Document:

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.

<PAGE>

<TABLE>
                                                            MORGAN STANLEY
                                               SENIOR GLOBAL MEDIUM-TERM NOTES, SERIES F
                                                             (Fixed Rate)

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

                                                     10% SPARQS(R) DUE JULY 1, 2006
                                                       MANDATORILY EXCHANGEABLE
                                           FOR SHARES OF COMMON STOCK OF NVIDIA CORPORATION

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

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

Maturity Date................    July 1, 2006, subject to acceleration as
                                 described below in "Price Event Acceleration"
                                 and "Alternate Exchange Calculation in Case of
                                 an Event of Default"

                                      A-2
<PAGE>

                                 and subject to extension if the Final Call
                                 Notice Date is postponed in accordance with
                                 the following paragraph.

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

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

Interest Payment Dates.......    October 1, 2005, January 1, 2006, April 1,
                                 2006 and the Maturity Date.

                                 If the scheduled Maturity Date is postponed
                                 due to a Market Disruption Event or otherwise,
                                 the Issuer shall pay interest on the Maturity
                                 Date as postponed rather than on July 1, 2006,
                                 but no interest will accrue on this SPARQS or
                                 on such payment during the period from or
                                 after the scheduled Maturity Date.

                                      A-3
<PAGE>

Record Date..................    Notwithstanding the definition of "Record
                                 Date" on page 23 hereof, the Record Date for
                                 each Interest Payment Date, including the
                                 Interest Payment Date scheduled to occur on
                                 the Maturity Date, shall be the date 5
                                 calendar days prior to such scheduled Interest
                                 Payment Date, whether or not that date is a
                                 Business Day; provided, however, that in the
                                 event that the Issuer exercises the Morgan
                                 Stanley Call Right, no Interest Payment Date
                                 shall occur after the Morgan Stanley Notice
                                 Date, except for any Interest Payment Date for
                                 which the Morgan Stanley Notice Date falls on
                                 or after the "ex-interest" date for the
                                 related interest payment, in which case the
                                 related interest payment shall be made on such
                                 Interest Payment Date; and provided, further,
                                 that accrued but unpaid interest payable on
                                 the Call Date, if any, shall be payable to the
                                 person to whom the Call Price is payable. The
                                 "ex-interest" date for any interest payment is
                                 the date on which purchase transactions in the
                                 SPARQS no longer carry the right to receive
                                 such interest payment.

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

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

Morgan Stanley Call Right....    On any scheduled Trading Day on or after
                                 January 1, 2006 or on the Maturity Date
                                 (including the Maturity Date as it may be
                                 extended and regardless of whether the
                                 Maturity Date is a Trading Day), the Issuer
                                 may call the SPARQS, in whole but not in part,
                                 for mandatory exchange for the Call Price paid
                                 in cash (together with accrued but unpaid
                                 interest) on the Call Date.

                                 On the Morgan Stanley Notice Date, the Issuer
                                 shall give notice of the Issuer's exercise of
                                 the Morgan Stanley Call Right (i) to the
                                 holder of this SPARQS by

                                      A-4
<PAGE>

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

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

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

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

                                      A-5
<PAGE>

                                 delivery of this SPARQS to the Trustee. The
                                 Issuer shall, or shall cause the Calculation
                                 Agent to, deliver such cash to the Trustee for
                                 delivery to the holder of this SPARQS.

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

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

Final Call Notice Date.......    June 21, 2006; provided that if June 21, 2006
                                 is not a Trading Day or if a Market Disruption
                                 Event occurs on such day, the Final Call
                                 Notice Date will be the immediately succeeding
                                 Trading Day on which no Market Disruption
                                 Event occurs.

Call Date....................    The day specified in the Issuer's notice of
                                 mandatory exchange, on which the Issuer shall
                                 deliver cash to the holder of this SPARQS, for
                                 mandatory exchange, which day may be any
                                 scheduled Trading Day on or after January 1,
                                 2006 or the Maturity Date (including the
                                 Maturity Date as it may be extended and
                                 regardless of whether the Maturity Date is a
                                 scheduled Trading Day). See "Maturity Date"
                                 above.

Call Price...................    The Call Price with respect to any Call Date
                                 is an amount of cash per each $    principal
                                 amount of this SPARQS, as calculated by the
                                 Calculation Agent, such that the sum of the
                                 present values of all cash flows on each
                                 $      principal amount of this SPARQS to and
                                 including the Call Date (i.e., the Call Price
                                 and all of the interest payments, including
                                 accrued and unpaid interest payable on the Call
                                 Date), discounted to the Original Issue Date
                                 from the applicable payment date at the Yield
                                 to Call rate of    % per annum computed on the
                                 basis of a 360-day year of twelve 30-day
                                 months, equals the Issue Price, as determined
                                 by the Calculation Agent.

                                      A-6
<PAGE>

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

                                 The amount of Nvidia Stock to be delivered at
                                 maturity shall be subject to any applicable
                                 adjustments (i) to the Exchange Ratio
                                 (including, as applicable, any New Stock
                                 Exchange Ratio or any Basket Stock Exchange
                                 Ratio, each as defined in paragraph 5 under
                                 "Antidilution Adjustments" below) and (ii) in
                                 the Exchange Property, as defined in paragraph
                                 5 under "Antidilution Adjustments" below, to
                                 be delivered instead of, or in addition to,
                                 such Nvidia 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 Nvidia Stock (or the
                                 amount of Exchange Property) or cash to be
                                 delivered with respect to each $     principal
                                 amount of this SPARQS and of the amount of any
                                 cash to be paid in lieu of any fractional
                                 share of Nvidia Stock (or of any other
                                 securities included in Exchange Property, if
                                 applicable); provided that if the maturity
                                 date of this SPARQS is accelerated (x) because
                                 of a Price Event Acceleration (as described
                                 under "Price Event Acceleration" below) or (y)
                                 because of an Event of Default Acceleration
                                 (as defined under "Alternate

                                      A-7
<PAGE>

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

                                 If this SPARQS is not surrendered for exchange
                                 at maturity, it shall be deemed to be no
                                 longer Outstanding under, and as defined in,
                                 the Senior Indenture, except with respect to
                                 the holder's right to receive the Nvidia Stock
                                 (and, if applicable, any Exchange Property)
                                 and any cash in respect of interest and any
                                 fractional share of Nvidia Stock (or any

                                      A-8
<PAGE>

                                 Exchange Property) and any other cash due at
                                 maturity as described in the preceding
                                 paragraph under this heading.

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

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

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

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

No Fractional Shares.........    Upon delivery of this SPARQS to the Trustee at
                                 maturity, the Issuer shall deliver the
                                 aggregate number of shares of Nvidia Stock due
                                 with respect to this SPARQS, as described
                                 above, but the Issuer shall pay cash in lieu
                                 of delivering any fractional share of Nvidia
                                 Stock in an amount equal to the corresponding
                                 fractional Closing Price of such fraction of a
                                 share of Nvidia Stock as determined by the
                                 Calculation Agent as of the second scheduled
                                 Trading Day prior to maturity of this SPARQS.

                                      A-9
<PAGE>

Exchange Ratio...............    1.0, subject to adjustment for corporate
                                 events relating to Nvidia Stock described
                                 under "Antidilution Adjustments" below.

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

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

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

                                 o    if Nvidia 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 Nvidia 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 Nvidia 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,

                                     A-10
<PAGE>

                                 because of a Market Disruption Event (as
                                 defined below) or otherwise, the last reported
                                 sale price or Nasdaq official closing price,
                                 as applicable, for Nvidia 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 Nvidia Stock (or
                                 any such other security) obtained from as many
                                 recognized dealers in such security, but not
                                 exceeding three, as will make such bid prices
                                 available to the Calculation Agent. Bids of MS
                                 & Co. or any of its affiliates may be included
                                 in the calculation of such mean, but only to
                                 the extent that any such bid is the highest of
                                 the bids obtained. The term "security of the
                                 Nasdaq National Market" will include a
                                 security included in any successor to such
                                 system, and the term OTC Bulletin Board
                                 Service will include any successor service
                                 thereto.

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

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

                                 All calculations with respect to the Exchange
                                 Ratio and Call Price for the SPARQS shall be
                                 made by the Calculation Agent and shall be
                                 rounded to the nearest one hundred-thousandth,
                                 with five one-millionths rounded upward (e.g.,
                                 .876545 would be rounded to .87655); all
                                 dollar amounts related to the Call Price
                                 resulting from such calculations shall be
                                 rounded to the nearest ten-thousandth, with
                                 five one hundred-thousandths rounded upward
                                 (e.g., .76545 would be rounded to .7655); and
                                 all dollar amounts paid with respect to the
                                 Call Price on the aggregate number of SPARQS
                                 shall be rounded to the nearest cent, with
                                 one-half cent rounded upward.

                                 All determinations made by the Calculation
                                 Agent shall be at the sole discretion of the
                                 Calculation Agent and shall, in the absence of
                                 manifest error, be

                                     A-11
<PAGE>

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

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

                                 1. If Nvidia 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 Nvidia Stock.

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

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

                                     A-12
<PAGE>

                                 Closing Price on the expiration date of such
                                 rights or warrants, which shall be determined
                                 by multiplying such total number of shares
                                 offered by the exercise price of such rights or
                                 warrants and dividing the product so obtained
                                 by such Closing Price.

                                 4. There shall be no adjustments to the
                                 Exchange Ratio to reflect cash dividends or
                                 other distributions paid with respect to Nvidia
                                 Stock other than distributions described in
                                 paragraph 2, paragraph 3 and clauses (i), (iv)
                                 and (v) of the first sentence of paragraph 5
                                 and Extraordinary Dividends. "Extraordinary
                                 Dividend" means each of (a) the full amount per
                                 share of Nvidia Stock of any cash dividend or
                                 special dividend or distribution that is
                                 identified by Nvidia 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 Nvidia as an extraordinary or special
                                 dividend or distribution) distributed per share
                                 of Nvidia Stock over the immediately preceding
                                 cash dividend or other cash distribution, if
                                 any, per share of Nvidia 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 Nvidia Stock on the
                                 Trading Day preceding the "ex-dividend date"
                                 (that is, the day on and after which
                                 transactions in Nvidia 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 Nvidia
                                 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 Nvidia Stock includes an
                                 Extraordinary Dividend, the Exchange Ratio with
                                 respect to Nvidia Stock shall be adjusted on
                                 the ex-dividend date so that the new Exchange
                                 Ratio shall equal the product of (i) the prior
                                 Exchange Ratio and (ii) a fraction, the
                                 numerator of which is the Base Closing Price,
                                 and the denominator of which is the

                                     A-13
<PAGE>

                                 amount by which the Base Closing Price exceeds
                                 the Extraordinary Dividend. If any
                                 Extraordinary Dividend is at least 35% of the
                                 Base Closing Price, then, instead of adjusting
                                 the Exchange Ratio, the amount payable upon
                                 exchange at maturity shall be determined as
                                 described in paragraph 5 below, and the
                                 Extraordinary Dividend shall be allocated to
                                 Reference Basket Stocks in accordance with the
                                 procedures for a Reference Basket Event as
                                 described in clause (c)(ii) of paragraph 5
                                 below. The value of the non-cash component of
                                 an Extraordinary Dividend shall be determined
                                 on the ex-dividend date for such distribution
                                 by the Calculation Agent, whose determination
                                 shall be conclusive in the absence of manifest
                                 error. A distribution on Nvidia 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) Nvidia Stock is
                                 reclassified or changed, including, without
                                 limitation, as a result of the issuance of any
                                 tracking stock by Nvidia, (ii) Nvidia has been
                                 subject to any merger, combination or
                                 consolidation and is not the surviving entity,
                                 (iii) Nvidia completes a statutory exchange of
                                 securities with another corporation (other than
                                 pursuant to clause (ii) above), (iv) Nvidia is
                                 liquidated, (v) Nvidia issues to all of its
                                 shareholders equity securities of an issuer
                                 other than Nvidia (other than in a transaction
                                 described in clause (ii), (iii) or (iv) above)
                                 (a "spinoff stock") or (vi) Nvidia 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
                                 Nvidia Stock receive any equity security listed
                                 on a national securities exchange or traded on
                                 The Nasdaq National Market (a "Marketable
                                 Security"), other securities or other property,
                                 assets or cash (collectively "Exchange
                                 Property"), the amount payable upon exchange at
                                 maturity with respect to each $      principal
                                 amount of this SPARQS following the effective
                                 date for such Reorganization Event (or, if
                                 applicable, in the case of spinoff stock, the
                                 ex-dividend date for the distribution of such
                                 spinoff stock) and any

                                     A-14
<PAGE>

                                 required adjustment to the Exchange Ratio
                                 shall be determined in accordance with the
                                 following:

                                      (a) if Nvidia Stock continues to be
                                      outstanding, Nvidia 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 Nvidia Stock, the number of shares of
                                      the New Stock received with respect to
                                      one share of Nvidia Stock multiplied by
                                      the Exchange Ratio for Nvidia 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
                                           Nvidia 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 Nvidia Stock
                                           is less than 25% of the Closing
                                           Price of Nvidia Stock on the Trading
                                           Day immediately prior to the
                                           effective date of such
                                           Reorganization Event, a number of
                                           shares of Nvidia 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 Nvidia Stock and
                                           any such New Stock, and with an
                                           aggregate value equal to the
                                           Non-Stock

                                     A-15
<PAGE>

                                           Exchange Property Value multiplied
                                           by the Exchange Ratio in effect for
                                           Nvidia 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 Nvidia
                                           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
                                           Nvidia Stock on the Trading Day
                                           immediately prior to the effective
                                           date relating to such Reorganization
                                           Event or, if Nvidia 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 Nvidia
                                           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 Nvidia;
                                           provided, however, that a Reference
                                           Basket Stock shall not include any
                                           stock that is subject to a trading
                                           restriction under the trading
                                           restriction policies of Morgan
                                           Stanley or any of its affiliates
                                           that would materially limit the
                                           ability of Morgan Stanley or any of
                                           its affiliates to hedge the SPARQS

                                     A-16
<PAGE>

                                           with respect to such stock (a
                                           "Hedging Restriction"); provided
                                           further that if three Reference
                                           Basket Stocks cannot be identified
                                           from the S&P 500 Index by primary
                                           SIC Code for which a Hedging
                                           Restriction does not exist, the
                                           remaining Reference Basket Stock(s)
                                           shall be selected by the Calculation
                                           Agent from the largest market
                                           capitalization stock(s) within the
                                           same Division and Major Group
                                           classification (as defined by the
                                           Office of Management and Budget) as
                                           the primary SIC Code for Nvidia.
                                           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
                                           Nvidia Stock on the Trading Day
                                           immediately prior to the effective
                                           date of such Reorganization Event
                                           and (c) 0.3333333.

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

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

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

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

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

                                     A-17
<PAGE>

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

                                 Following the occurrence of any Reorganization
                                 Event referred to in paragraphs 4 or 5 above,
                                 (i) references to "Nvidia 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 "Nvidia 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 Nvidia
                                 Stock shall be deemed to refer to the
                                 applicable unit or units of such Exchange
                                 Property, including any New Stock or Reference
                                 Basket Stock, unless the context otherwise
                                 requires. The New Stock Exchange Ratio(s) or
                                 Basket Stock Exchange Ratios resulting from
                                 any Reorganization Event described in
                                 paragraph 5 above or similar adjustment under
                                 paragraph 4 above shall be subject to the
                                 adjustments set forth in paragraphs 1 through
                                 5 hereof.

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

                                     A-18
<PAGE>

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

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

                                     A-19
<PAGE>

                                      prices for Nvidia 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 Nvidia Stock, if available,
                                      during the one-half hour period preceding
                                      the close of the principal trading
                                      session in the applicable market, in each
                                      case as determined by the Calculation
                                      Agent in its sole discretion; and

                                      (ii) a determination by the Calculation
                                      Agent in its sole discretion that any
                                      event described in clause (i) above
                                      materially interfered with the ability of
                                      the Issuer or any of its affiliates to
                                      unwind or adjust all or a material
                                      portion of the hedge with respect to the
                                      SPARQS due July 1, 2006, Mandatorily
                                      Exchangeable for Shares of Common Stock
                                      of Nvidia Corporation.

                                 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
                                 Nvidia Stock by the primary securities market
                                 trading in such options, if available, by
                                 reason of (x) a price change exceeding limits
                                 set by such securities exchange or market, (y)
                                 an imbalance of orders relating to such
                                 contracts or (z) a disparity in bid and ask
                                 quotes relating to such contracts shall
                                 constitute a suspension, absence or material
                                 limitation of trading in options contracts
                                 related to Nvidia Stock and (5) a suspension,

                                     A-20
<PAGE>

                                 absence or material limitation of trading on
                                 the primary securities market on which options
                                 contracts related to Nvidia Stock are traded
                                 shall not include any time when such securities
                                 market is itself closed for trading under
                                 ordinary circumstances.

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

Treatment of SPARQS for
  United States Federal
  Income Tax Purposes........    The Issuer, by its sale of this SPARQS, and
                                 the holder of this SPARQS (and any successor
                                 holder of, or holder of a beneficial interest
                                 in, this SPARQS), by its respective purchase
                                 hereof, agree (in the absence of an
                                 administrative determination or judicial
                                 ruling to the contrary) to characterize each
                                 $       principal amount of this SPARQS for
                                 all tax purposes as 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"), Nvidia Stock at maturity and
                                 (ii) allows the Issuer, upon exercise of the
                                 Morgan Stanley

                                     A-21
<PAGE>

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

                                     A-22
<PAGE>

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

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

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

                                     A-23
<PAGE>

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

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

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

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

                                     A-24
<PAGE>

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

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

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

                                     A-25
<PAGE>

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

DATED:                                   MORGAN STANLEY

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

TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in
     the within-mentioned Senior
     Indenture.

JPMORGAN CHASE BANK, N.A., as Trustee

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

                                     A-26
<PAGE>

                              REVERSE OF SECURITY

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

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

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

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

                                     A-27
<PAGE>

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

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

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

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

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

                                     A-28
<PAGE>

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

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

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

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

                                     A-29
<PAGE>

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

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

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

                                     A-30
<PAGE>

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

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

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

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

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

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

                                     A-31
<PAGE>

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

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

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

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

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

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

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

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

                                     A-32
<PAGE>

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

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

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

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

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

                                     A-33
<PAGE>

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

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

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

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

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

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

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

                                     A-34
<PAGE>

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

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

                                     A-35
<PAGE>

                                 ABBREVIATIONS

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

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

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

     Under Uniform Gifts to Minors Act __________________________________
                                                   (State)

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

                                   ---------

                                     A-36
<PAGE>

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

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

_______________________________________________________________________________

_______________________________________________________________________________

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

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

Dated: ___________________________

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

                                     A-37
<PAGE>

                           OPTION TO ELECT REPAYMENT

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

_______________________________________________________________________________

_______________________________________________________________________________

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

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

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

                                      A-38FIXED 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.

<PAGE>

                                 MORGAN STANLEY
                    SENIOR GLOBAL MEDIUM-TERM NOTES, SERIES F

                PERFORMANCE LEVERAGED UPSIDE SECURITIES ("PLUS")

                             PLUS DUE JUNE 30, 2006
                            MANDATORILY EXCHANGEABLE
                      FOR AN AMOUNT PAYABLE IN U.S. DOLLARS
                 BASED ON THE VALUE OF THE RUSSELL 2000(R) INDEX

<TABLE>
<S>                             <C>                          <C>                          <C>
------------------------------- ---------------------------- ---------------------------- ----------------------------
ORIGINAL ISSUE DATE:            INITIAL REDEMPTION DATE:     INTEREST RATE: None          MATURITY DATE: See
                                   N/A                                                       "Maturity Date" below.
------------------------------- ---------------------------- ---------------------------- ----------------------------
INTEREST ACCRUAL DATE:          INITIAL REDEMPTION           INTEREST PAYMENT DATES: N/A  OPTIONAL REPAYMENT
                                   PERCENTAGE: N/A                                           DATE(S):  N/A
------------------------------- ---------------------------- ---------------------------- ----------------------------
SPECIFIED CURRENCY: U.S.        ANNUAL REDEMPTION            INTEREST PAYMENT PERIOD:     APPLICABILITY OF MODIFIED
   dollars                         PERCENTAGE REDUCTION:        N/A                          PAYMENT UPON
                                   N/A                                                       ACCELERATION: See
                                                                                             "Alternate Exchange
                                                                                             Calculation in Case of
                                                                                             an Event of Default"
                                                                                             below.
------------------------------- ---------------------------- ---------------------------- ----------------------------
IF SPECIFIED CURRENCY OTHER     REDEMPTION NOTICE PERIOD:    APPLICABILITY OF ANNUAL      If yes, state Issue Price:
   THAN U.S. DOLLARS, OPTION       N/A                          INTEREST PAYMENTS: N/A       N/A
   TO ELECT PAYMENT IN U.S.
   DOLLARS: N/A
------------------------------- ---------------------------- ---------------------------- ----------------------------
EXCHANGE RATE AGENT: N/A        TAX REDEMPTION AND PAYMENT                                ORIGINAL YIELD TO
                                   OF ADDITIONAL AMOUNTS:                                    MATURITY: N/A
                                   N/A
------------------------------- ---------------------------- ---------------------------- ----------------------------
OTHER PROVISIONS: See below     If yes, state Initial
                                   Offering Date: N/A
------------------------------- ---------------------------- ---------------------------- ----------------------------
</TABLE>

Maturity Date..............   June 30, 2006, subject to extension in accordance
                              with the following paragraph in the event of a
                              Market Disruption Event on the scheduled Index
                              Valuation Date (as defined below).

                              If due to a Market Disruption Event or otherwise,
                              the Index Valuation Date is postponed so that it
                              falls less than two scheduled Trading Days prior
                              to the scheduled Maturity Date, the Maturity Date
                              shall be the second scheduled Trading Day
                              following that

                                      A-2
<PAGE>

                              Index Valuation Date as postponed. See "Index
                              Valuation Date" below.

                              In the event that the Maturity Date of the PLUS is
                              postponed due to postponement of the Index
                              Valuation Date as described in the immediately
                              preceding paragraph, the Issuer shall give notice
                              of such postponement and, once it has been
                              determined, of the date to which the Maturity Date
                              has been rescheduled (i) to the holder of this
                              PLUS by mailing notice of such postponement by
                              first class mail, postage prepaid, to the holder's
                              last address as it shall appear upon the registry
                              books, (ii) to the Trustee by telephone or
                              facsimile confirmed by mailing such notice to the
                              Trustee by first class mail, postage prepaid, at
                              its New York office and (iii) to The Depository
                              Trust Company (the "Depositary") by telephone or
                              facsimile confirmed by mailing such notice to the
                              Depositary by first class mail, postage prepaid.
                              Any notice that is mailed in the manner herein
                              provided shall be conclusively presumed to have
                              been duly given, whether or not the holder of this
                              PLUS receives the notice. The Issuer shall give
                              such notice as promptly as possible, and in no
                              case later than (i) with respect to notice of
                              postponement of the Maturity Date, the Business
                              Day immediately following June 28, 2006, and (ii)
                              with respect to notice of the date to which the
                              Maturity Date has been rescheduled, the Business
                              Day immediately following the actual Index
                              Valuation Date for determining the Final Index
                              Value (as defined below).

Denominations..............   $10 and integral multiples thereof

Payment at Maturity........   At maturity, upon delivery of this PLUS to the
                              Trustee, the Issuer shall pay with respect to each
                              $10 principal amount of this PLUS an amount in
                              cash equal to (i) if the Final Index Value is
                              greater than the Initial Index Value (as defined
                              below), the lesser of (a) $10 plus the Leveraged
                              Upside Payment (as defined below) and (b) the
                              Maximum Payment at Maturity (as defined below) or
                              (ii) if the Final Index Value is less than or
                              equal to the Initial Index Value, $10 times the
                              Index Performance Factor (as defined below).

                                      A-3
<PAGE>

                              The Issuer shall, or shall cause the Calculation
                              Agent to, (i) provide written notice to the
                              Trustee and to the Depositary of the amount of
                              cash to be delivered with respect to each $10
                              principal amount of this PLUS, on or prior to
                              10:30 a.m. on the Trading Day preceding the
                              Maturity Date (but if such Trading Day is not a
                              Business Day, prior to the close of business on
                              the Business Day preceding the Maturity Date), and
                              (ii) deliver the aggregate cash amount due with
                              respect to this PLUS to the Trustee for delivery
                              to the holder of this PLUS on the Maturity Date.

Leveraged Upside Payment ..   The product of (i) $10 and (ii) % and (iii) the
                              Index Percent Increase (as defined below).

Maximum Payment at Maturity   $

Index Percent Increase.....   A fraction, the numerator of which shall be the
                              Final Index Value minus the Initial Index Value
                              and the denominator of which shall be the Initial
                              Index Value.

Index Performance Factor...   A fraction, the numerator of which shall be the
                              Final Index Value and the denominator of which
                              shall be the Initial Index Value.

Final Index Value..........   The Index Closing Value of the Russell 2000 Index
                              on the Index Valuation Date.

Index Valuation Date.......   The Index Valuation Date shall be the second
                              scheduled Trading Day prior to the Maturity Date,
                              subject to adjustment for Market Disruption Events
                              as described in the following paragraph.

                              If there is a Market Disruption Event on the
                              scheduled Index Valuation Date or if the scheduled
                              Index Valuation Date is not otherwise a Trading
                              Day, the Index Valuation Date shall be the
                              immediately succeeding Trading Day during which no
                              Market Disruption Event shall have occurred.

Initial Index Value........

Index Closing Value........   The Index Closing Value on any Trading Day shall
                              equal the closing value of the Russell 2000 Index
                              or any Successor Index (as defined under

                                      A-4
<PAGE>

                              "Discontinuance of the Russell 2000 Index;
                              Alteration of Method of Calculation" below)
                              published at the regular weekday close of trading
                              on that Trading Day. In certain circumstances, the
                              Index Closing Value shall be based on the
                              alternate calculation of the Russell 2000 Index
                              described under "Discontinuance of the Russell
                              2000 Index; Alteration of Method of Calculation."

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 ("AMEX"), the Nasdaq National
                              Market, the Chicago Mercantile Exchange and the
                              Chicago Board of Options Exchange and in the
                              over-the-counter market for equity securities in
                              the United States.

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

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

                              All calculations with respect to the Payment at
                              Maturity 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
                              determination of the amount of cash payable for
                              each $10 principal amount of this PLUS shall be
                              rounded to the nearest ten-thousandth, with five
                              one hundred-thousandths rounded upward (e.g.,
                              .76545 would be rounded up to .7655); and all
                              dollar amounts paid on the aggregate number of
                              PLUS shall be rounded to the nearest cent, with
                              one-half cent rounded upward.

Market Disruption Event....   Market Disruption Event means, with respect to the
                              Russell 2000 Index:

                              (i)the occurrence or existence of a suspension,
                              absence or material limitation of trading of
                              stocks then

                                      A-5
<PAGE>

                              constituting 20 percent or more of the level of
                              the Russell 2000 Index (or the Successor Index) on
                              the Relevant Exchanges for such securities for
                              more than two hours of trading or during the
                              one-half hour period preceding the close of the
                              principal trading session on such Relevant
                              Exchange; or a breakdown or failure in the price
                              and trade reporting systems of any Relevant
                              Exchange as a result of which the reported trading
                              prices for stocks then constituting 20 percent or
                              more of the level of the Russell 2000 Index (or
                              the Successor Index) during the last one-half hour
                              preceding the close of the principal trading
                              session on such Relevant Exchange are materially
                              inaccurate; or the suspension, material limitation
                              or absence of trading on any major U.S. securities
                              market for trading in futures or options contracts
                              or exchange traded funds related to the Russell
                              2000 Index (or the Successor Index) for more than
                              two hours of trading or during the one-half hour
                              period preceding the close of the principal
                              trading session on such 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 position with respect to the PLUS due June
                              30, 2006, Mandatorily Exchangeable for an Amount
                              Payable in U.S. Dollars Based on the Value of the
                              Russell 2000(R) Index.

                              For the purpose of determining whether a Market
                              Disruption Event exists at any time, if trading in
                              a security included in the Russell 2000 Index is
                              materially suspended or materially limited at that
                              time, then the relevant percentage contribution of
                              that security to the level of the Russell 2000
                              Index shall be based on a comparison of (x) the
                              portion of the value of the Russell 2000 Index
                              attributable to that security relative to (y) the
                              overall value of the Russell 2000 Index, in each
                              case immediately before that suspension or
                              limitation.

                              For the purpose of determining whether a Market
                              Disruption Event has occurred: (1) a limitation on
                              the

                                      A-6
<PAGE>

                              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 or market, (2) a
                              decision to permanently discontinue trading in the
                              relevant futures or options contract or exchange
                              traded fund shall not constitute a Market
                              Disruption Event, (3) limitations pursuant to the
                              rules of any Relevant Exchange similar to NYSE
                              Rule 80A (or any applicable rule or regulation
                              enacted or promulgated by any other
                              self-regulatory organization or any government
                              agency 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 futures or options contracts on the Russell
                              2000 Index by the primary securities market
                              trading in such contracts by reason of (a) a price
                              change exceeding limits set by such securities
                              exchange or market, (b) an imbalance of orders
                              relating to such contracts or (c) a disparity in
                              bid and ask quotes relating to such contracts
                              shall constitute a suspension, absence or material
                              limitation of trading in futures or options
                              contracts related to the Russell 2000 Index and
                              (5) a "suspension, absence or material limitation
                              of trading" on any Relevant Exchange or on the
                              primary market on which futures or options
                              contracts related to the Russell 2000 Index are
                              traded shall not include any time when such
                              securities market is itself closed for trading
                              under ordinary circumstances.

Relevant Exchange..........   Relevant Exchange means the primary U.S. organized
                              exchange or market of trading for any security (or
                              any combination thereof) then included in the
                              Russell 2000 Index or any Successor Index.

Alternate Exchange
  Calculation in Case of
  an Event of Default......   In case an event of default with respect to the
                              PLUS shall have occurred and be continuing, the
                              amount declared due and payable for each $10
                              principal amount of this PLUS upon any
                              acceleration of this PLUS shall be determined by
                              the Calculation Agent and shall be an amount in
                              cash equal to the Payment at Maturity calculated
                              using the Index Closing Value as

                                      A-7
<PAGE>

                              of the date of such acceleration as the Final
                              Index Value.

                              If the maturity of the PLUS is accelerated because
                              of an event of default as described above, 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 the Depositary of the
                              cash amount due with respect to each $10 principal
                              amount of this PLUS as promptly as possible and in
                              no event later than two Business Days after the
                              date of acceleration.

Discontinuance of the
Russell 2000 Index;
Alteration of Method of
Calculation................   If Frank Russell Company discontinues publication
                              of the Russell 2000 Index and Frank Russell
                              Company or another entity publishes a successor or
                              substitute index that the Calculation Agent
                              determines, in its sole discretion, to be
                              comparable to the discontinued Russell 2000 Index
                              (such index being referred to herein as a
                              "Successor Index"), then any subsequent Index
                              Closing Value shall be determined by reference to
                              the published value of such Successor Index at the
                              regular weekday close of trading on the Trading
                              Day that any Index Closing Value is to be
                              determined.

                              Upon any selection by the Calculation Agent of a
                              Successor Index, the Calculation Agent shall cause
                              written notice thereof to be furnished to the
                              Trustee, to the Issuer and to the Depositary, as
                              holder of the PLUS, within three Trading Days of
                              such selection.

                              If Frank Russell Company discontinues publication
                              of the Russell 2000 Index prior to, and such
                              discontinuance is continuing on, the Index
                              Valuation Date and the Calculation Agent
                              determines, in its sole discretion, that no
                              Successor Index is available at such time, then
                              the Calculation Agent shall determine the Index
                              Closing Value for such date. The Index Closing
                              Value shall be computed by the Calculation Agent
                              in accordance with the formula for calculating the
                              Russell 2000 Index last in effect prior to such
                              discontinuance, using the closing price (or, if
                              trading in the relevant securities has been
                              materially suspended or materially

                                      A-8
<PAGE>

                              limited, its good faith estimate of the closing
                              price that would have prevailed but for such
                              suspension or limitation) at the close of the
                              principal trading session of the Relevant Exchange
                              on such date of each security most recently
                              comprising the Russell 2000 Index without any
                              rebalancing or substitution of such securities
                              following such discontinuance.

                              If at any time the method of calculating the
                              Russell 2000 Index or a Successor Index, or the
                              value thereof, is changed in a material respect,
                              or if the Russell 2000 Index or a Successor Index
                              is in any other way modified so that such index
                              does not, in the opinion of the Calculation Agent,
                              fairly represent the value of the Russell 2000
                              Index or such Successor Index had such changes or
                              modifications not been made, then, from and after
                              such time, the Calculation Agent shall, at the
                              close of business in New York City on the date on
                              which the Index Closing Value is to be determined,
                              make such calculations and adjustments as, in the
                              good faith judgment of the Calculation Agent, may
                              be necessary in order to arrive at a value of a
                              stock index comparable to the Russell 2000 Index
                              or such Successor Index, as the case may be, as if
                              such changes or modifications had not been made,
                              and the Calculation Agent shall calculate the
                              Final Index Value with reference to the Russell
                              2000 Index or such Successor Index, as adjusted.
                              Accordingly, if the method of calculating the
                              Russell 2000 Index or a Successor Index is
                              modified so that the value of such index is a
                              fraction of what it would have been if it had not
                              been modified (e.g., due to a split in the index),
                              then the Calculation Agent shall adjust such index
                              in order to arrive at a value of the Russell 2000
                              Index or such Successor Index as if it had not
                              been modified (e.g., as if such split had not
                              occurred).

Treatment of PLUS for
  United States Federal
  Income Tax Purposes......   The Issuer, by its sale of this PLUS, and the
                              holder of this PLUS (and any successor holder of,
                              or holder of a beneficial interest in, this PLUS),
                              by its respective purchase hereof, agree (in the
                              absence of an administrative determination or
                              judicial ruling to the contrary) to characterize
                              each $10 principal amount of

                                      A-9
<PAGE>

                              this PLUS for all tax purposes as a single
                              financial contract with respect to the Russell
                              2000 Index that (i) requires the holder of this
                              PLUS to pay to the Issuer at inception an amount
                              equal to $10 and (ii) entitles the holder to
                              receive at maturity an amount in cash based upon
                              the performance of the Russell 2000 Index.

                                      A-10
<PAGE>

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

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

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

                                      A-11
<PAGE>

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

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

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

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

                                      A-12
<PAGE>

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

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

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

                                      A-13
<PAGE>

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

DATED:                                  MORGAN STANLEY

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

TRUSTEE'S CERTIFICATE
   OF AUTHENTICATION

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

JPMORGAN CHASE BANK, N.A.,
   as Trustee

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

                                      A-14
<PAGE>

                           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. Notice of redemption shall be mailed to the registered
holders of the Notes designated for redemption at their addresses as the same
shall appear on the Note register not less than 30 nor more than 60 calendar
days prior to the date fixed for redemption or within the Redemption Notice
Period specified on the face hereof, subject to all the conditions and
provisions of the Senior Indenture. In the event of redemption of this Note in
part only, a new Note or Notes for the amount of the unredeemed portion hereof
shall be issued in the name of the holder hereof upon the cancellation hereof.

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

                                      A-15
<PAGE>

hereof) at the option of the holder hereof at a price equal to 100% of the
principal amount to be repaid, together with interest accrued and unpaid hereon
to the date of repayment, provided that if this Note is issued with original
issue discount, this Note will be repayable on the applicable Optional Repayment
Date or Dates at the price(s) specified on the face hereof. For this Note to be
repaid at the option of the holder hereof, the Paying Agent must receive at its
corporate trust office in the Borough of Manhattan, The City of New York, at
least 15 but not more than 30 calendar days prior to the date of repayment, (i)
this Note with the form entitled "Option to Elect Repayment" below duly
completed or (ii) a telegram, telex, facsimile transmission or a letter from a
member of a national securities exchange or the National Association of
Securities Dealers, Inc. or a commercial bank or a trust company in the United
States setting forth the name of the holder of this Note, the principal amount
hereof, the certificate number of this Note or a description of this Note's
tenor and terms, the principal amount hereof to be repaid, a statement that the
option to elect repayment is being exercised thereby and a guarantee that this
Note, together with the form entitled "Option to Elect Repayment" duly
completed, will be received by the Paying Agent not later than the fifth
Business Day after the date of such telegram, telex, facsimile transmission or
letter; provided, that such telegram, telex, facsimile transmission or letter
shall only be effective if this Note and form duly completed are received by the
Paying Agent by such fifth Business Day. Exercise of such repayment option by
the holder hereof shall be irrevocable. In the event of repayment of this Note
in part only, a new Note or Notes for the amount of the unpaid portion hereof
shall be issued in the name of the holder hereof upon the cancellation hereof.

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

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

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

     This Note, and any Note or Notes issued upon transfer or exchange hereof,
is issuable only in fully registered form, without coupons, and, if denominated
in U.S. dollars, unless otherwise stated above, is issuable only in
denominations of U.S. $1,000 and any integral multiple of U.S. $1,000 in excess
thereof. If this Note is denominated in a Specified Currency other than U.S.
dollars, then, unless a higher minimum denomination is required by applicable

                                      A-16
<PAGE>

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.

     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

                                      A-17
<PAGE>

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 amortized from the Interest
Accrual Date to the date of declaration, which amortization shall be calculated
using the "interest method" (computed in accordance with generally accepted
accounting principles in effect on the date of declaration), (ii) for the
purpose of any vote of securityholders taken pursuant to the Senior Indenture
prior to the acceleration of payment of this Note, the principal amount hereof
shall equal the amount that would be due and payable hereon, calculated as set
forth in clause (i) above, if this Note were declared to be due and payable on
the date of any such vote and (iii) for the purpose of any vote of
securityholders taken pursuant to the Senior Indenture following the
acceleration of payment of this Note, the principal amount hereof shall equal
the amount of principal due and payable with respect to this Note, calculated as
set forth in clause (i) above.

     If the face hereof indicates that this Note is subject to "Tax Redemption
and Payment of Additional Amounts," this Note may be redeemed, as a whole, at
the option of the Issuer at any time prior to maturity, upon the giving of a
notice of redemption as described below, at a redemption price equal to 100% of
the principal amount hereof, together with accrued interest to the date fixed
for redemption (except that if this Note is subject to "Modified Payment upon
Acceleration or Redemption," such redemption price would be limited to the
aggregate principal amount hereof multiplied by the sum of the Issue Price
specified on the face hereof (expressed as a percentage of the aggregate
principal amount) plus the original issue discount amortized from

                                      A-18
<PAGE>

the Interest Accrual Date to the date of redemption, which amortization shall be
calculated using the "interest method" (computed in accordance with generally
accepted accounting principles in effect on the date of redemption) (the
"Amortized Amount")), if the Issuer determines that, as a result of any change
in or amendment to the laws, or any regulations or rulings promulgated
thereunder, of the United States or of any political subdivision or taxing
authority thereof or therein affecting taxation, or any change in official
position regarding the application or interpretation of such laws, regulations
or rulings, which change or amendment becomes effective on or after the Initial
Offering Date hereof, the Issuer has or will become obligated to pay Additional
Amounts, as defined below, with respect to this Note as described below. Prior
to the giving of any notice of redemption pursuant to this paragraph, the Issuer
shall deliver to the Trustee (i) a certificate stating that the Issuer is
entitled to effect such redemption and setting forth a statement of facts
showing that the conditions precedent to the right of the Issuer to so redeem
have occurred, and (ii) an opinion of independent legal counsel satisfactory to
the Trustee to such effect based on such statement of facts; provided that no
such notice of redemption shall be given earlier than 60 calendar days prior to
the earliest date on which the Issuer would be obligated to pay such Additional
Amounts if a payment in respect of this Note were then due.

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

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

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

                                      A-19
<PAGE>

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

          (c) any tax, assessment or other governmental charge imposed by reason
     of such holder's past or present status as a personal holding company or
     foreign personal holding company or controlled foreign corporation or
     passive foreign investment company with respect to the United States or as
     a corporation which accumulates earnings to avoid United States federal
     income tax or as a private foundation or other tax-exempt organization or a
     bank receiving interest under Section 881(c)(3)(A) of the Internal Revenue
     Code of 1986, as amended;

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

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

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

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

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

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

                                      A-20
<PAGE>

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 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

                                      A-21
<PAGE>

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
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.

                                      A-22
<PAGE>

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

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

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

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

                                      A-23
<PAGE>

                                  ABBREVIATIONS

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

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

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

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

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

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

                                      A-24
<PAGE>

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

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

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

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

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

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

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

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

                                      A-25
<PAGE>

                            OPTION TO ELECT REPAYMENT

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

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

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

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

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

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

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