such rights or warrants
                             and dividing the product so obtained by such
                             Closing Price.

                                  4. There shall be no adjustments to the
                             Exchange Ratio to reflect cash dividends or other
                             distributions paid with respect to Analog Devices
                             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
                             Analog Devices Stock of any cash dividend or
                             special dividend or distribution that is
                             identified by Analog Devices 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
                             Analog Devices as an extraordinary or special
                             dividend or distribution) distributed per share of
                             Analog Devices Stock over the immediately
                             preceding cash dividend or

                                      A-12
<PAGE>

                             other cash distribution, if any, per share of
                             Analog Devices 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 Analog Devices Stock on the Trading Day
                             preceding the "ex-dividend date" (that is, the day
                             on and after which transactions in Analog Devices
                             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 Analog Devices 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 Analog Devices
                             Stock includes an Extraordinary Dividend, the
                             Exchange Ratio with respect to Analog Devices
                             Stock shall be adjusted on the ex- dividend date
                             so that the new Exchange Ratio shall equal the
                             product of (i) the prior Exchange Ratio and (ii) a
                             fraction, the numerator of which is the Base
                             Closing Price, and the denominator of which is the
                             amount by which the Base Closing Price exceeds the
                             Extraordinary Dividend. If any Extraordinary
                             Dividend is at least 35% of the Base Closing
                             Price, then, instead of adjusting the Exchange
                             Ratio, the amount payable upon exchange at
                             maturity shall be determined as described in
                             paragraph 5 below, and the Extraordinary Dividend
                             shall be allocated to Reference Basket Stocks in
                             accordance with the procedures for a Reference
                             Basket Event as described in clause 3(b) 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 Analog
                             Devices 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) Analog Devices Stock is
                             reclassified or changed, including, without
                             limitation, as

                                      A-13
<PAGE>

                             a result of the issuance of any tracking stock by
                             Analog Devices, (ii) Analog Devices has been
                             subject to any merger, combination or
                             consolidation and is not the surviving entity,
                             (iii) Analog Devices completes a statutory
                             exchange of securities with another corporation
                             (other than pursuant to clause (ii) above), (iv)
                             Analog Devices is liquidated, (v) Analog Devices
                             issues to all of its shareholders equity
                             securities of an issuer other than Analog Devices
                             (other than in a transaction described in clause
                             (ii), (iii) or (iv) above) (a "spinoff stock") or
                             (vi) Analog Devices 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 Analog Devices
                             Stock receive any equity security listed on a
                             national securities exchange or traded on The
                             Nasdaq National Market (a "Marketable Security"),
                             other securities or other property, assets or cash
                             (collectively "Exchange Property"), the amount
                             payable upon exchange at maturity with respect to
                             each $    principal amount of this SPARQS following
                             the effective date for such Reorganization Event
                             (or, if applicable, in the case of spinoff stock,
                             the ex-dividend date for the distribution of such
                             spinoff stock) shall be determined in accordance
                             with the following:

                             (1) if Analog Devices Stock continues to be
                             outstanding, Analog Devices 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 (3)(a)
                             below); and

                             (2) 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 Analog Devices Stock where Analog
                             Devices is not the surviving entity, the number of
                             shares of the New Stock received with respect to
                             one share of Analog Devices Stock multiplied by
                             the Exchange Ratio for Analog Devices 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

                                      A-14
<PAGE>

                             account any adjustments for distributions
                             described under clause (3)(a) below); and

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

                                (a) if the combined value of the amount of
                                Non-Stock Exchange Property received per share
                                of Analog Devices 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 Analog Devices Stock is less than
                                25% of the Closing Price of Analog Devices
                                Stock on the Trading Day immediately prior to
                                the effective date of such Reorganization
                                Event, a number of shares of Analog Devices
                                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 Analog Devices Stock
                                and any such New Stock, and with an aggregate
                                value equal to the Non-Stock Exchange Property
                                Value 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 Analog Devices Stock or any New
                                Stock determined in accordance with this clause
                                (3)(a) shall be added at the time of such
                                adjustment to the Exchange Ratio in
                                subparagraph (1) above and/or the New Stock
                                Exchange Ratio in subparagraph (2) above, as
                                applicable, or

                                (b) if the Non-Stock Exchange Property Value is
                                equal to or exceeds 25% of the Closing Price of
                                Analog Devices Stock on the Trading Day
                                immediately prior to the effective date
                                relating to such Reorganization Event or, if
                                Analog Devices 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. The "Reference Basket
                                Stocks" shall be the three stocks with the
                                largest

                                      A-15
<PAGE>

                                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 Analog
                                Devices; provided, however, that a Reference
                                Basket Stock shall not include any stock that
                                is subject to a trading restriction under the
                                trading restriction policies of Morgan Stanley
                                or any of its affiliates that would materially
                                limit the ability of Morgan Stanley or any of
                                its affiliates to hedge the SPARQS with respect
                                to such stock (a "Hedging Restriction");
                                provided further that if three Reference Basket
                                Stocks cannot be identified from the S&P 500
                                Index by primary SIC Code for which a Hedging
                                Restriction does not exist, the remaining
                                Reference Basket Stock(s) shall be selected by
                                the Calculation Agent from the largest market
                                capitalization stock(s) within the same
                                Division and Major Group classification (as
                                defined by the Office of Management and Budget)
                                as the primary SIC Code for Analog Devices.
                                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 Analog Devices
                                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:

                                (i)   if applicable, Analog Devices Stock at the
                                      Exchange Ratio then in effect; and

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

                                      A-16
<PAGE>

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

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

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

                             Following the occurrence of any Reorganization
                             Event referred to in paragraphs 4 or 5 above, (i)
                             references to "Analog Devices 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 "Analog
                             Devices 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 Analog Devices 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

                                      A-17
<PAGE>

                             notice to the Trustee at its New York office, on
                             which notice the Trustee may conclusively rely,
                             and to DTC of the occurrence of such Reference
                             Basket Event and of the three Reference Basket
                             Stocks selected as promptly as possible and in no
                             event later than five Business Days after the date
                             of the Reference Basket Event.

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

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

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

                             The Calculation Agent shall provide information as
                             to any adjustments to the Exchange Ratio or to the
                             method of calculating the amount payable upon
                             exchange at maturity of the SPARQS made pursuant
                             to paragraphs 1 through 5 above upon written
                             request by any holder of this SPARQS.

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

                                (i) a suspension, absence or material
                                limitation of trading of Analog Devices Stock
                                on the primary market for Analog Devices Stock
                                for more than two

                                      A-18
<PAGE>

                                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 Analog
                                Devices Stock as a result of which the reported
                                trading prices for Analog Devices 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 Analog Devices 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 January 30, 2005, Mandatorily
                                Exchangeable for Shares of Common Stock of
                                Analog Devices, Inc.

                             For purposes of determining whether a Market
                             Disruption Event has occurred: (i) 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, (ii) a decision to
                             permanently discontinue trading in the relevant
                             options contract shall not constitute a Market
                             Disruption Event, (iii) 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, (iv) a
                             suspension of trading in options contracts on
                             Analog Devices Stock by the primary securities
                             market trading in such options, if available, by
                             reason of (a) a price change exceeding limits set
                             by such securities exchange or market, (b) an
                             imbalance of orders relating to such contracts or
                             (c) a disparity in bid and ask quotes relating to
                             such contracts

                                      A-19
<PAGE>

                             shall constitute a suspension, absence or material
                             limitation of trading in options contracts related
                             to Analog Devices Stock and (v) a suspension,
                             absence or material limitation of trading on the
                             primary securities market on which options
                             contracts related to Analog Devices 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 Analog Devices 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"), Analog Devices Stock at

                                      A-20
<PAGE>

                             maturity and (ii) allows the Issuer, upon exercise
                             of the Morgan Stanley Call Right, to terminate the
                             Terminable Forward Contract by returning to such
                             holder the Deposit (as defined below) and paying
                             to such holder an amount of cash equal to the
                             difference between the Deposit and the Call Price
                             and (B) a deposit with the Issuer of a fixed
                             amount of cash, equal to the Issue Price per each
                             $    principal amount of this SPARQS, to secure the
                             holder's obligation to purchase Analog Devices
                             Stock pursuant to the Terminable Forward Contract
                             (the "Deposit"), which Deposit bears an annually
                             compounded yield of    % per annum.

                                      A-21
<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 Analog Devices 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 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

                                      A-22
<PAGE>

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 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.

                                      A-23
<PAGE>

     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-24
<PAGE>

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

DATED:
                                              MORGAN STANLEY

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

TRUSTEE'S CERTIFICATE
  OF AUTHENTICATION

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

JPMORGAN CHASE BANK,
  as Trustee

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

                                      A-25

<PAGE>

                              REVERSE OF SECURITY

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

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

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

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

                                      A-26
<PAGE>

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

                                      A-27
<PAGE>

     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 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

                                      A-28
<PAGE>

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 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

                                      A-29
<PAGE>

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 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;

                                      A-30
<PAGE>

          (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 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.

                                      A-31
<PAGE>

     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 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.

                                      A-32
<PAGE>

     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 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-33
<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-34
<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-35
<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 will 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-36EXHIBIT 4.1

                            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.

                                      A-1
<PAGE>

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

                   % EXCHANGEABLE NOTES DUE JANUARY 30, 2011
                       (EXCHANGEABLE FOR SHARES OF COMMON
                          STOCK OF FEDEX CORPORATION)

<TABLE>
=======================================================================================================
<S>                   <C>                         <C>                      <C>
ORIGINAL ISSUE DATE:  INITIAL REDEMPTION          INTEREST RATE:   % per   MATURITY DATE:
                        DATE: January 30,           annum
                        2005.  See also "Morgan
                        Stanley Call Right"
                        below.
-------------------------------------------------------------------------------------------------------
INTEREST ACCRUAL      INITIAL REDEMPTION          INTEREST PAYMENT         OPTIONAL
  DATE:                 PERCENTAGE: See             DATE(S):                 REPAYMENT
                        "Morgan Stanley Call                                 DATE(S): N/A
                        Right" below.
-------------------------------------------------------------------------------------------------------
SPECIFIED CURRENCY:   ANNUAL REDEMPTION           INTEREST PAYMENT         APPLICABILITY OF
  U.S. dollars          PERCENTAGE                  PERIOD: Semi-annually    MODIFIED
                        REDUCTION: N/A                                       PAYMENT UPON
                                                                             ACCELERATION:
                                                                             See "Alternate
                                                                             Exchange Calculation
                                                                             in Case of an Event
                                                                             of Default" below.
-------------------------------------------------------------------------------------------------------
IF SPECIFIED          REDEMPTION NOTICE           APPLICABILITY OF         If yes, state Issue Price:
  CURRENCY              PERIOD: See also            ANNUAL INTEREST
  OTHER THAN U.S.       "Morgan Stanley Notice      PAYMENTS: N/A
  DOLLARS, OPTION       Date" below.
  TO ELECT
  PAYMENT IN U.S.
  DOLLARS: N/A
-------------------------------------------------------------------------------------------------------
EXCHANGE RATE         TAX REDEMPTION AND                                   ORIGINAL YIELD TO
  AGENT: N/A          PAYMENT OF                                           MATURITY: N/A
                      ADDITIONAL
                      AMOUNTS: NO
-------------------------------------------------------------------------------------------------------
OTHER PROVISIONS:     IF YES, STATE INITIAL
  See below.          OFFERING DATE: N/A
=======================================================================================================
</TABLE>

Exchange Right............. On any Exchange Date, subject to a prior call of
                            this Note for cash in an amount equal to the
                            applicable Call Price (as defined below) by the
                            Issuer as described under "Morgan Stanley Call
                            Right" below, the holder of this Note shall be
                            entitled, upon the holder's

                                      A-2
<PAGE>

                            o  completion and delivery to the Issuer and the
                               Calculation Agent of an Official Notice of
                               Exchange (in the form of Annex A attached
                               hereto) prior to 11:00 a.m. (New York City time)
                               on such date; and

                            o  transfer of this Note to the Trustee on the
                               Issuer's behalf on or before the Exchange
                               Settlement Date (as defined below),

                            to exchange each $1,000 principal amount of this
                            Note for a number of shares of common stock of
                            FedEx Corporation ("FedEx Stock") at the Exchange
                            Ratio (as defined below) as of the close of
                            business on such Exchange Date, subject to any
                            adjustment (x) to the Exchange Ratio or (y)
                            resulting in other Exchange Property (as defined
                            below) being required to be delivered instead of or
                            in addition to such FedEx Stock as a result of any
                            corporate event described under "Antidilution
                            Adjustments" below, in each case, required to be
                            made prior to the close of business on such
                            Exchange Date.

                            Upon any exercise of the Exchange Right (including
                            upon the automatic exercise of the Exchange Right),
                            the holder of this Note shall not be entitled, with
                            respect to the principal amount of this Note that
                            is exchanged, to receive any cash payment
                            representing any accrued but unpaid interest on
                            this Note. Consequently, if this Note is exchanged
                            so that the Exchange Settlement Date occurs during
                            the period from the close of business on a Record
                            Date (as defined below) for the payment of interest
                            and prior to the next succeeding Interest Payment
                            Date, this Note must, as a condition to the
                            delivery of FedEx Stock, other Exchange Property or
                            cash, be accompanied by funds equal to the interest
                            payable on the succeeding Interest Payment Date on
                            the principal amount so exchanged.

                            Upon any such exchange, the Issuer may, at its sole
                            option, either deliver such shares of FedEx Stock
                            (or such other Exchange Property) or pay an amount
                            in cash for each $1,000 principal amount of this
                            Note equal to the Exchange Ratio as of the close of
                            business on such Exchange Date times the Closing
                            Price (as defined below) of FedEx Stock (or such
                            other Exchange Property) on the Exchange Date, as
                            determined by the Calculation Agent,

                                      A-3
<PAGE>

                            in lieu of such FedEx Stock (or such other Exchange
                            Property).

                            The Issuer shall, or shall cause the Calculation
                            Agent to, deliver such shares of FedEx Stock or
                            cash to the Trustee for delivery to the holder of
                            this Note on the third Business Day after any
                            Exchange Date, subject to delivery of this Note to
                            the Trustee on such day (such third Business Day,
                            or, if later, the day on which this exercised Note
                            is delivered to the Trustee, the "Exchange
                            Settlement Date"); provided, that upon the
                            automatic exercise of the Exchange Right, the
                            Exchange Settlement Date shall be the Maturity
                            Date.

                            Prior to 9:30 a.m. on the first Business Day
                            immediately succeeding any Exchange Date, including
                            upon the automatic exercise of the Exchange Right,
                            the Issuer shall cause the Calculation Agent to
                            provide written notice to the Trustee at its New
                            York office and to The Depository Trust Company, or
                            any successor depositary (the "Depositary"), on
                            which notice the Trustee and the Depositary may
                            conclusively rely, (i) of its receipt of any such
                            "Official Notice of Exchange" (which shall not be
                            required upon the automatic exercise of the
                            Exchange Right), (ii) of the Issuer's determination
                            to deliver FedEx Stock (or, if applicable, any
                            other Exchange Property to be delivered as a result
                            of any corporate event described in paragraphs 3 or
                            4 under "Antidilution Adjustments" below) or to pay
                            an equivalent amount of cash for each $1,000
                            principal amount of this Note and (iii) if FedEx
                            Stock (or, if applicable, any other Exchange
                            Property) is to be delivered, of the number of
                            shares of FedEx Stock (or the amount of such other
                            Exchange Property) to be delivered for each $1,000
                            principal amount of this Note and of the amount of
                            any cash to be paid in lieu of any fractional share
                            of FedEx Stock (or of any other securities included
                            in other Exchange Property, if applicable), or, if
                            cash is to be paid, of the amount of such cash for
                            each $1,000 principal amount of this Note.

Minimum Exchange........... The Exchange Right may only be exercised with
                            respect to aggregate principal amounts of $25,000
                            or greater, unless the principal amount of this
                            Note to be exchanged represents the entire
                            principal amount of the interest in

                                      A-4
<PAGE>

                            this Note beneficially owned by the owner causing
                            the exchange, as determined by the Calculation
                            Agent.

No Fractional Shares....... If upon any exchange or call of this Note the
                            Issuer delivers shares of FedEx Stock (and, if
                            applicable, any other stock or other securities),
                            the Issuer shall pay cash in lieu of delivering any
                            fractional share of FedEx Stock (and, if
                            applicable, of any other stock or securities) in an
                            amount equal to the corresponding fractional
                            Closing Price of FedEx Stock (and, if applicable,
                            any such other stock or other securities) as
                            determined by the Calculation Agent on the
                            applicable Exchange Date or on the second Trading
                            Day immediately preceding the Call Date (as defined
                            below).

Exchange Ratio.............             , subject to adjustment for certain
                            corporate events relating to FedEx Corporation
                            ("FedEx") described under "Antidilution
                            Adjustments" below.

Exchange Date.............. Any Trading Day on which a holder of this Note has
                            duly completed and delivered to the Issuer and the
                            Calculation Agent, as described under "Exchange
                            Right" above, through the Depositary an official
                            notice of exchange prior to 11:00 a.m., or if the
                            Issuer receives it after 11:00 a.m., the next
                            Trading Day; provided that such Trading Day falls
                            during the period beginning March 1, 2004 and
                            ending on the Trading Day prior to the earliest of
                            (i) the fifth scheduled Trading Day prior to the
                            Maturity Date, (ii) the fifth scheduled Trading Day
                            prior to the Call Date and (iii) in the event of a
                            call for the applicable cash Call Price as
                            described under "Morgan Stanley Call Right" below,
                            the Morgan Stanley Notice Date.

Automatic Exercise of
Exchange Right at Maturity. Notwithstanding the procedures described under
                            "Exchange Right" above and subject to the exercise
                            of the Morgan Stanley Call Right, if (i) Parity (as
                            defined below) on January 26, 2011 is equal to or
                            greater than $1,000 and (ii) this Note has not been
                            called on or prior to January 26, 2011, the
                            Exchange Right will be automatically exercised on
                            January 26, 2011, and such date or any other date
                            on which the Exchange Right shall be automatically
                            exercised in accordance with this paragraph shall
                            be deemed an Exchange Date, even though the holder
                            of this Note has not delivered an Official Notice
                            of Exchange in

                                      A-5
<PAGE>

                            respect of this Note or transferred this Note to
                            the Trustee; provided, that if a Market Disruption
                            Event (as defined below) occurs on January 26,
                            2011, Parity will be determined and, if applicable,
                            the Exchange Right will be automatically exercised
                            on the immediately succeeding Trading Day; provided
                            further, that if a Market Disruption Event occurs
                            on each scheduled Trading Day through and including
                            the second scheduled Trading Day prior to the
                            Maturity Date, Parity will be determined and, if
                            applicable, the Exchange Right will be
                            automatically exercised on such second scheduled
                            Trading Day prior to the Maturity Date
                            notwithstanding the occurrence of a Market
                            Disruption Event on such day. In such event, the
                            Closing Price used by the Calculation Agent to
                            calculate Parity will be determined as provided
                            under "Closing Price" below.

                            Upon automatic exercise of the Exchange Right, the
                            Trustee will deliver shares of FedEx Stock, or the
                            cash value of those shares, as described above
                            under "Exchange Right."

                            If this Note is not surrendered for exchange on or
                            before the Exchange Settlement Date relating to an
                            automatic exercise of the Exchange Right, it shall
                            be deemed to be no longer Outstanding under, and as
                            defined in, the Senior Indenture (as defined below)
                            after said Exchange Settlement Date, except with
                            respect to the holder's right to receive FedEx
                            Stock (and, if applicable, any other Exchange
                            Property) or cash due in connection with such
                            Exchange Right.

Morgan Stanley Call Right.. On or after January 30, 2005 to and including the
                            Maturity Date, the Issuer may call this Note, in
                            whole but not in part, for mandatory exchange into
                            FedEx Stock (and, if applicable, any other Exchange
                            Property) at the Exchange Ratio (with respect to
                            each $1,000 principal amount of this Note), or, at
                            the Issuer's subsequent election on the third
                            scheduled Trading Day prior to the Call Date, the
                            cash value of such shares of FedEx Stock determined
                            by the Calculation Agent based on the Closing Price
                            of FedEx Stock on the third scheduled Trading Day
                            prior to the Call Date; provided that, if Parity
                            (as defined below) on the Trading Day immediately
                            preceding the Morgan Stanley Notice Date, as
                            determined by the

                                      A-6
<PAGE>

                            Calculation Agent, is less than the Call Price (as
                            defined below) for the specified Call Date, the
                            Issuer shall pay the applicable Call Price,
                            described under "Call Price" below, in cash on the
                            Call Date.

                            Unless the Issuer has called this Note for the Call
                            Price in cash pursuant to the Morgan Stanley Call
                            Right, prior to the fifth scheduled Trading Day
                            prior to the Call Date, the holder of this Note
                            shall continue to be entitled to exchange this Note
                            and receive any amounts described under "Exchange
                            Right" above.

                            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 Note
                            by mailing notice of such exercise by first class
                            mail, postage prepaid, at 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, at its New
                            York office. 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 Note receives the notice.
                            Failure to give notice by mail, or any defect in
                            the notice to the holder of any Note shall not
                            affect the validity of the proceedings for the
                            exercise of the Morgan Stanley Call Right with
                            respect to any other Note.

                            The notice of the Issuer's exercise of the Morgan
                            Stanley Call Right shall specify (i) the Call Date
                            (as defined below), (ii) whether Parity on the
                            Trading Day immediately prior to the Morgan Stanley
                            Notice Date, as determined by the Calculation
                            Agent, is less than the applicable Call Price for
                            the specified Call Date so that the Issuer shall
                            pay such Call Price in cash on the Call Date, (iii)
                            the place or places of payment in cash (in the
                            event of a call for the applicable Call Price) or,
                            if Parity on the Trading Day immediately prior to
                            the Morgan Stanley Notice Date, as determined by
                            the Calculation Agent, is equal to or greater than
                            the applicable Call Price, the place or places of
                            delivery of the FedEx Stock (and, if applicable, of
                            any other Exchange Property to be

                                      A-7
<PAGE>

                            delivered as a result of any corporate event
                            described in paragraphs 3 or 4 under "Antidilution
                            Adjustments" below) (and of any cash to be paid in
                            lieu of any fractional share of FedEx Stock (and,
                            if applicable, of any such other stock or
                            securities)), (iv) the number of shares of FedEx
                            Stock (and, if applicable, the quantity of any
                            other Exchange Property), if any, to be delivered
                            per $1,000 principal amount of this Note, (v) that
                            such delivery shall be made upon presentation and
                            surrender of this Note and (vi) that such exchange
                            is pursuant to the Morgan Stanley Call Right.

                            If the Issuer has exercised the Morgan Stanley Call
                            Right to exchange shares of FedEx Stock for this
                            Note and subsequently elects to deliver the cash
                            value of the shares of FedEx Stock on the Call Date
                            (determined as provided above under "Morgan Stanley
                            Call Right"), the Issuer shall give notice of its
                            election on or prior to the Trading Day immediately
                            following the third scheduled Trading Day prior to
                            the Call Date (i) to the holder of this Note by
                            mailing notice of such exercise by first class
                            mail, postage prepaid, at 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, at its New
                            York office. 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 Note receives the notice.
                            Failure to give notice by mail, or any defect in
                            the notice to the holder of any Note shall not
                            affect the validity of the proceedings for the
                            exercise of the Morgan Stanley Call Right with
                            respect to any other Note. The notice of such
                            election to pay the cash value of the shares of
                            FedEx Stock shall specify (i) the place or places
                            of payment in cash, (ii) the amount of cash to be
                            delivered per $1,000 principal amount of this Note
                            and (iii) that such delivery shall be made upon
                            presentation and surrender of this Note.

                            The notice of the Issuer's exercise of the Morgan
                            Stanley Call Right shall be given by the Issuer or,
                            at the Issuer's

                                      A-8
<PAGE>

                            request, by the Trustee in the name and at the
                            expense of the Issuer.

                            If shares of FedEx Stock (and, if applicable, any
                            other Exchange Property) are to be delivered and,
                            as a result of any corporate event described under
                            "Antidilution Adjustments" occurring during the
                            period from and including the Morgan Stanley Notice
                            Date to the close of business on the third Trading
                            Day prior to the Call Date, the Calculation Agent
                            makes any adjustment to the Exchange Ratio and
                            consequent adjustment to the number of shares of
                            FedEx Stock to be delivered or any adjustment to
                            the quantity of any other Exchange Property due to
                            the holder of this Note, the Calculation Agent
                            shall give prompt notice of any such adjustments to
                            the Trustee at its New York office and to the
                            Depositary, on which notice the Trustee and the
                            Depositary may conclusively rely. No adjustment to
                            the Exchange Ratio shall be made as a result of any
                            corporate event occurring after the close of
                            business on the third Trading Day prior to the Call
                            Date.

                            If this Note is so called for mandatory exchange by
                            the Issuer, then, unless the holder of this Note
                            subsequently exercises the Exchange Right (the
                            exercise of which shall not be available to the
                            holder of this Note following a call for cash in an
                            amount equal to the applicable Call Price), the
                            FedEx Stock (and, if applicable, any other Exchange
                            Property) or (in the event of a call for cash in an
                            amount equal to the applicable Call Price, as
                            described above, or a subsequent election by the
                            Issuer to deliver the cash value of FedEx Stock)
                            cash to be delivered to the holder of this Note
                            shall be delivered on the Call Date fixed by the
                            Issuer and set forth in its notice of its exercise
                            of the Morgan Stanley Call Right, upon delivery of
                            this Note to the Trustee. The Issuer shall, or
                            shall cause the Calculation Agent to, deliver such
                            shares of FedEx Stock or cash to the Trustee for
                            delivery to the holder of this Note.

                            Upon any call by the Issuer (as described above),
                            the holder of this Note shall not receive any
                            accrued but unpaid interest on the Note for the
                            period from and including the most recent Interest
                            Payment Date to but excluding the specified Call
                            Date.

                                      A-9
<PAGE>

                            If this Note 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 (as defined below) after the Call Date,
                            except with respect to the holder's right to
                            receive FedEx Stock (and, if applicable, any other
                            Exchange Property) or 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 30 but no more than 60 days prior to
                            the Call Date.

Call Date.................. The scheduled Trading Day on or after January 30,
                            2005 or the Maturity Date (regardless of whether
                            the Maturity Date is a scheduled Trading Day) as
                            specified by the Issuer in its notice of mandatory
                            exchange on which the Issuer shall deliver shares
                            of FedEx Stock or, at the Issuer's subsequent
                            election, the cash value of those shares, or cash
                            equal to the applicable Call Price to the holder of
                            this Note for mandatory exchange.

Parity..................... With respect to any Trading Day, an amount equal to
                            the Exchange Ratio on such Trading Day times the
                            Closing Price (as defined below) of FedEx Stock
                            (and any other Exchange Property) on such Trading
                            Day.

Call Price................. The table below sets forth the Call Price per each
                            $1,000 principal amount of this Note, in effect for
                            any Call Date or other day during each of the
                            periods presented.

<TABLE>
                                                 Call Period                            Call
                                                                                        Price
                            ------------------------------------------------------------------
<S>                                                                                     <C>
                            From January 30, 2005 to and including January 31, 2006     105%
                            From February 1, 2006 to and including January 31, 2007     104%
                            From February 1, 2007 to and including January 31, 2008     103%
                            From February 1, 2008 to and including January 31, 2009     102%
                            From February 1, 2009 to and including January 31, 2010     101%
                            From February 1, 2010 to and including January 30, 2011     101%
</TABLE>

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

                                      A-10
<PAGE>

                            o if FedEx 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 FedEx Stock (or any such other security) is
                            listed or admitted to trading,

                            o if FedEx 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 FedEx Stock (or any such other security) is
                            not listed or admitted to trading on any national
                            securities exchange or 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 FedEx 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 FedEx Stock
                            (or one unit of any such other security) on any
                            Trading Day will mean the last reported sale price
                            of the principal trading session on the
                            over-the-counter market as reported on the Nasdaq
                            National Market or the OTC Bulletin Board on such
                            day. If, because of a Market Disruption Event (as
                            defined below) or otherwise, the last reported sale
                            price or Nasdaq official closing price, as
                            applicable, for FedEx 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
                            FedEx Stock (or any such other security) obtained
                            from as many recognized dealers in such

                                      A-11
<PAGE>

                            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
                            and on which a Market Disruption Event has not
                            occurred.

Calculation Agent.......... Morgan Stanley & Co. Incorporated and its
                            successors ("MS & Co.").

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

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

                            1. If FedEx 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 FedEx Stock.

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

                                      A-12
<PAGE>

                            equal the prior Exchange Ratio plus the product of
                            (i) the number of shares issued with respect to one
                            share of FedEx Stock and (ii) the prior Exchange
                            Ratio.

                            3. There shall be no adjustments to the Exchange
                            Ratio to reflect cash dividends or other
                            distributions paid with respect to FedEx Stock
                            other than distributions described in paragraph 2
                            and clauses (i), (iv) and (v) of the first sentence
                            of paragraph 4 and Extraordinary Dividends.
                            "Extraordinary Dividend" means each of (a) the full
                            amount per share of FedEx Stock of any cash
                            dividend or special dividend or distribution that
                            is identified by FedEx 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 FedEx as an
                            extraordinary or special dividend or distribution)
                            distributed per share of FedEx Stock over the
                            immediately preceding cash dividend or other cash
                            distribution, if any, per share of FedEx 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 distribution
                            or excess portion of the dividend is more than 5%
                            of the Closing Price of FedEx Stock on the Trading
                            Day preceding the "ex-dividend date" (that is, the
                            day on and after which transactions in FedEx 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 FedEx Stock
                            (excluding Marketable Securities, as defined in
                            paragraph 4 below). Subject to the following
                            sentence, if any cash dividend or distribution of
                            such other property with respect to FedEx Stock
                            includes an Extraordinary Dividend, the Exchange
                            Ratio with respect to FedEx Stock shall be adjusted
                            on the ex-dividend date so that the new Exchange
                            Ratio shall equal the product of (i) the prior
                            Exchange Ratio and (ii) a fraction, the numerator
                            of which is the Base Closing Price, and the
                            denominator of which is the amount by which the
                            Base Closing Price exceeds the Extraordinary
                            Dividend. If any Extraordinary Dividend is at least
                            35% of the Base Closing Price, then, instead of
                            adjusting the Exchange Ratio, upon any

                                      A-13
<PAGE>

                            exchange or, if we call this Note and Parity
                            exceeds the principal amount per Note, upon our
                            call of this Note, the payment, upon such exchange
                            or call of this Note, shall be determined as
                            described in paragraph 4 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 3(b) of paragraph 4 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
                            FedEx Stock described in clause (i), (iv) or (v) of
                            the first sentence of paragraph 4 below shall cause
                            an adjustment to the Exchange Ratio pursuant only
                            to clause (i), (iv) or (v) of the first sentence of
                            paragraph 4, as applicable.

                            4. Any of the following shall constitute a
                            Reorganization Event: (i) FedEx Stock is
                            reclassified or changed, including, without
                            limitation, as a result of the issuance of any
                            tracking stock by FedEx, (ii) FedEx has been
                            subject to any merger, combination or consolidation
                            and is not the surviving entity, (iii) FedEx
                            completes a statutory exchange of securities with
                            another corporation (other than pursuant to clause
                            (ii) above), (iv) FedEx is liquidated, (v) FedEx
                            issues to all of its shareholders equity securities
                            of an issuer other than FedEx (other than in a
                            transaction described in clause (ii), (iii) or (iv)
                            above) (a "spinoff stock") or (vi) FedEx 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 FedEx
                            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"), upon any
                            exchange or upon our call of this Note for shares
                            of FedEx Stock, the payment with respect to the
                            $1,000 principal amount of each Note following the
                            effective date for such Reorganization Event (or,
                            if applicable, in the case of spinoff stock, the
                            ex-dividend date for the distribution of such
                            spinoff stock) shall be determined in accordance
                            with the following:

                                      A-14
<PAGE>

                            (1) if FedEx Stock continues to be outstanding,
                            FedEx 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 (3)(a) below); and

                            (2) 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 FedEx Stock where FedEx is not the
                            surviving entity, the number of shares of the New
                            Stock received with respect to one share of FedEx
                            Stock multiplied by the Exchange Ratio for FedEx
                            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 (3)(a) below);
                            and

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

                               (a) if the combined value of the amount of
                               Non-Stock Exchange Property received per share
                               of FedEx 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 FedEx Stock is less than 25% of the Closing
                               Price of FedEx Stock on the Trading Day
                               immediately prior to the effective date of such
                               Reorganization Event, a number of shares of
                               FedEx 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 FedEx Stock and any
                               such New Stock, and with an aggregate value
                               equal to the Non- Stock Exchange Property Value
                               multiplied by the Exchange Ratio in effect for
                               FedEx Stock on the

                                      A-15
<PAGE>

                               Trading Day immediately prior to the effective
                               date of the 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 FedEx Stock or
                               any New Stock determined in accordance with this
                               clause (3)(a) shall be added at the time of such
                               adjustment to the Exchange Ratio in subparagraph
                               (1) above and/or the New Stock Exchange Ratio in
                               subparagraph (2) above, as applicable, or

                               (b) if the Non-Stock Exchange Property Value is
                               equal to or exceeds 25% of the Closing Price of
                               FedEx Stock on the Trading Day immediately prior
                               to the effective date relating to such
                               Reorganization Event or, if FedEx 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
                               FedEx Stock on the Trading Day immediately prior
                               to the effective date of the 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 FedEx; 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 Notes 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

                                      A-16
<PAGE>

                               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 FedEx. 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 FedEx 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 3 above or any Reorganization Event
                            described in this paragraph 4, Parity on any
                            Trading Day determined by the Calculation Agent
                            upon any exchange, call or at maturity of this Note
                            with respect to the $1,000 principal amount of each
                            Note shall be an amount equal to:

                               (i)   if applicable, the Closing Price of FedEx
                                     Stock times the Exchange Ratio then in
                                     effect; and

                               (ii)  if applicable, for each New Stock, the
                                     Closing Price of such New Stock times the
                                     New Stock Exchange Ratio then in effect
                                     for such New Stock; and

                               (iii) if applicable, for each Reference Basket
                                     Stock, the Closing Price of such Reference
                                     Basket Stock times 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, as applicable, upon any exchange, call
                            or at maturity of this Note.

                            5. No adjustments to the Exchange Ratio shall be
                            required other than those specified above. The

                                      A-17
<PAGE>

                            adjustments specified above do not cover all of the
                            events that could affect the Closing Price of FedEx
                            Stock, including, without limitation, a partial
                            tender or exchange offer for FedEx Stock.

                            For purposes of paragraph 4 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 3 or 4 above, (i)
                            references to "FedEx 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 pricing supplement to "FedEx
                            Stock" shall be deemed to refer to the Exchange
                            Property into which this Note is thereafter
                            exchangeable and references to a "share" or
                            "shares" of FedEx 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 4 above
                            or similar adjustment under paragraph 3 above shall
                            be subject to the adjustments set forth in
                            paragraphs 1 through 4 hereof.

                            No adjustment to the Exchange Ratio shall be
                            required unless such adjustment would require a
                            change of at least .1% in the Exchange Ratio then
                            in effect. The Exchange Ratio resulting from any of
                            the adjustments specified above shall be rounded to
                            the nearest ten-thousandth, with five one
                            hundred-thousandths rounded upward.

                                      A-18
<PAGE>

                            The Calculation Agent shall be solely responsible
                            for the determination and calculation of any
                            adjustments to the Exchange Ratio 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 3 or 4 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 upon
                            written request by the holder of this Note.

                            If the holder of this Note exercises the Exchange
                            Right and the Issuer elects to deliver FedEx Stock
                            or if the Issuer calls this Note for FedEx Stock,
                            the Calculation Agent shall continue to make such
                            adjustments until, but not beyond, the close of
                            business on the Exchange Date or the third Trading
                            Day prior to the Call Date, as applicable.

Market Disruption Event     "Market Disruption Event" means, with respect to
                            FedEx Stock:

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

                                      A-19
<PAGE>

                               Issuer or any of its affiliates to unwind or
                               adjust all or a material portion of the hedge
                               with respect to the % Exchangeable Notes due
                               January 30, 2011 (Exchangeable for FedEx Stock).

                            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 FedEx 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 FedEx Stock
                            and (5) a suspension, absence or material
                            limitation of trading on the primary securities
                            market on which options contracts related to FedEx
                            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 this
                            Note shall have occurred and be continuing, the
                            amount declared due and payable per each $1,000
                            principal amount of this Note upon any acceleration
                            of this Note shall be determined by MS & Co., as
                            Calculation Agent, and shall be equal to the
                            principal amount of this Note plus any accrued and
                            unpaid interest at the Interest Rate to but not
                            including the date of acceleration; provided that
                            if (x) the holder of this Note has submitted an
                            Official Notice of Exchange to the Issuer in
                            accordance with the Exchange Right or (y) the
                            Issuer

                                      A-20
<PAGE>

                            has called this Note, other than a call for the
                            applicable cash Call Price, in accordance with the
                            Morgan Stanley Call Right, the amount declared due
                            and payable upon any such acceleration with respect
                            to each $1,000 principal amount of this Note (i)
                            for which such Official Notice of Exchange has been
                            duly submitted or (ii) that has been called (other
                            than a call for the applicable cash Call Price)
                            shall be an amount in cash equal to the Exchange
                            Ratio times the Closing Price of FedEx Stock (and
                            any other Exchange Property), determined by the
                            Calculation Agent as of the Exchange Date or as of
                            the date of acceleration (or if the Issuer has
                            elected to pay the cash value of such shares of
                            FedEx Stock on the Call Date, the Closing Price of
                            FedEx Stock (and any other Exchange Property) as of
                            the third scheduled Trading Day prior to the Call
                            Date), respectively, and shall not include any
                            accrued and unpaid interest thereon; provided
                            further that if the Issuer has called this Note for
                            the applicable Call Price in cash, in accordance
                            with the Morgan Stanley Call Right, the amount
                            declared due and payable upon any such acceleration
                            shall be an amount in cash per each $1,000
                            principal amount of this Note equal to such Call
                            Price and shall not include any accrued and unpaid
                            interest thereon.

                                      A-21
<PAGE>

     Morgan Stanley (formerly known as Morgan Stanley Dean Witter & Co.), 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 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 on the Maturity Date
(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 shall 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 shall 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 shall, 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) shall
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, shall 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, shall be
made by U.S. dollar check mailed to the address of the 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

                                      A-22
<PAGE>

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 shall 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 shall 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) shall 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) shall convert such payments into U.S. dollars.
In the event of such an election, payment in respect of this Note shall 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 U.S. dollars for the Specified Currency of 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 and at which the applicable
dealer commits to execute a contract. If such bid quotations are not available,
such

                                      A-23
<PAGE>

payment shall be made in the Specified Currency. All currency exchange costs
shall 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-24
<PAGE>

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

DATED:                                       MORGAN STANLEY

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

TRUSTEE'S CERTIFICATE
  OF AUTHENTICATION

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

JPMORGAN CHASE BANK,
  as Trustee

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

                                      A-25
<PAGE>

                              REVERSE OF SECURITY

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

     Unless otherwise indicated on the face hereof, this Note shall 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, shall not be
redeemable or subject to repayment at the option of the holder prior to
maturity.

     If so indicated on the face of 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 shall 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 hereof, this Note shall 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 shall 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

                                      A-26
<PAGE>

accrued and unpaid hereon to the date of repayment, provided that 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, shall 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 shall 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 shall 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

                                      A-27
<PAGE>

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 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
shall 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 shall 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 shall 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

                                      A-28
<PAGE>

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 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 and 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

                                      A-29
<PAGE>

or of any political subdivision or taxing authority thereof or therein
affecting taxation, or any change in official position regarding the
application or 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 shall 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 shall 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 shall 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 shall, 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, shall not be less than the amount provided for in this Note to be
then due and payable. The Issuer shall not, however, be required to 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 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

                                      A-30
<PAGE>

     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 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

                                      A-31
<PAGE>

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 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 shall 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 shall 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 shall 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.

                                      A-32
<PAGE>

     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 shall 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 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,

                                      A-33
<PAGE>

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 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-34
<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-35
<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-36
<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 will 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-37
<PAGE>

                                                                        ANNEX A

                          OFFICIAL NOTICE OF EXCHANGE

                                             Dated: [On or after March 1, 2004]

Morgan Stanley                             Morgan Stanley & Co. Incorporated, as
1585 Broadway                                Calculation Agent
New York, New York 10036                   1585 Broadway
                                           New York, New York 10036
                                           Fax No.: (212) 761-0674
                                           (Attn: Meghan Maloney)

Dear Sirs:

     The undersigned holder of the Global Medium-Term Notes, Series C, Senior
Fixed Rate Notes,   % Exchangeable Notes due January 30, 2011 (Exchangeable for
Shares of Common Stock of FedEx Corporation) of Morgan Stanley (CUSIP No.
617446MF3) (the "Notes") hereby irrevocably elects to exercise with respect to
the principal amount of the Notes indicated below, as of the date hereof (or,
if this letter is received after 11:00 a.m. on any Trading Day, as of the next
Trading Day), provided that such day is on or after March 1, 2004 and is no
later than the Trading Day prior to the earliest of (i) the fifth scheduled
Trading Day prior to January 30, 2011, (ii) the fifth scheduled Trading Day
prior to the Call Date and (iii) in the event of a call for the applicable cash
Call Price, the Morgan Stanley Notice Date, the Exchange Right as described in
Pricing Supplement No. 26 dated January 23, 2004 (the "Pricing Supplement") to
the Prospectus Supplement dated August 26, 2003 and the Prospectus dated August
26, 2003 related to Registration Statement No. 333-106789. Terms not defined
herein have the meanings given to such terms in the Pricing Supplement. Please
date and acknowledge receipt of this notice in the place provided below on the
date of receipt, and fax a copy to the fax number indicated, whereupon Morgan
Stanley will deliver, at its sole option, shares of common stock of FedEx
Corporation or cash on the third business day after the Exchange Date in
accordance with the terms of the Notes, as described in the Pricing Supplement.

     The undersigned certifies to you that (i) it is, or is duly authorized to
act for, the beneficial owner of the principal amount of the Notes indicated
below its signature (and attaches evidence of such ownership as provided by the
undersigned's position services department or the position services department
of the entity through which the undersigned holds its Notes), (ii) it will
cause the principal amount of Notes to be exchanged to be transferred to the
Trustee on the Exchange Settlement Date and (iii) the principal amount of Notes
to be exchanged pursuant to this notice is equal to or greater than $25,000,
unless the Notes identified for exchange hereby constitute the undersigned's
entire holding of Notes.

     If the Exchange Settlement Date for this exchange falls after a Record
Date and prior to the succeeding Interest Payment Date, the undersigned will
deliver to the Trustee on the Exchange Settlement Date an amount of cash equal
to the interest payable on the succeeding Interest Payment Date with respect to
the principal amount of Notes to be exchanged. The amount of any such cash
payment will be determined by the Calculation Agent and indicated in its
acknowledgment of this Official Notice of Exchange.

                                             Very truly yours,

                                             __________________________________
                                             [Name of Holder]

                                             By:_______________________________
                                                [Title]

                                             __________________________________
                                             [Fax No.]

                                             $_________________________________
Receipt of the above Official                Principal Amount of Notes to be
Notice of Exchange is hereby acknowledged     surrendered for exchange
MORGAN STANLEY, as Issuer
MORGAN STANLEY & CO. INCORPORATED, as Calculation Agent
By MORGAN STANLEY & CO. INCORPORATED, as Calculation Agent

By:____________________________________
   Title:

Date and time of acknowledgment __________________
Accrued interest, if any, due upon surrender of the Notes for exchange: $_______

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