Document:

-- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC
Filing

	Exhibit 4.1 
	 
	 FORM
              OF FIXED RATE SENIOR NOTE

	  
	REGISTERED 
	 	REGISTERED 

	No.
            FXR-1	 	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.

 

 MORGAN
        STANLEY

  SENIOR
  GLOBAL MEDIUM-TERM NOTE, SERIES F

  (Fixed Rate)

      STOCK
        PARTICIPATION ACCRETING 

  REDEMPTION QUARTERLY-PAY SECURITIESSM (“SPARQS”)

	 %
            SPARQS® DUE OCTOBER 20, 2007 
	 MANDATORILY
            EXCHANGEABLE 
	 FOR
            SHARES OF COMMON STOCK OF 
	 TELLABS,
            INC. 

	  ORIGINAL
          ISSUE DATE:  
	  INITIAL
          REDEMPTION DATE:
          See “Morgan Stanley
          Call Right” below.   
	  INTEREST
          RATE: % per annum  
	  MATURITY
          DATE: See “Maturity
          Date” below.  

	  INTEREST
          ACCRUAL DATE:   
	  INITIAL
          REDEMPTION PERCENTAGE:
          See  “Morgan
          Stanley Call Right” and “Call
          Price” below.  
	  INTEREST
          PAYMENT DATE(S):
          See “Interest Payment
          Dates” below.   
	  OPTIONAL
          REPAYMENT DATE(S):
          N/A  

	  SPECIFIED
          CURRENCY: U.S.
          dollars  
	  ANNUAL
          REDEMPTION PERCENTAGE REDUCTION:
          N/A  
	  INTEREST
          PAYMENT PERIOD:
          Quarterly  
	  APPLICABILITY
          OF MODIFIED PAYMENT
          UPON ACCELERATION
          OR REDEMPTION:
          See “Alternate
          Exchange Calculation
          in Case of an Event
          of Default” below.  

	  IF
          SPECIFIED CURRENCY
          OTHER THAN
          U.S. DOLLARS, OPTION
          TO ELECT PAYMENT
          IN U.S. DOLLARS:
          N/A       
	  REDEMPTION
          NOTICE PERIOD:
          At least 10 days
          but no more than 30 days.
          See “Morgan Stanley
          Call Right” and “Morgan
          Stanley Notice Date” below.   
	  APPLICABILITY
          OF ANNUAL
          INTEREST PAYMENTS:
          N/A     
	 If
        yes, state Issue Price: N/A  
	  EXCHANGE
          RATE AGENT:
          N/A  
	  TAX
          REDEMPTION AND PAYMENT
          OF ADDITIONAL AMOUNTS:
          NO    
	  PRICE
          APPLICABLE UPON
          OPTIONAL REPAYMENT: N/A   
	  ORIGINAL
          YIELD TO MATURITY:
          N/A   

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

 2

	Stated
    Principal Amount	 	$           per
    SPARQS
	 	 	 
	Underlying
    Company	 	Tellabs,
    Inc. (“Tellabs”)
	 	 	 
	Underlying
    Stock	 	The
    common stock of Tellabs
	 	 	 
	Pricing
          Date
      	 	$           per
      each Stated Principal Amount of this SPARQS
      
	 	 	 
	Issue
    Price 	 	 
	 	 	 
	Denominations
	 	$           and
        integral multiples thereof
	  	 	 
	 Acceleration
        Trigger Price  	  	 The
        product of $            and
        the Exchange Ratio  
	  	 	 
	Exchange
          Ratio
	 	          ,
        subject to adjustment for corporate events relating to the Underlying
        Stock described under “Antidilution Adjustments” below.
	 	 	 
	Yield
    to Call 	 	     %
    per annum
	 	 	 
	First
    Call Date	 	April
    20, 2007
	 	 	 
	Maturity
      Date
      	 	October
          20, 2007, subject to acceleration as described below in “Price
          Event Acceleration” and “Alternate Exchange Calculation in
          Case of an Event of Default” and subject to extension if the Final
          Call Notice Date is postponed in accordance with the definition thereof.
          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 scheduled 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

 3

	  	 	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
	 	January
          20, 2006, April 20, 2007, July 20, 2007 and the Maturity Date.

      If
          the scheduled Maturity Date is postponed due to a Market Disruption
          Event or otherwise, the Issuer shall pay interest on the Maturity Date
          as postponed rather than on the scheduled Maturity Date, 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 24 hereof, the Record
          Date for each Interest Payment Date, including the Interest Payment
          Date scheduled to occur on the Maturity Date, shall be the date 5 calendar
          days prior to such scheduled Interest Payment Date, whether or not
          that date is a Business Day; provided, however,
          that in the event that the Issuer exercises the Morgan Stanley Call
          Right, no Interest Payment Date shall occur after the Morgan Stanley
          Notice Date, except for any Interest Payment Date for which the Morgan
          Stanley Notice Date falls on or after the “ex-interest” date
          for the related interest payment, in which case the related interest
          payment shall be made on such Interest Payment Date; and
          provided, further,
          that accrued but unpaid interest payable on the Call Date, if any,
          shall be payable to the person to whom the Call Price is payable. The “ex-
          interest” date for any interest payment is the date on which purchase
          transactions in the SPARQS no longer carry the right to receive such
          interest payment.

 4

 

	  	 	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.

	  
	Morgan
    Stanley Call Right
	 	On
          any scheduled Trading Day on or after the First Call Date 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 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.

 5

 

	 	 	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 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 calendar days
          prior to the Call Date.

 6

	Final
          Call Notice Date
	 	October
          10, 2007; provided that if such date 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 the First Call Date 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
          Stated 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 Stated 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 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 Stated Principal Amount
          of this SPARQS shall be applied by the Issuer as payment for a number
          of shares of the Underlying Stock at the Exchange Ratio, and the Issuer
          shall deliver with respect to each Stated Principal Amount of this
          SPARQS an amount of the Underlying Stock equal to the Exchange Ratio.

      The
          amount of Underlying Stock to be delivered at maturity shall be subject
          to any applicable adjustments (i) to the Exchange Ratio (including,
          as applicable, any New Stock Exchange Ratio or any Basket Stock Exchange
          Ratio, each as defined in paragraph 5 under

 7

 

	 	“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 Underlying 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 the scheduled
          Maturity Date.

      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 the maturity
          of this SPARQS), of the amount of Underlying Stock (or the amount of
          Exchange Property) or cash to be delivered with respect to each Stated
          Principal Amount of this SPARQS and of the amount of any cash to be
          paid in lieu of any fractional share of the Underlying 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 Depositary by first class

 8

	 	 	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 Underlying 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 the Underlying Stock (or any Exchange Property) and
          cash in respect of interest and any fractional share of the Underlying
          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 Stated 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
          Underlying Stock (and, if applicable, any Exchange Property) and any
          cash in respect of interest and any fractional share of the Underlying
          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 of the Underlying Stock and
          the Exchange Ratio is less than the Acceleration Trigger Price, 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
          Stated Principal Amount of this SPARQS shall receive per SPARQS on
          the date of acceleration:

 9

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

      (ii)
          accrued but unpaid interest on each Stated 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 Stated 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 the Underlying Stock due with
        respect to this SPARQS, as described above, but the Issuer shall pay
        cash in lieu of delivering any fractional share of the Underlying Stock
        in an amount equal to the corresponding fractional Closing Price of such
        fraction of a share of the Underlying Stock as determined by the Calculation
        Agent as of the second scheduled Trading Day prior to maturity of this
    SPARQS.
	  	 	 	 
	Closing
    Price	 	The
        Closing Price for one share of the Underlying Stock (or one unit of any
        other security for which a Closing Price must be determined) on any Trading
    Day (as defined below) means:
	 	 	 	 
	 
	 	•  	if
          the Underlying 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 the Underlying Stock (or any such other security) is listed
          or admitted to trading,
      

 10

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

 11

 

	  	 	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, the Chicago Board of Options Exchange and in the
          over-the-counter market for equity securities in the United States.

	  
	Calculation
          Agent
	 	Morgan
          Stanley & Co. Incorporated (“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,
          the Trustee and the Issuer.

	  
	Antidilution
          Adjustments
	 	The
          Exchange Ratio shall be adjusted as follows:

      1.
          If the Underlying 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 the Underlying Stock.

 12

 

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

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

 13

 

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

 14

	 	Reference
          Basket Stocks in accordance with the procedures for a Reference Basket
          Event as described in clause (c)(ii) of paragraph 5 below. The value
          of the non-cash component of an Extraordinary Dividend shall be determined
          on the ex-dividend date for such distribution by the Calculation Agent,
          whose determination shall be conclusive in the absence of manifest
          error. A distribution on the Underlying 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) the
          Underlying Stock is reclassified or changed, including, without limitation,
          as a result of the issuance of any tracking stock by the Underlying
          Company, (ii) the Underlying Company has been subject to any merger,
          combination or consolidation and is not the surviving entity, (iii)
          the Underlying Company completes a statutory exchange of securities
          with another corporation (other than pursuant to clause (ii) above),
          (iv) the Underlying Company is liquidated, (v) the Underlying Company
          issues to all of its shareholders equity securities of an issuer other
          than the Underlying Company (other than in a transaction described
          in clause (ii), (iii) or (iv) above) (a “spinoff stock”)
          or (vi) the Underlying 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 the Underlying 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 Stated
          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) and
          any required adjustment to the Exchange Ratio shall be determined in
          accordance with the following:

 15

	 	 	(a)
          if the Underlying Stock continues to be outstanding, the Underlying
          Stock (if applicable, as reclassified upon the issuance of any tracking
          stock) at the Exchange Ratio in effect on the third Trading Day prior
          to the scheduled Maturity Date (taking into account any adjustments
          for any distributions described under clause (c)(i) below); and
      (b)
          for each Marketable Security received in such Reorganization Event
          (each a “New Stock”), including the issuance of any tracking
          stock or spinoff stock or the receipt of any stock received in exchange
          for the Underlying Stock, the number of shares of the New Stock received
          with respect to one share of Underlying Stock multiplied by the Exchange
          Ratio for Underlying Stock on the Trading Day immediately prior to
          the effective date of the Reorganization Event (the “New Stock
          Exchange Ratio”), as adjusted to the third Trading Day prior to
          the scheduled Maturity Date (taking into account any adjustments for
          distributions described under clause (c)(i) below); and
      (c)
          for any cash and any other property or securities other than Marketable
          Securities received in such Reorganization Event (the “Non-Stock
    Exchange Property”),

		 	 	 
		 	 	(i)
        if the combined value of the amount of Non-Stock Exchange Property received
        per share of Underlying 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 the
        Underlying Stock is less than 25% of the Closing Price of the Underlying
        Stock on the Trading Day immediately prior to the effective date of such
        Reorganization Event, a number of shares of the Underlying 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
    the

 16

 

	 	Underlying
          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 the Underlying Stock on the Trading Day immediately prior
          to the effective date of such Reorganization Event, based on such Closing
          Prices, in each case as determined by the Calculation Agent in its
          sole discretion on the effective date of such Reorganization Event;
          and the number of such shares of Underlying Stock or any New Stock
          determined in accordance with this clause (c)(i) shall be added at
          the time of such adjustment to the Exchange Ratio in subparagraph (a)
          above and/or the New Stock Exchange Ratio in subparagraph (b) above,
          as applicable, or

      (ii)
          if the Non-Stock Exchange Property Value is equal to or exceeds 25%
          of the Closing Price of Underlying Stock on the Trading Day immediately
          prior to the effective date relating to such Reorganization Event or,
          if the Underlying 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 the Underlying Stock
          on the Trading Day immediately prior to the effective date of such
          Reorganization Event. The “Reference Basket Stocks” shall
          be the three stocks with the largest market capitalization among the
          stocks that then comprise the S&P 500 Index (or, if publication
          of such index is discontinued, any successor or substitute index selected
          by the Calculation Agent in its sole discretion) with the same primary
          Standard Industrial Classification Code (“SIC Code”) as the
          Underlying Company; 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

 17

 

	 	 	 	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
          the Underlying Company. 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 the Underlying
          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 Stated Principal Amount of this SPARQS shall be the sum of:
		 	 	 
		 	(x)	if
        applicable, the Underlying Stock at the Exchange Ratio then in effect;
    and
		 	 	 
		 	(y)	        if applicable, for each New Stock, such New Stock at the New Stock
        Exchange Ratio then in effect for such New Stock; and
    
		 	 	 
		 	(z) 	if
        applicable, for each Reference Basket Stock, such Reference Basket Stock
        at the Basket Stock Exchange Ratio then in effect for such Reference
    Basket Stock.

 18

 

	 	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 consideration
          of particular types, Exchange Property shall be deemed to include the
          amount of cash or other property delivered by the offeror in the tender
          or exchange offer (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 “Underlying 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 “Underlying 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 Underlying Stock shall
          be deemed to refer to the applicable unit or units of such Exchange
          Property, including any New Stock or Reference Basket Stock, unless
          the context otherwise requires. The New Stock Exchange Ratio(s) or
          Basket Stock Exchange Ratios resulting from any Reorganization Event
          described in paragraph 5 above or similar adjustment under paragraph
          4 above shall be subject to the adjustments set forth in paragraphs
          1 through 5 hereof.

      If
          a Reference Basket Event occurs, the Issuer shall, or shall cause the
          Calculation Agent to, provide written notice to the Trustee at its
          New York office, on which notice the Trustee may conclusively rely,
          and to DTC

 19

 

	 	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 scheduled Maturity Date.

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

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

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

	  
	Market
          Disruption Event
	Market
          Disruption Event means, with respect to the Underlying Stock:

 20

 

		 	(i) 	a
        suspension, absence or material limitation of trading of the Underlying
        Stock on the primary market for the Underlying 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 the
        Underlying Stock as a result of which the reported trading prices for
        the Underlying 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 the Underlying 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 this issuance
          of SPARQS.
      
		 	 	 
		 	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 the Underlying Stock
    by the primary securities market

 21

 

	  	 	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 the Underlying Stock and (5) a suspension, absence or material limitation
          of trading on the primary securities market on which options contracts
          related to the Underlying 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 Stated
          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 the Underlying
          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 Stated 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

 22

 

	  	contrary)
          to characterize each Stated Principal Amount of this SPARQS for all
          tax purposes as a 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”), the Underlying
    Stock at maturity and (ii) allows the Issuer, upon exercise of the Morgan
    Stanley Call Right, to terminate the Terminable Forward Contract by returning
    to such holder the Deposit (as defined below) and paying to such holder an
    amount of cash equal to the difference between the Deposit and the Call Price
    and (B) a deposit with the Issuer of a fixed amount of cash, equal to the
    Issue Price per each Stated Principal Amount of this SPARQS, to secure the
    holder’s obligation to purchase the Underlying Stock pursuant to the
    Terminable Forward Contract (the “Deposit”), which Deposit bears
    a quarterly compounded yield of          % per annum, provided, however,
    that any interest payments on this SPARQS made to non-U.S. investors will
    generally be withheld upon at a rate of 30%. 

	  	 

 23

 

      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 Underlying 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

 24

 

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

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

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

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

 25

 

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

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

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

 26

 

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

	 DATED: 	 	 MORGAN STANLEY 
	 	 	 	 	 
	 	 	By:	 
	 	 	 	

	 	 	 	Name:	 
	 	 	 	Title:	 

  	 TRUSTEE’S CERTIFICATE 
	          OF
          AUTHENTICATION 
	 
	 This is one of the Notes referred 
	          to
          in the within-mentioned 
	          Senior
          Indenture. 
	 
	 JPMORGAN CHASE BANK, N.A., 
	          as
            Trustee 
	 	 
	By:	 
	 	
        

	 	Authorized Officer 

 27

 

FORM
OF REVERSE OF SECURITY

      This
      Note is one of a duly authorized issue of Senior Global Medium-Term Notes,
      Series F, having maturities more than nine months from the date of issue
      (the “Notes”)
      of the Issuer. The Notes are issuable under a Senior Indenture, dated as
      of November 1, 2004, between the Issuer and JPMorgan Chase Bank, N.A. (formerly
      known as JPMorgan Chase Bank), as Trustee (the “Trustee,” which term includes any successor trustee under
      the Senior Indenture) (as may be amended or supplemented from time to time,
      the “Senior
      Indenture”),
      to which Senior Indenture and all indentures supplemental thereto reference
      is hereby made for a statement of the respective rights, limitations of
      rights, duties and immunities of the Issuer, the Trustee and holders of
      the Notes and the terms upon which the Notes are, and are to be, authenticated
      and delivered. The Issuer has appointed JPMorgan Chase Bank, N.A. at its
      corporate trust office in The City of New York as the paying agent (the “Paying
      Agent,” which
      term includes any additional or successor Paying Agent appointed by the
      Issuer) with respect to the Notes. The terms of individual Notes may vary
      with respect to interest rates, interest rate formulas, issue dates, maturity
      dates, or otherwise, all as provided in the Senior Indenture. To the extent
      not inconsistent herewith, the terms of the Senior Indenture are hereby
      incorporated by reference herein.

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

      If
      so indicated on the face hereof, this Note may be redeemed in whole or
      in part at the option of the Issuer on or after the Initial Redemption
      Date specified on the face hereof on the terms set forth on the face hereof,
      together with interest accrued and unpaid hereon to the date of redemption.
      If this Note is subject to “Annual Redemption Percentage Reduction,” the
      Initial Redemption Percentage indicated on the face hereof will be reduced
      on each anniversary of the Initial Redemption Date by the Annual Redemption
      Percentage Reduction specified on the face hereof until the redemption
      price of this Note is 100% of the principal amount hereof, together with
      interest accrued and unpaid hereon to the date of redemption. If the face
      hereof indicates that this Note is subject to “Modified Payment upon
      Acceleration or Redemption”, the amount of principal payable upon
      redemption will 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 accrued from the Interest Accrual Date to the date of redemption
      (expressed as a percentage of the aggregate principal amount), with the
      amount of original issue discount accrued being calculated using a constant
      yield method (as described below). 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.

 28

 

      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 the face hereof indicates that this Note is subject
      to “Modified Payment upon Acceleration or Redemption”, the amount
      of principal payable upon repayment will 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 accrued from the Interest Accrual Date
      to the date of repayment (expressed as a percentage of the aggregate principal
      amount), with the amount of original issue discount accrued being calculated
      using a constant yield method (as described below). 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.

 29

      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.

      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.

 30

 

      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 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 accrued
      from the Interest Accrual Date to the date of declaration (expressed as
      a percentage of the aggregate principal amount), with the amount of original
      issue discount accrued being calculated using a constant yield method (as
      described in the next paragraph), (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) 

 31

 

 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.

      The
      constant yield shall be calculated using a 30-day month, 360-day year convention,
      a compounding period that, except for the initial period (as defined below),
      corresponds to the shortest period between Interest Payment Dates (with
      ratable accruals within a compounding period), and an assumption that the
      maturity will not be accelerated. If the period from the Original Issue
      Date to the first Interest Payment Date (the “initial period”)
      is shorter than the compounding period for this Note, a proportionate amount
      of the yield for an entire compounding period will be accrued. If the initial
      period is longer than the compounding period, then the period will be divided
      into a regular compounding period and a short period with the short period
      being treated as provided in the preceding sentence.

      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,” the
      amount of principal so payable will 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 accrued from the Interest Accrual Date
      to the date of redemption (expressed as a percentage of the aggregate principal
      amount), with the amount of original issue discount accrued being calculated
      using a constant yield method (as described above)), if the Issuer determines
      that, as a result of any change in or amendment to the laws (including
      a holding, judgment or as ordered by a court of competent jurisdiction),
      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 occurs, becomes effective or, in the case of a change in official
      position, is announced on or after the Initial Offering Date hereof, the
      Issuer has or will become obligated to pay Additional Amounts, as defined
      below, with respect to this Note as described below. Prior to the giving
      of any notice of redemption pursuant to this paragraph, the Issuer shall
      deliver to the Trustee (i) a certificate stating that the Issuer is entitled
      to effect such redemption and setting forth a statement of facts showing
      that the conditions precedent to the right of the Issuer to so redeem have
      occurred, and (ii) an opinion of independent legal counsel satisfactory
      to the Trustee to such effect based on such statement of facts; provided that no such notice of redemption shall be given earlier
      than 60 calendar days prior to the earliest date on which the Issuer would
      be obligated to pay such Additional Amounts if a payment in respect of
      this Note were then due.

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

 32

 

      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 U.S. 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 U.S. 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 U.S. 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 controlled foreign corporation
      or passive foreign investment company with respect to the United States
      or as a corporation which accumulates earnings to avoid U.S. 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;

 33

 

      (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 U.S. 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.

      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

 34

 

 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.

      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

 35

 

 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 “U.S. Alien” means any person who is, for
      U.S. 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 U.S. 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.

 36

 

	 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.

 ______________________________

 37

 

  

  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.

 38

 

	 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.

 39-- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

FORM OF FIXED RATE SENIOR NOTE 

	
REGISTERED	
REGISTERED
	
No. FXR-1	
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. 

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

	
	
STOCK PARTICIPATION ACCRETING
	
	
REDEMPTION QUARTERLY-PAY SECURITIESSM (“SPARQS”)
	 

	
	
% SPARQS® DUE OCTOBER 20, 2007
	
	
MANDATORILY EXCHANGEABLE
	
	
FOR SHARES OF COMMON STOCK OF
	
	
STARBUCKS CORPORATION
	

	
ORIGINAL ISSUE DATE:				
INITIAL REDEMPTION

    DATE: See “Morgan

     Stanley Call Right”

     below.	
INTEREST RATE:    % per

    annum			
MATURITY DATE: See

    “Maturity Date” below.		
	
INTEREST ACCRUAL

    DATE:				
INITIAL REDEMPTION

    PERCENTAGE: See

     “Morgan Stanley Call

     Right” and “Call Price”

     below.	
INTEREST PAYMENT

    DATE(S): See “Interest

     Payment Dates” below.			
OPTIONAL REPAYMENT

    DATE(S): N/A			
	
SPECIFIED CURRENCY:

    U.S. dollars							
ANNUAL REDEMPTION

    PERCENTAGE

     REDUCTION: N/A						
INTEREST PAYMENT

    PERIOD: Quarterly							
APPLICABILITY OF

    MODIFIED

     PAYMENT UPON

     ACCELERATION OR

     REDEMPTION: See

     “Alternate Exchange

     Calculation in Case of an

     Event of Default” below.
	
IF SPECIFIED

    CURRENCY OTHER

     THAN U.S. DOLLARS,

     OPTION TO ELECT

     PAYMENT IN U.S.

     DOLLARS: N/A		
REDEMPTION NOTICE

    PERIOD: At least 10

     days but no more than 30

     days. See “Morgan

     Stanley Call Right” and

     “Morgan Stanley Notice

     Date” below.	
APPLICABILITY OF

    ANNUAL INTEREST

     PAYMENTS: N/A					
If yes, state Issue Price: N/A						
	
EXCHANGE RATE

    AGENT: N/A			
TAX REDEMPTION AND

    PAYMENT OF

     ADDITIONAL

     AMOUNTS: NO	
PRICE APPLICABLE

    UPON OPTIONAL

     REPAYMENT: N/A	
ORIGINAL YIELD TO

    MATURITY: N/A	
	
OTHER PROVISIONS: See

    below.	
IF YES, STATE INITIAL

    OFFERING DATE: N/A	 		 	

2 

	Stated Principal Amount		$            per SPARQS
	 		 
	Underlying Company		Starbucks Corporation (“Starbucks”)
	 		 
	Underlying Stock		The common stock of Starbucks
	 		 
	Pricing Date		 
	 		 
	Issue Price

		$             per each Stated Principal
	      Amount of this SPARQS

	 
	Denominations
			$         and integral multiples thereof
	
	 
	
Acceleration Trigger Price		
The product of $      and
the Exchange Ratio
	 
	Exchange Ratio
			                , subject to adjustment for corporate events relating to the Underlying Stock described under “Antidilution Adjustments” below.
	
	 
	Yield to Call

First Call Date

Maturity Date
			     % per annum

April 20, 2007

October 20, 2007, subject to acceleration as described below in “Price Event Acceleration” and “Alternate Exchange Calculation in Case of an Event of Default” and subject to extension if the Final Call Notice Date is
postponed in accordance with the definition thereof. 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 scheduled
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
	

3 

			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

			January 20, 2006, April 20, 2007, July 20, 2007 and the Maturity Date.

If the scheduled Maturity Date is postponed due to a Market Disruption Event or otherwise, the Issuer shall pay interest on the Maturity Date as postponed rather than on the scheduled Maturity Date, 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 24 hereof, the Record Date for each Interest Payment Date, including the Interest Payment Date scheduled to occur on the Maturity Date, shall be the
date 5 calendar days prior to such scheduled Interest Payment Date, whether or not that date is a Business Day; provided, however, that in the event that the Issuer exercises the Morgan Stanley Call Right, no
Interest Payment Date shall occur after the Morgan Stanley Notice Date, except for any Interest Payment Date for which the Morgan Stanley Notice Date falls on or after the “ex-interest” date for the related interest payment, in which case
the related interest payment shall be made on such Interest Payment Date; and provided, further, that accrued but unpaid interest payable on the Call Date, if any, shall be payable to the person to whom the Call
Price is payable. The “ex- interest” date for any interest payment is the date on which purchase transactions in the SPARQS no longer carry the right to receive such interest payment.

	

4 

			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.

	
	 

	
	Morgan Stanley Call Right

			On any scheduled Trading Day on or after the First Call Date 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 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.

	

5 

	
			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 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 calendar days prior to the Call Date.

	

6 

	Final Call Notice Date

			October 10, 2007; provided that if such date 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 the First Call Date 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 Stated 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 Stated 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 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 Stated Principal Amount of this SPARQS shall be applied by the Issuer as payment for a number of shares of the Underlying Stock at the Exchange Ratio, and the Issuer shall deliver with respect to each
Stated Principal Amount of this SPARQS an amount of the Underlying Stock equal to the Exchange Ratio.

The amount of Underlying Stock to be delivered at maturity shall be subject to any applicable adjustments (i) to the Exchange Ratio (including, as applicable, any New Stock Exchange Ratio or any Basket Stock Exchange Ratio, each as defined
in paragraph 5 under

	

7 

	
			“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
Underlying 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 the scheduled Maturity Date.

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 the maturity of this SPARQS), of the amount of Underlying Stock (or the amount
of Exchange Property) or cash to be delivered with respect to each Stated Principal Amount of this SPARQS and of the amount of any cash to be paid in lieu of any fractional share of the Underlying 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 Depositary
by first class

	

8 

	
			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 Underlying 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 the Underlying Stock (or any Exchange Property) and cash in respect of interest and any fractional share of the Underlying 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 Stated 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 Underlying Stock (and, if
applicable, any Exchange Property) and any cash in respect of interest and any fractional share of the Underlying 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 of the Underlying Stock and the
Exchange Ratio is less than the Acceleration Trigger Price, 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 Stated Principal Amount of this SPARQS shall receive per SPARQS on the date of acceleration:

	

9 

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

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

	
	 

	
	Closing Price

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

	 	•	if
        the Underlying 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
        the Underlying Stock (or any such other security) is listed or admitted
    to trading,

10 

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

			 
			If the Underlying 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 the Underlying 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 the Underlying 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 the Underlying 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
	

11 

			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, the Chicago Board of Options Exchange and in the over-the-counter market for equity securities in the United States.

	
	 

	
	Calculation Agent

			Morgan Stanley & Co. Incorporated (“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, the Trustee and
the Issuer.

	
	 

	
	Antidilution Adjustments

			The Exchange Ratio shall be adjusted as follows:

1. If the Underlying 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 the Underlying Stock.

	

12 

			2. If the Underlying Stock is subject
	      (i) to a stock dividend (issuance of additional shares of the Underlying
	      Stock) that is given ratably to all holders of shares of the Underlying
	      Stock or (ii) to a distribution  of the Underlying Stock as a result
	      of the triggering of any provision of the corporate charter of the Underlying
	      Company, then once the dividend has become effective and the Underlying
	      Stock is trading ex-dividend, the Exchange Ratio shall be  adjusted
	      so that the new Exchange Ratio shall equal the prior Exchange Ratio plus
	      the product of (i) the number of shares
issued with respect to one share of the Underlying
Stock and (ii) the prior Exchange Ratio.
	
	 	
				3. If the Underlying Company issues rights or warrants to all holders of the Underlying Stock to subscribe for or purchase Underlying Stock at an exercise price per share less than the Closing Price of the
Underlying 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 the Underlying Stock outstanding immediately prior to the issuance of such rights or
warrants plus the number of additional shares of Underlying Stock offered for subscription or purchase pursuant to such rights or warrants and the denominator of which shall be the number of shares of Underlying Stock outstanding immediately prior
to the issuance of such rights or warrants plus the number of additional shares of Underlying Stock which the aggregate offering price of the total number of shares of Underlying 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 the Underlying Stock other than
	

13 

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

14 

	
			Reference Basket Stocks in accordance with the procedures for a Reference Basket Event as described in clause (c)(ii) of paragraph 5 below. The value of the non-cash component of an Extraordinary Dividend shall be
determined on the ex-dividend date for such distribution by the Calculation Agent, whose determination shall be conclusive in the absence of manifest error. A distribution on the Underlying 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) the Underlying Stock is reclassified or changed, including, without limitation, as a result of the issuance of any tracking stock by the Underlying Company, (ii) the
Underlying Company has been subject to any merger, combination or consolidation and is not the surviving entity, (iii) the Underlying Company completes a statutory exchange of securities with another corporation (other than pursuant to clause (ii)
above), (iv) the Underlying Company is liquidated, (v) the Underlying Company issues to all of its shareholders equity securities of an issuer other than the Underlying Company (other than in a transaction described in clause (ii), (iii) or (iv)
above) (a “spinoff stock”) or (vi) the Underlying 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 the Underlying 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 Stated 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) and any required adjustment to the Exchange Ratio shall be determined in accordance with the following:

	

15 

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

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

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

	 	 	 	 
	 	 	 	(i)
        if the combined value of the amount of Non-Stock Exchange Property received
        per share of Underlying 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 the Underlying
Stock is less than 25% of the Closing Price of the Underlying Stock on the Trading
Day immediately prior to the effective date of such Reorganization Event, a number
of shares of the Underlying 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 the 

16 

					Underlying 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 the Underlying Stock on the Trading Day immediately
prior to the effective date of such Reorganization Event, based on such Closing Prices, in each case as determined by the Calculation Agent in its sole discretion on the effective date of such Reorganization Event; and the number of such shares of
Underlying Stock or any New Stock determined in accordance with this clause (c)(i) shall be added at the time of such adjustment to the Exchange Ratio in subparagraph (a) above and/or the New Stock Exchange Ratio in subparagraph (b) above, as
applicable, or

(ii) if the Non-Stock Exchange Property Value is equal to or exceeds 25% of the Closing Price of Underlying Stock on the Trading Day immediately prior to the effective date relating to such Reorganization Event or, if the Underlying 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 the Underlying Stock on the Trading Day immediately prior to the effective date of such Reorganization Event. The
“Reference Basket Stocks” shall be the three stocks with the largest market capitalization among the stocks that then comprise the S&P 500 Index (or, if publication of such index is discontinued, any successor or substitute index
selected by the Calculation Agent in its sole discretion) with the same primary Standard Industrial Classification Code (“SIC Code”) as the Underlying Company; 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
	

17 

	 	 	 	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 the Underlying Company. 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 the Underlying 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
Stated Principal Amount of this SPARQS shall be the sum of:

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

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

18 

				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 consideration of particular types, Exchange Property shall be deemed to include the amount of cash or other
property delivered by the offeror in the tender or exchange offer (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 “Underlying
    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 “Underlying
    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
    Underlying 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 StockExchange Ratios resulting from any
Reorganization Event described in paragraph 5 above or similar adjustment under
paragraph 4 above shall be subject to the adjustments set forth in paragraphs
1 through 5 hereof.
	
	 			 
				If a Reference Basket Event occurs, the Issuer shall, or shall cause the Calculation Agent to, provide written notice to the Trustee at its New York office, on which notice the Trustee may conclusively rely, and to DTC

19 

	
			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 scheduled Maturity Date.

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

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

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

	
	 

	
	Market Disruption Event

			Market Disruption Event means, with respect to the Underlying Stock:

	

20 

	 	 	 	(i)
          a suspension, absence or material limitation of trading of the Underlying
          Stock on the primary market for the Underlying 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 the Underlying Stock as a result of which the reported trading
          prices for the Underlying 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 the
          Underlying 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 this issuance of SPARQS.

	 	 	 	 

	
			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 the Underlying Stock by the primary securities market

21 

			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 the Underlying Stock and (5) a suspension, absence or material limitation of trading on the primary
securities market on which options contracts related to the Underlying 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 Stated 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 the Underlying 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 Stated 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

	

22 

			contrary) to characterize each
	      Stated Principal Amount of this SPARQS for all tax purposes as a 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”), the Underlying Stock at maturity
and (ii) allows the Issuer, upon exercise of the Morgan Stanley Call Right, to
terminate the Terminable Forward Contract by returning to such holder the Deposit
(as defined below) and paying to such holder an amount of cash equal to the difference
between the Deposit and the Call Price and (B) a deposit with the Issuer of a
fixed amount of cash, equal to the Issue Price per each Stated Principal Amount
of this SPARQS, to secure the holder’s obligation to purchase the Underlying
Stock pursuant to the Terminable Forward Contract (the “Deposit”),
which Deposit bears a quarterly compounded yield of      %
per annum, provided, however, that any interest payments on this SPARQS made
to non-U.S. investors will generally be withheld upon at a rate of 30%.
	
	 			 
			 
	

23 

     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 Underlying 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 

24 

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

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

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

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

25 

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

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

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

26 

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

	
DATED:		 	
MORGAN STANLEY
	 		 	 	 
	 		 	 	 
	 		By:	 	 
	 		

	 			Name:  	 
	 			Title:	 

	
TRUSTEE’S CERTIFICATE
	
      OF AUTHENTICATION
	 

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

	
	
JPMORGAN CHASE BANK, N.A.,
	
      as Trustee
	 

	
	 

	
	
By:  _____________________________
	
       Authorized
Officer

27 

FORM OF REVERSE OF SECURITY 

     This Note is one of a duly authorized issue of Senior Global Medium-Term Notes, Series F, having maturities more than nine months from the date of issue (the “Notes”) of
the Issuer. The Notes are issuable under a Senior Indenture, dated as of November 1, 2004, between the Issuer and JPMorgan Chase Bank, N.A. (formerly known as JPMorgan Chase Bank), as Trustee (the
“Trustee,” which term includes any successor trustee under the Senior Indenture) (as may be amended or supplemented from time to time, the “Senior Indenture”), to
which Senior Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities of the Issuer, the Trustee and holders of the Notes and the terms upon
which the Notes are, and are to be, authenticated and delivered. The Issuer has appointed JPMorgan Chase Bank, N.A. at its corporate trust office in The City of New York as the paying agent (the “Paying
Agent,” which term includes any additional or successor Paying Agent appointed by the Issuer) with respect to the Notes. The terms of individual Notes may vary with respect to interest rates, interest rate formulas, issue
dates, maturity dates, or otherwise, all as provided in the Senior Indenture. To the extent not inconsistent herewith, the terms of the Senior Indenture are hereby incorporated by reference herein. 

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

      If so indicated on the face hereof, this Note may be redeemed in whole or in part at the option of the Issuer on or after the Initial Redemption Date specified on the face hereof on the terms set forth on the face hereof, together with
interest accrued and unpaid hereon to the date of redemption. If this Note is subject to “Annual Redemption Percentage Reduction,” the Initial Redemption Percentage indicated on the face hereof will be reduced on each anniversary of the
Initial Redemption Date by the Annual Redemption Percentage Reduction specified on the face hereof until the redemption price of this Note is 100% of the principal amount hereof, together with interest accrued and unpaid hereon to the date of
redemption. If the face hereof indicates that this Note is subject to “Modified Payment upon Acceleration or Redemption”, the amount of principal payable upon redemption will 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 accrued from the Interest Accrual Date to the date of redemption (expressed as a percentage of
the aggregate principal amount), with the amount of original issue discount accrued being calculated using a constant yield method (as described below).  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. 

28 

      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 the face hereof indicates that this Note is subject to “Modified Payment upon Acceleration or Redemption”, the amount of principal payable upon repayment will 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 accrued from the Interest Accrual Date to the
date of repayment (expressed as a percentage of the aggregate principal amount), with the amount of original issue discount accrued being calculated using a constant yield method (as described below). 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. 

29 

     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. 

     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. 

30 

     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 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 accrued from the Interest Accrual Date to the date of declaration (expressed as a percentage of the aggregate principal amount), with the amount of original issue discount accrued being calculated using a constant yield
method (as described in the next paragraph), (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) 

31 

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. 

      The constant yield shall be calculated using a 30-day month, 360-day year convention, a compounding period that, except for the initial period (as defined below), corresponds to the shortest period between Interest Payment Dates (with ratable
accruals within a compounding period), and an assumption that the maturity will not be accelerated. If the period from the Original Issue Date to the first Interest Payment Date (the “initial period”) is shorter than the compounding period
for this Note, a proportionate amount of the yield for an entire compounding period will be accrued. If the initial period is longer than the compounding period, then the period will be divided into a regular compounding period and a short period
with the short period being treated as provided in the preceding sentence. 

      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,” the amount of principal so payable will 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 accrued from the Interest Accrual Date to the date of redemption (expressed as a percentage of the aggregate principal amount), with the amount of original issue discount accrued being calculated using a
constant yield method (as described above)), if the Issuer determines that, as a result of any change in or amendment to the laws (including a holding, judgment or as ordered by a court of competent jurisdiction), 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 occurs, becomes effective or, in the case of a change in official position, is announced on or after the Initial Offering Date hereof, the Issuer has or will become obligated to pay Additional Amounts, as defined
below, with respect to this Note as described below. Prior to the giving of any notice of redemption pursuant to this paragraph, the Issuer shall deliver to the Trustee (i) a certificate stating that the Issuer is entitled to effect such redemption
and setting forth a statement of facts showing that the conditions precedent to the right of the Issuer to so redeem have occurred, and (ii) an opinion of independent legal counsel satisfactory to the Trustee to such effect based on such statement
of facts; provided that no such notice of redemption shall be given earlier than 60 calendar days prior to the earliest date on which the Issuer would be obligated to pay such Additional Amounts if a payment in
respect of this Note were then due. 

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

32 

     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 U.S. 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 U.S. 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 U.S. 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 controlled foreign corporation or passive foreign investment company with respect to the
United States or as a corporation which accumulates earnings to avoid U.S. 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; 

33 

     (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 U.S. 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. 

     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 

34 

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. 

     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 

35 

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 “U.S. Alien” means any person who is, for U.S. 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 U.S. 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. 

36

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.

	 	 	 	 
	 	 	 
	 
		 		

37

    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.

38

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.

 

     39

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