Document:

FORM
OF FIXED RATE SENIOR NOTE

       

      
        	
                REGISTERED

              	
                REGISTERED

              
	
                No.
      FXR-1

              	
                U.S.
      $

              
	 
      	
                CUSIP:
      617480504

              

      

       

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

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      MORGAN
STANLEY

      SENIOR
GLOBAL MEDIUM-TERM NOTE, SERIES F

      (Fixed
Rate)

       

      STOCK
PARTICIPATION ACCRETING

      REDEMPTION
QUARTERLY-PAY SECURITIESSM
(“SPARQS”)

       

      %
SPARQS® DUE JULY
20, 2009

      MANDATORILY
EXCHANGEABLE

      FOR
COMMON STOCK OF

      INTEL
CORPORATION

       

      
        	
                ORIGINAL
      ISSUE DATE:

              	
                INITIAL
      REDEMPTION DATE: See “Morgan Stanley Call Right” below.

              	
                INTEREST
      RATE:  % per annum

              	
                MATURITY
      DATE: See “Maturity Date” below.

              
	
                INTEREST
      ACCRUAL DATE:

              	
                INITIAL
      REDEMPTION PERCENTAGE: See “Morgan Stanley Call Right” and “Call Price”
      below.

              	
                INTEREST
      PAYMENT DATE(S): See “Interest Payment Dates” below.

              	
                 OPTIONAL
      REPAYMENT

                DATE(S):  N/A

              
	
                SPECIFIED
      CURRENCY: U.S. dollars

              	
                ANNUAL
      REDEMPTION PERCENTAGE REDUCTION: N/A

              	
                INTEREST
      PAYMENT PERIOD: Quarterly

              	
                APPLICABILITY
      OF MODIFIED PAYMENT
      UPON ACCELERATION OR REDEMPTION: See “Alternate Exchange Calculation in
      Case of an Event of Default” below.

              
	
                IF
      SPECIFIED CURRENCY OTHER THAN U.S. DOLLARS, OPTION TO ELECT PAYMENT IN
      U.S. DOLLARS: N/A

              	
                REDEMPTION
      NOTICE PERIOD: At least 10 days but no more than 30 days.  See
      “Morgan Stanley Call Right” and “Morgan Stanley Notice Date”
      below.

              	
                APPLICABILITY
      OF ANNUAL INTEREST PAYMENTS: N/A

              	
                If
      yes, state Issue Price: N/A

              
	
                EXCHANGE
      RATE AGENT: N/A

              	
                TAX
      REDEMPTION AND PAYMENT OF ADDITIONAL AMOUNTS: NO

              	
                PRICE
      APPLICABLE UPON OPTIONAL REPAYMENT: N/A

              	
                ORIGINAL
      YIELD TO MATURITY: N/A

              
	
                OTHER
      PROVISIONS: See below.

              	
                IF
      YES, STATE INITIAL OFFERING DATE: N/A

              	 
      	 
      

      

      

      
        	
                Stated
      Principal Amount

              	 
      	
                $

              
	 	 	 
	
                Underlying
      Company

              	 
      	
                Intel
      Corporation (“INTC”)

              

      

       

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      
        	
                Underlying
      Stock

              	 
      	
                The
      common stock of INTC

              
	 	 	 
	
                Pricing
      Date

              	 
      	 
      
	 	 	 
	
                Issue
      Price

              	 
      	
                $             per
      SPARQS

              
	 	 	 
	
                Denominations

              	 
      	
                $             and
      integral multiples thereof

              
	 	 	 
	
                Acceleration
      Trigger Price

              	 
      	
                The
      product of $2.00 and the Exchange Ratio as of the Original Issue
      Date.

              
	 	 	 
	
                Exchange
      Ratio

              	 
      	
                    ,
      subject to adjustment for corporate events relating to the Underlying
      Stock described under “Antidilution Adjustments” below.

              
	 	 	 
	
                Yield
      to Call

              	 
      	
                     %
      per annum

              
	 	 	 
	
                First
      Call Date

              	 
      	
                January
      20, 2009

              
	 	 	 
	
                Maturity
      Date

              	 
      	
                July
      20, 2009, subject to acceleration as described below in “Price Event
      Acceleration” and “Alternate Exchange Calculation in Case of an Event of
      Default” and subject to extension if the Final Call Notice Date is
      postponed in accordance with the definition thereof.  If the
      Final Call Notice Date is postponed because it is not a Trading Day or due
      to a Market Disruption Event and the Issuer exercises the Morgan Stanley
      Call Right, the scheduled Maturity Date shall be postponed so that the
      Maturity Date is 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

              

      

       

       

      
        
          
          

        

        
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                (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
      20, 2008, January 20, 2009, April 20, 2009 and the Maturity
      Date.

              
	 	 	 
	 
      	 
      	
                If
      the scheduled Maturity Date is postponed, the Issuer shall pay interest on
      the Maturity Date as postponed rather than on the scheduled Maturity Date,
      but no interest shall accrue on this SPARQS or on such payment during the
      period from or after the scheduled Maturity Date.

              
	 	 	 
	
                Record
      Date

              	 
      	
                Notwithstanding
      the definition of “Record Date” below, 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

              

      

       

       

      
        
          
          

        

        
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                Date
      falls before the “ex-interest” date for an interest payment, so that as a
      result a scheduled Interest Payment Date does 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 shall occur after such Morgan Stanley Notice
      Date.

              
	 	 	 
	
                Morgan
      Stanley Call Right

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

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

              
	 	 	 
	 
      	 
      	
                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

              

      

       

       

      
        
          
          

        

        
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                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 shall be made upon presentation and
      surrender of this SPARQS, (vii) that such exchange is pursuant to the
      Morgan Stanley Call Right and (viii) if applicable, the date to which the
      Maturity Date has been extended due to a Market Disruption Event as
      described under “Maturity Date” above.

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

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

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

              
	 	 	 
	
                Morgan
      Stanley Notice Date

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

              
	 	 	 
	
                Final
      Call Notice Date

              	 
      	
                July
      10, 2009; provided that if such
      date is not a Trading Day or if a Market Disruption Event occurs on such
      day, the Final Call Notice Date shall be the immediately succeeding
      Trading Day on which no Market Disruption Event
  occurs.

              

      

       

       

      
        
          
          

        

        
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                Call
      Date

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

              
	 	 	 
	
                Call
      Price

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

              
	 	 	 
	
                Exchange
      at Maturity

              	 
      	
                At
      maturity, subject to a prior call of this SPARQS for cash in an amount
      equal to the Call Price by the Issuer as described under “Morgan Stanley
      Call Right” above or any acceleration of the SPARQS, upon delivery of this
      SPARQS to the Trustee, each Stated Principal Amount of this SPARQS shall
      be applied by the Issuer as payment for a number of shares of the
      Underlying Stock at the Exchange Ratio, and the Issuer shall deliver with
      respect to each Stated Principal Amount of this SPARQS a number of shares
      of the Underlying Stock equal to the Exchange Ratio.

              
	 	 	 
	 
      	 
      	
                The
      amount of Underlying Stock to be delivered at maturity shall be subject to
      any applicable adjustments (i) to the Exchange Ratio (including, as
      applicable, any New Stock Exchange Ratio or any Basket Stock Exchange
      Ratio, each as defined in paragraph 5 under “Antidilution Adjustments”
      below) and (ii) in the Exchange Property, as defined in paragraph 5 under
      “Antidilution Adjustments” below, to be delivered instead of, or in
      addition to, such Underlying Stock as a result of any corporate event
      described under 

              

      

       

       

      
        
          
          

        

        
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                “Antidilution
      Adjustments” below, to be delivered instead of, or in addition to, such
      Underlying Stock as a result of any corporate event described under
      “Antidilution Adjustments” below, in each case, required to be made
      through the close of business on the third Trading Day prior to the
      scheduled Maturity Date.

              
	 	 	 
	 
      	 
      	
                The
      Issuer shall, or shall cause the Calculation Agent to, provide written
      notice to the Trustee at its New York Office and to the Depositary, on
      which notice the Trustee and Depositary may conclusively rely, on or prior
      to 10:30 a.m. on the Trading Day immediately prior to maturity of this
      SPARQS (but if such Trading Day is not a Business Day, prior to the close
      of business on the Business Day preceding the maturity of this SPARQS), of
      the amount of Underlying Stock (or the amount of Exchange Property) or
      cash to be delivered with respect to each Stated Principal Amount of this
      SPARQS and of the amount of any cash to be paid in lieu of any fractional
      share of the Underlying Stock (or of any other securities included in
      Exchange Property, if applicable); provided that if the
      maturity date of this SPARQS is accelerated (x) because of a Price Event
      Acceleration (as described under “Price Event Acceleration” below) or (y)
      because of an Event of Default Acceleration (as defined under “Alternate
      Exchange Calculation in Case of an Event of Default” below), the Issuer
      shall give notice of such acceleration as promptly as possible, and in no
      case later than (A) in the case of an Event of Default Acceleration, two
      Trading Days following such deemed maturity date or (B) in the case of a
      Price Event Acceleration, 10:30 a.m. on the Trading Day immediately prior
      to the date of acceleration (as defined under “Price Event Acceleration”
      below), (i) to the holder of this SPARQS by mailing notice of such
      acceleration by first class mail, postage prepaid, to the holder’s last
      address as it shall appear upon the registry books, (ii) to the Trustee by
      telephone or facsimile confirmed by mailing such notice to the Trustee by
      first class mail, postage prepaid, at its New York office and (iii) to the
      Depositary by telephone or facsimile confirmed by mailing such notice to
      the Depositary by first class 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
  

              

      

       

       

      
        
          
          

        

        
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                holder
      of this SPARQS receives the notice.  If the maturity of this
      SPARQS is accelerated, no interest on the amounts payable with respect to
      this SPARQS shall accrue for the period from and after such accelerated
      maturity date; provided that the
      Issuer has deposited with the Trustee the Underlying Stock, the Exchange
      Property or any cash due with respect to such acceleration by such
      accelerated maturity date.

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

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

              
	 	 	 
	
                Price
      Event Acceleration

              	 
      	
                If
      on any two consecutive Trading Days during the period prior to and ending
      on the third Business Day immediately preceding the Maturity Date, the
      product of the Closing Price of the Underlying Stock and the Exchange
      Ratio is less than the Acceleration Trigger Price, the Maturity Date of
      this SPARQS shall be deemed to be accelerated to the third Business Day
      immediately following such second Trading Day (the “date of
      acceleration”).  Upon such acceleration, the holder of each
      Stated Principal Amount of this SPARQS shall receive per SPARQS on the
      date of acceleration:

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

              

      

       

       

      
        
          
          

        

        
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                (ii)
      accrued but unpaid interest on each Stated Principal Amount of this SPARQS
      to but excluding the date of acceleration; and

              
	 	 	 
	 
      	 
      	
                (iii)
      an amount of cash as determined by the Calculation Agent equal to the sum
      of the present values of the remaining scheduled payments of interest on
      each Stated Principal Amount of this SPARQS (excluding the amounts
      included in clause (ii) above) discounted to the date of
      acceleration.  The present value of each remaining scheduled
      payment shall 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.

              
	 	 	 
	 
      	 
      	
                The
      holder of this SPARQS shall not be entitled to receive the return of each
      Stated Principal Amount of this SPARQS upon a Price Event
      Acceleration.

              
	 	 	 
	
                No
      Fractional Shares

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

              
	 	 	 
	
                Closing
      Price

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

              
	 	 	 
	
                 

              	 
      	
                

                  · 
      if the Underlying
      Stock (or any such other security) is listed or admitted to trading on a
      national securities exchange (other than The NASDAQ Stock Market LLC (the
      “NASDAQ”)), the last reported sale price, regular way, of the principal
      trading session on such day on the principal national securities exchange
      registered under the

                

              

      

       

      
      

       

      
        
          
          

        

        
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                Securities Exchange
      Act of 1934, as amended (the “Exchange Act”), on which the Underlying
      Stock (or any such other security) is listed or admitted to
      trading,

              
	 	 	 
	
                 

              	 
      	
                

                  · 
      if the
      Underlying Stock (or any such other security) is a security of the NASDAQ,
      the official closing price published by the NASDAQ on such day,
      or

                

              
	 	 	 
	
                 

              	 
      	
                

                  · 
      if the
      Underlying Stock (or any such other security) is not listed or admitted to
      trading on any national securities exchange but is included in the OTC
      Bulletin Board Service (the “OTC Bulletin Board”) operated by the
      Financial Industry Regulatory Authority, Inc., the last reported sale
      price of the principal trading session on the OTC Bulletin Board on such
      day.

                

              
	 	 	 
	 
      	 
      	
                If
      the Underlying Stock (or any such other security) is listed or admitted to
      trading on any national securities exchange but the last reported sale
      price or the official closing price published by NASDAQ, as applicable, is
      not available pursuant to the preceding sentence, then the Closing Price
      for one share of the Underlying Stock (or one unit of any such other
      security) on any Trading Day shall mean the last reported sale price of
      the principal trading session on the over-the-counter market as reported
      on the NASDAQ or the OTC Bulletin Board on such day.  If a
      Market Disruption Event occurs with respect to the Underlying Stock (or
      any such other security) or the last reported sale price or the official
      closing price published by NASDAQ, as applicable, for the Underlying Stock
      (or any such other security) is not available pursuant to either of the
      two preceding sentences, then the Closing Price for any Trading Day shall
      be the mean, as determined by the Calculation Agent, of the bid prices for
      the Underlying Stock (or any such other security) for such Trading Day
      obtained from as many recognized dealers in such security, but not
      exceeding three, as shall 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

              

      

       

       

      
        
          
          

        

        
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                term
      “OTC Bulletin Board Service” shall 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 LLC (“NYSE”), the American Stock
      Exchange LLC, the NASDAQ, the Chicago Mercantile Exchange, the Chicago
      Board of Options Exchange and in the over-the-counter market for equity
      securities in the United States and, if the principal trading market of
      the Underlying Stock is outside the United States, in such principal
      trading market.

              
	 	 	 
	
                Calculation
      Agent

              	 
      	
                Morgan
      Stanley & Co. Incorporated (“MS & Co.”) and its
      successors.

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

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

              
	 	 	 
	
                Antidilution
      Adjustments

              	 
      	
                The
      Exchange Ratio shall be adjusted as follows:

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

              

      

       

       

      
        
          
          

        

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

              
	 	 	 
	 
      	 
      	
                3.
      If the Underlying Company issues rights or warrants to all holders of the
      Underlying Stock to subscribe for or purchase Underlying Stock at an
      exercise price per share less than the Closing Price of the Underlying
      Stock on both (i) the date the exercise price of such rights or warrants
      is determined and (ii) the expiration date of such rights or warrants, and
      if the expiration date of such rights or warrants precedes the maturity of
      this SPARQS, then the Exchange Ratio shall be adjusted to equal the
      product of the prior Exchange Ratio and a fraction, the numerator of which
      shall be the number of shares of the Underlying Stock outstanding
      immediately prior to the issuance of such rights or warrants plus the
      number of additional shares of Underlying Stock offered for subscription
      or purchase pursuant to such rights or warrants and the denominator of
      which shall be the number of shares of Underlying Stock outstanding
      immediately prior to the issuance of such rights or warrants plus the
      number of additional shares of Underlying Stock which the aggregate
      offering price of the total number of shares of Underlying Stock so
      offered for subscription or purchase pursuant to such rights or warrants
      would purchase at the Closing Price on the expiration date of such rights
      or warrants, which shall be determined by multiplying such total number of
      shares offered by the exercise price of such rights or warrants and
      dividing the product so obtained by such Closing
  Price.

              

      

       

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      
        	 
      	 
      	
                4.
      There shall be no adjustments to the Exchange Ratio to reflect cash
      dividends or other distributions paid with respect to the Underlying Stock
      other than distributions described in paragraph 2, paragraph 3 and clauses
      (i), (iv) and (v) of the first sentence of paragraph 5 and Extraordinary
      Dividends as described below.  A cash dividend or other
      distribution with respect to the Underlying Stock shall be deemed to be an
      “Extraordinary Dividend” if such cash dividend or distribution exceeds the
      immediately preceding non-Extraordinary Dividend for the Underlying Stock
      by an amount equal to at least 10% of the Closing Price of the Underlying
      Stock (as adjusted for any subsequent corporate event requiring an
      adjustment hereunder, such as a stock split or reverse stock split) on the
      Trading Day preceding the ex-dividend date (that is, the day on and after
      which transactions in the Underlying Stock on the primary U.S. organized
      securities exchange or trading system on which the Underlying Stock is
      traded or trading system no longer carry the right to receive that cash
      dividend or that cash distribution) for the payment of such Extraordinary
      Dividend (such closing price, the “Base Closing
      Price”).  Subject to the following sentence, if an Extraordinary
      Dividend occurs with respect to the Underlying Stock, the Exchange Ratio
      with respect to the Underlying Stock shall be adjusted on the ex-dividend
      date with respect to such Extraordinary Dividend so that the new Exchange
      Ratio shall equal the product of (i) the then current Exchange Ratio and
      (ii) a fraction, the numerator of which is the Base Closing Price, and the
      denominator of which is the amount by which the Base Closing Price exceeds
      the Extraordinary Dividend Amount.  If any Extraordinary
      Dividend Amount 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 “Extraordinary
      Dividend Amount” with respect to an Extraordinary Dividend for the
      Underlying Stock shall equal (i) in the case
of

              

      

       

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      
        	 	 	

                cash
      dividends or other distributions that constitute regular dividends, the
      amount per share of such Extraordinary Dividend minus the amount per share
      of the immediately preceding non-Extraordinary Dividend for the Underlying
      Stock or (ii) in the case of cash dividends or other distributions that do
      not constitute regular dividends, the amount per share of such
      Extraordinary Dividend.  The value of the non-cash component of
      an Extraordinary Dividend shall be determined on the ex-dividend date for
      such distribution by the Calculation Agent, whose determination shall be
      conclusive in the absence of manifest error.  A distribution on
      the Underlying Stock described in clause (i), (iv) or (v) of the first
      sentence of paragraph 5 below shall cause an adjustment to the Exchange
      Ratio pursuant only to clause (i), (iv) or (v) of the first sentence of
      paragraph 5, as applicable.

              
	 	 	 
	 
      	 
      	
                5.
      Any of the following shall constitute a Reorganization
      Event:  (i) the Underlying Stock is reclassified or changed,
      including, without limitation, as a result of the issuance of any tracking
      stock by the Underlying Company, (ii) the Underlying Company has been
      subject to any merger, combination or consolidation and is not the
      surviving entity, (iii) the Underlying Company completes a statutory
      exchange of securities with another corporation (other than pursuant to
      clause (ii) above), (iv) the Underlying Company is liquidated, (v) the
      Underlying Company issues to all of its shareholders equity securities of
      an issuer other than the Underlying Company (other than in a transaction
      described in clause (ii), (iii) or (iv) above) (a “spinoff stock”) or (vi)
      the Underlying Stock is the subject of a tender or exchange offer or going
      private transaction on all of the outstanding shares.  If any
      Reorganization Event occurs, in each case as a result of which the holders
      of the Underlying Stock receive any equity security listed on a national
      securities exchange or traded on NASDAQ (a “Marketable Security”), other
      securities or other property, assets or cash (collectively “Exchange
      Property”), the amount payable upon exchange at maturity with respect to
      each Stated Principal Amount of this SPARQS following the effective date
      for such

              

      

       

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

      
        	 	 	

                Reorganization
      Event (or, if applicable, in the case of spinoff stock, the ex-dividend
      date for the distribution of such spinoff stock) and any required
      adjustment to the Exchange Ratio shall be determined in accordance with
      the following:

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

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

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

              
	 	 	 
	 
      	 
      	
                (i)
      if the combined value of the amount of Non-Stock Exchange Property
      received per share of Underlying Stock, as determined by the Calculation
      Agent in its sole discretion on the effective date of such Reorganization
      Event (the “Non-Stock Exchange Property Value”), by holders of the
      Underlying Stock is less than 25% of the Closing Price of the Underlying
      Stock on the Trading Day immediately prior to the effective date of such
      Reorganization

              

      

       

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      
        	 	 	

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

              
	 	 	 
	 
      	 
      	
                (ii)
      if the Non-Stock Exchange Property Value is equal to or exceeds 25% of the
      Closing Price of Underlying Stock on the Trading Day immediately prior to
      the effective date relating to such Reorganization Event or, if the
      Underlying Stock is surrendered exclusively for Non-Stock Exchange
      Property (in each case, a “Reference Basket Event”), an initially
      equal-dollar weighted basket of three Reference Basket Stocks (as defined
      below) with an aggregate value on the effective date of such
      Reorganization Event equal to the Non-Stock Exchange Property Value
      multiplied by the Exchange Ratio in effect for the Underlying Stock on the
      Trading Day immediately prior to the effective date of such Reorganization
      Event.  The “Reference Basket Stocks” shall be the three stocks
      with the largest market capitalization among the stocks that then
      constitute the NASDAQ-100 Index®
      (or, if publication of such index is discontinued, any successor or
      substitute index selected by the 

              

      

       

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

       

      
        	 	 	

                Calculation
      Agent in its sole discretion) with the same primary Standard Industrial
      Classification Code (“SIC Code”) as the Underlying Company; provided, however, that
      a Reference Basket Stock shall not include any stock that is subject to a
      trading restriction under the trading restriction policies of Morgan
      Stanley or any of its affiliates that would materially limit the ability
      of Morgan Stanley or any of its affiliates to hedge the SPARQS with
      respect to such stock (a “Hedging Restriction”); provided further that
      if three Reference Basket Stocks cannot be identified from the NASDAQ-100
      Index® by
      primary SIC Code for which a Hedging Restriction does not exist, the
      remaining Reference Basket Stock(s) shall be selected by the Calculation
      Agent from the largest market capitalization stock(s) within the same
      Division and Major Group classification (as defined by the Office of
      Management and Budget) as the primary SIC Code for the Underlying
      Company.  Each Reference Basket Stock shall be assigned a Basket
      Stock Exchange Ratio equal to the number of shares of such Reference
      Basket Stock with a Closing Price on the effective date of such
      Reorganization Event equal to the product of (a) the Non-Stock Exchange
      Property Value, (b) the Exchange Ratio in effect for the Underlying Stock
      on the Trading Day immediately prior to the effective date of such
      Reorganization Event and (c) 0.3333333.

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

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

              

      

       

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

         

      

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

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

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

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

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

              

      

       

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

       

      
        	 	 	

                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 the
      Depositary of the occurrence of such Reference Basket Event and of the
      three Reference Basket Stocks selected as promptly as possible and in no
      event later than five Business Days after the date of the Reference Basket
      Event.

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

              

      

       

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

       

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

              
	 	 	 
	
                Market
      Disruption Event

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

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

              
	 	 	 
	 
      	 
      	
                (ii)
      a determination by the Calculation Agent in its sole discretion that any
      event described in clause (i) above materially interfered with the ability
      of the Issuer or any of its affiliates to unwind or adjust all or a
      material portion of the hedge with respect to this issuance of
      SPARQS.

              
	 	 	 
	 
      	 
      	
                For
      purposes of determining whether a Market Disruption Event has occurred:
      (1) a limitation on the hours or number of days of trading shall not
      constitute a Market Disruption Event if it results from an announced
      change in the regular business hours of the primary market, (2) a decision
      to permanently discontinue trading in the relevant options
      contract

              

      

       

       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

       

      
        	 	 	

                shall
      not constitute a Market Disruption Event, (3) limitations pursuant to NYSE
      Rule 80A (or any applicable rule or regulation enacted or promulgated by
      the NYSE, any other self-regulatory organization or  the
      Securities and Exchange Commission of scope similar to NYSE Rule 80A as
      determined by the Calculation Agent) on trading during significant market
      fluctuations shall constitute a suspension, absence or material limitation
      of trading, (4) a suspension of trading in options contracts on the
      Underlying Stock by the primary securities market trading in such options,
      if available, by reason of (x) a price change exceeding limits set by such
      securities exchange or market, (y) an imbalance of orders relating to such
      contracts or (z) a disparity in bid and ask quotes relating to such
      contracts shall constitute a suspension, absence or material limitation of
      trading in options contracts related to the Underlying Stock and (5) a
      suspension, absence or material limitation of trading on the primary
      securities market on which options contracts related to the Underlying
      Stock are traded shall not include any time when such securities market is
      itself closed for trading under ordinary circumstances.

              
	 	 	 
	
                Alternate
      Exchange Calculation

              	 
      	 
      
	
                in
      Case of an Event of Default

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

              

      

       

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

       

      
        	 	 	

                in
      cash for each Stated Principal Amount of this SPARQS equal to the Call
      Price for the Call Date specified in the Issuer’s notice of mandatory
      exchange, plus accrued but unpaid interest to but excluding the date of
      acceleration.

              

      

       

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

         

      

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

       

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

       

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

       

       

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

       

      in U.S.
dollars.  U.S. dollar payments of interest, other than interest due at
maturity or on any date of redemption or repayment, will be made by U.S. dollar
check mailed to the address of the person entitled thereto as such address shall
appear in the Note register.  A holder of U.S. $10,000,000 (or the
equivalent in a Specified Currency) or more in aggregate principal amount of
Notes having the same Interest 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

       

       

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

         

      

      Agent
unless such Exchange Rate Agent is an affiliate of the Issuer) for the purchase
by the quoting dealer of the Specified Currency for U.S. dollars for settlement
on such payment date in the amount of the Specified Currency payable in the
absence of such an election to such holder and at which the applicable dealer
commits to execute a contract.  If such bid quotations are not
available, such payment will be made in the Specified Currency.  All
currency exchange costs will be borne by the holder of this Note by deductions
from such payments.

       

      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.

       

       

      
        
          
          

        

        
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          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.

                
	 
	
                  THE
      BANK OF NEW YORK,

                  as
      Trustee

                
	 
	 
	
                  By:
      

                	 
      
	
                  Authorized
      Signatory

                

        

        
 

        
          
            
            

          

          
            27

            
              

            

          

          
            
            

          

           

        

      

      FORM
OF REVERSE OF SECURITY

       

      This Note
is one of a duly authorized issue of Senior Global Medium-Term Notes, Series F
(the “Notes”) of the
Issuer.  The Notes are issuable under a Senior Indenture, dated as of
November 1, 2004, between the Issuer and The Bank of New York, a New York
banking corporation (as successor Trustee to 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 The Bank of New York (as
successor to JPMorgan Chase Bank, N.A.) at its corporate trust office in The
City of New York as the paying agent (the “Paying Agent,” which term
includes any additional or successor Paying Agent appointed by the Issuer) with
respect to the Notes.  The terms of individual Notes may vary with
respect to interest rates, interest rate formulas, issue dates, maturity dates,
or otherwise, all as provided in the Senior Indenture.  To the extent
not inconsistent herewith, the terms of the Senior Indenture are hereby
incorporated by reference herein.

      

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

       

      If so indicated on the face hereof,
this Note may be redeemed in whole or in part at the option of the Issuer on or
after the Initial Redemption Date specified on the face hereof on the terms set
forth on the face hereof, together with interest accrued and unpaid hereon to
the date of redemption.  If this Note is subject to “Annual Redemption
Percentage Reduction,” the Initial Redemption Percentage indicated on the face
hereof will be reduced on each anniversary of the Initial Redemption Date by the
Annual Redemption Percentage Reduction specified on the face hereof until the
redemption price of this Note is 100% of the principal amount hereof, together
with interest accrued and unpaid hereon to the date of redemption.  If
the face hereof indicates that this Note is subject to “Modified Payment upon
Acceleration or Redemption”, the amount of principal payable upon redemption
will be limited to the aggregate principal amount hereof multiplied by the sum
of the Issue Price specified on the face hereof (expressed as a percentage of
the aggregate principal amount) plus the original issue discount accrued from
the Interest Accrual Date to the date of redemption (expressed as a percentage
of the aggregate principal amount), with the amount of original issue discount
accrued being calculated using a constant yield method (as described
below).  Notice of redemption shall be mailed to the registered
holders of the Notes designated for redemption at their addresses as the same
shall appear on the Note register not less than 30 nor more than 60 calendar
days prior to the date fixed for redemption or within the Redemption Notice
Period specified on the face hereof, subject to all the conditions and
provisions of the Senior Indenture.  In the event of redemption of
this Note in

       

       

      
        
          
          

        

        
          28

          
            

          

        

        
          
          

        

         

      

      part only,
a new Note or Notes for the amount of the unredeemed portion hereof shall be
issued in the name of the holder hereof upon the cancellation
hereof.

       

      If so indicated on the face of this
Note, this Note will be subject to repayment at the option of the holder on the
Optional Repayment Date or Dates specified on the face hereof on the terms set
forth herein.  On any Optional Repayment Date, this Note will be
repayable in whole or in part in increments of $1,000 or, if this Note is
denominated in a Specified Currency other than U.S. dollars, in increments of
1,000 units of such Specified Currency (provided that any remaining principal
amount hereof shall not be less than the minimum authorized denomination hereof)
at the option of the holder hereof at a price equal to 100% of the principal
amount to be repaid, together with interest accrued and unpaid hereon to the
date of repayment, provided
that if the face hereof indicates that this Note is subject to “Modified
Payment upon Acceleration or Redemption”, the amount of principal payable upon
repayment will be limited to the aggregate principal amount hereof multiplied by
the sum of the Issue Price specified on the face hereof (expressed as a
percentage of the aggregate principal amount) plus the original issue discount
accrued from the Interest Accrual Date to the date of
repayment  (expressed as a percentage of the aggregate principal
amount), with the amount of original issue discount accrued being calculated
using a constant yield method (as described below).  For this Note to
be repaid at the option of the holder hereof, the Paying Agent must receive at
its corporate trust office in the Borough of Manhattan, The City of New York, at
least 15 but not more than 30 calendar days prior to the date of repayment, (i)
this Note with the form entitled “Option to Elect Repayment” below duly
completed or (ii) a telegram, telex, facsimile transmission or a letter from a
member of a national securities exchange or the Financial Industry Regulatory
Authority, 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

       

       

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

         

      

      next
succeeding Business Day with the same force and effect as if made on the
Interest Payment Date or on the Maturity Date (or any redemption or repayment
date), and no interest on such payment shall accrue for the period from and
after the Interest Payment Date or the Maturity Date (or any redemption or
repayment date) to such next succeeding Business Day.

       

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

       

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

       

      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

       

       

      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

       

      Issuer and
the Trustee and executed by the registered holder in person or by the holder’s
attorney duly authorized in writing.  The date of registration of any
Note delivered upon any exchange or transfer of Notes shall be such that no gain
or loss of interest results from such exchange or transfer.

       

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

       

      The Senior
Indenture provides that (a) if an Event of Default (as defined in the Senior
Indenture) due to the default in payment of principal of, premium, if any, or
interest on, any series of debt securities issued under the Senior Indenture,
including the series of Senior Medium-Term Notes of which this Note forms a
part, or due to the default in the performance or breach of any other covenant
or warranty of the Issuer applicable to the debt securities of such series but
not applicable to all outstanding debt securities issued under the Senior
Indenture shall have occurred and be continuing, either the Trustee or the
holders of not less than 25% in aggregate principal amount of the outstanding
debt securities of each affected series, voting as one class, by notice in
writing to the Issuer and to the Trustee, if given by the securityholders, may
then declare the principal of all debt securities of all such series and
interest accrued thereon to be due and payable immediately and (b) if an Event
of Default due to a default in the performance of any other of the covenants or
agreements in the Senior Indenture applicable to all outstanding debt securities
issued 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

       

       

      
        
          
          

        

        
          31

          
            

          

        

        
          
          

        

         

      

      Issue
Price specified on the face hereof (expressed as a percentage of the aggregate
principal amount) plus the original issue discount accrued from the Interest
Accrual Date to the date of declaration (expressed as a percentage of the
aggregate principal amount), with the amount of original issue discount accrued
being calculated using a constant yield method (as described in the next
paragraph), (ii) for the purpose of any vote of securityholders taken pursuant
to the Senior Indenture prior to the acceleration of payment of this Note, the
principal amount hereof shall equal the amount that would be due and payable
hereon, calculated as set forth in clause (i) above, if this Note were declared
to be due and payable on the date of any such vote and (iii) for the purpose of
any vote of securityholders taken pursuant to the Senior Indenture following the
acceleration of payment of this Note, the principal amount hereof shall equal
the amount of principal due and payable with respect to this Note, calculated as
set forth in clause (i) above.

       

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

       

      If the face hereof indicates that this
Note is subject to “Tax Redemption and Payment of Additional Amounts,” this Note
may be redeemed, as a whole, at the option of the Issuer at any time prior to
maturity, upon the giving of a notice of redemption as described below, at a
redemption price equal to 100% of the principal amount hereof, together with
accrued interest to the date fixed for redemption (except that if this Note is
subject to “Modified Payment upon Acceleration or Redemption,” the amount of
principal so payable will be limited to the aggregate principal amount hereof
multiplied by the sum of the Issue Price specified on the face hereof (expressed
as a percentage of the aggregate principal amount) plus the original issue
discount accrued from the Interest Accrual Date to the date of redemption
(expressed as a percentage of the aggregate principal amount), with the amount
of original issue discount accrued being calculated using a constant yield
method (as described above)), if the Issuer determines that, as a result of any
change in or amendment to the laws (including a holding, judgment or as ordered
by a court of competent jurisdiction), or any regulations or rulings promulgated
thereunder, of the United States or of any political subdivision or taxing
authority thereof or therein affecting taxation, or any change in official
position regarding the application or interpretation of such laws, regulations
or rulings, which change or amendment occurs, becomes effective or, in the case
of a change in official position, is announced on or after the Initial Offering
Date hereof, the Issuer has or will become obligated to pay Additional Amounts,
as defined below, with respect to this Note as described below.  Prior
to the giving of any notice of redemption pursuant to this paragraph, the Issuer
shall deliver to the Trustee (i) a certificate stating that the Issuer is
entitled to effect such redemption and setting forth a statement of facts
showing that the conditions precedent to the right of the Issuer to so redeem
have occurred, and (ii) an opinion of

       

       

      
        
          
          

        

        
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      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 U.S. Alien as may be necessary in order that every
net payment of the principal of and interest on this Note and any other amounts
payable on this Note, after withholding or deduction for or on account of any
present or future tax, assessment or governmental charge imposed upon or as a
result of such payment by the United States, or any political subdivision or
taxing authority thereof or therein, will not be less than the amount provided
for in this Note to be then due and payable.  The Issuer will not,
however, make any payment of Additional Amounts to any such holder who is a U.S.
Alien for or on account of:

       

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

       

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

       

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

       

       

      
        
          
          

        

        
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      (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 U.S. Alien who is a fiduciary or
partnership or other than the sole beneficial owner of such payment to the
extent such payment would be required by the laws of the United States (or any
political subdivision thereof) to be included in the income, for tax purposes,
of a beneficiary or settlor with respect to such fiduciary or a member of such
partnership or a beneficial owner who would not have been entitled to the
Additional Amounts had such beneficiary, settlor, member or beneficial owner
been the holder of this Note.

       

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

       

       

      
        
          
          

        

        
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      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

       

       

      
        
          
          

        

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

       

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

       

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

       

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

       

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

       

       

      
        
          
          

        

        
          36

          
            

          

        

        
          
          

        

         

      

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

       

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

       

      

      
        
          
          

        

        
          37

          
            

          

        

        
          
          

        

      

       

      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.

           

          _______________________

           

           

          
            
              
              

            

            
              38

              
                

              

            

            
              
              

            

          

          
             

            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.

                    

            

             

             

            
              
                
                

              

              
                39

                
                  

                

              

              
                
                

              

            

             

            OPTION TO ELECT
REPAYMENT

             

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

             

              
                

              

            

             

              
                

              

            

             

              
                

              

            

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

             

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

             

            
               

              
                	Dated:
      ______________________________	____________________________________________
	 	
                        NOTICE:  The
      signature on this Option to Elect Repayment must

                        correspond
      with the name as written upon the face of the within

                        instrument
      in every particular without alteration or
  enlargement.

                      

              

               

            

             

             

            40FORM
OF FIXED RATE SENIOR NOTE

      
      

       

      
        	REGISTERED	REGISTERED
	No. FXR-1	U.S. $
	 	CUSIP:
    617480538

      

       

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

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      MORGAN
STANLEY

      SENIOR
GLOBAL MEDIUM-TERM NOTE, SERIES F

      (Fixed
Rate)

       

      STOCK
PARTICIPATION ACCRETING

      REDEMPTION
QUARTERLY-PAY SECURITIESSM
(“SPARQS”)

       

      %
SPARQS® DUE JULY
20, 2009

      MANDATORILY
EXCHANGEABLE

      FOR
COMMON STOCK OF

      WEATHERFORD
INTERNATIONAL LTD.

       

      
        	
                ORIGINAL
      ISSUE DATE:

              	
                INITIAL
      REDEMPTION DATE: See “Morgan Stanley Call Right” below.

              	
                INTEREST
      RATE:  % per annum

              	
                MATURITY
      DATE: See “Maturity Date” below.

              
	
                INTEREST
      ACCRUAL DATE:

              	
                INITIAL
      REDEMPTION PERCENTAGE: See “Morgan Stanley Call Right” and “Call Price”
      below.

              	
                INTEREST
      PAYMENT DATE(S): See “Interest Payment Dates” below.

              	
                OPTIONAL
      REPAYMENT DATE(S):  N/A

              
	
                SPECIFIED
      CURRENCY: U.S. dollars

              	
                ANNUAL
      REDEMPTION PERCENTAGE REDUCTION: N/A

              	
                INTEREST
      PAYMENT PERIOD: Quarterly

              	
                APPLICABILITY
      OF MODIFIED

                PAYMENT
      UPON ACCELERATION OR REDEMPTION: See “Alternate Exchange Calculation in
      Case of an Event of Default” below.

              
	
                IF
      SPECIFIED CURRENCY OTHER THAN U.S. DOLLARS, OPTION TO ELECT PAYMENT IN
      U.S. DOLLARS: N/A

              	
                REDEMPTION
      NOTICE PERIOD: At least 10 days but no more than 30 days.  See
      “Morgan Stanley Call Right” and “Morgan Stanley Notice Date”
      below.

              	
                APPLICABILITY
      OF ANNUAL INTEREST PAYMENTS: N/A

              	
                If
      yes, state Issue Price: N/A

              
	
                EXCHANGE
      RATE AGENT: N/A

              	
                TAX
      REDEMPTION AND PAYMENT OF ADDITIONAL AMOUNTS: NO

              	
                PRICE
      APPLICABLE UPON OPTIONAL REPAYMENT: N/A

              	
                ORIGINAL
      YIELD TO MATURITY: N/A

              
	
                OTHER
      PROVISIONS: See below.

              	
                IF
      YES, STATE INITIAL OFFERING DATE: N/A

              	 
      	 
      

      

       

      
      

       

      
        	

                Stated
      Principal Amount

              	 	

                $

              
	 	 	 
	

                Underlying
      Company

              	 	

                Weatherford
      International Ltd. (“WFT”)

              
	 	 	 
	

                Underlying
      Stock

              	 	

                The
      common stock of WFT

              

      

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

       

      
        	

                Pricing
      Date

              	 	 
	 	 	 
	

                Issue
      Price

              	 	

                $             per
      SPARQS

              
	 	 	 
	

                Denominations

              	 	

                $             and
      integral multiples thereof

              
	 	 	 
	

                Acceleration
      Trigger Price

              	 	

                The
      product of $2.00 and the Exchange Ratio as of the Original Issue
      Date.

              
	 	 	 
	

                Exchange
      Ratio

              	 	

                    ,
      subject to adjustment for corporate events relating to the Underlying
      Stock described under “Antidilution Adjustments” below.

              
	 	 	 
	

                Yield
      to Call

              	 	

                     %
      per annum

              
	 	 	 
	

                First
      Call Date

              	 	

                January
      20, 2009

              
	 	 	 
	

                Maturity
      Date

              	 	

                July
      20, 2009, subject to acceleration as described below in “Price Event
      Acceleration” and “Alternate Exchange Calculation in Case of an Event of
      Default” and subject to extension if the Final Call Notice Date is
      postponed in accordance with the definition thereof.  If the
      Final Call Notice Date is postponed because it is not a Trading Day or due
      to a Market Disruption Event and the Issuer exercises the Morgan Stanley
      Call Right, the scheduled Maturity Date shall be postponed so that the
      Maturity Date is 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 

              

      

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

       

      
        	 	 	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
      20, 2008, January 20, 2009, April 20, 2009 and the Maturity
      Date.

                 

                If
      the scheduled Maturity Date is postponed, the Issuer shall pay interest on
      the Maturity Date as postponed rather than on the scheduled Maturity Date,
      but no interest shall accrue on this SPARQS or on such payment during the
      period from or after the scheduled Maturity Date.

              
	 	 	 
	

                Record
      Date

              	 	

                Notwithstanding
      the definition of “Record Date” below, 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
      does 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
    

              

      

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

       

      
        	 	 	under “Morgan Stanley
      Call Right” below, that no Interest Payment Date shall occur after such
      Morgan Stanley Notice Date.
	 	 	 
	

                Morgan
      Stanley Call Right

              	 	

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

                 

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

                 

                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 shall be made upon presentation and
      surrender of this SPARQS, (vii) that such exchange is pursuant to the
      Morgan Stanley 

              

      

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

       

      
        	 	 	
                Call Right
      and (viii) if applicable, the date to which the Maturity Date has been
      extended due to a Market Disruption Event as described under “Maturity
      Date” above.

                 

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

                 

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

                 

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

              
	 	 	 
	

                Morgan
      Stanley Notice Date

              	 	

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

              
	 	 	 
	

                Final
      Call Notice Date

              	 	

                July
      10, 2009; provided that if such
      date is not a Trading Day or if a Market Disruption Event occurs on such
      day, the Final Call Notice Date shall be the immediately succeeding
      Trading Day on which no Market Disruption Event occurs.

              
	 	 	 
	

                Call
      Date

              	 	

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

              

      

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

       

      
        	

                Call
      Price

              	 	

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

              
	 	 	 
	

                Exchange
      at Maturity

              	 	

                At
      maturity, subject to a prior call of this SPARQS for cash in an amount
      equal to the Call Price by the Issuer as described under “Morgan Stanley
      Call Right” above or any acceleration of the SPARQS, upon delivery of this
      SPARQS to the Trustee, each Stated Principal Amount of this SPARQS shall
      be applied by the Issuer as payment for a number of shares of the
      Underlying Stock at the Exchange Ratio, and the Issuer shall deliver with
      respect to each Stated Principal Amount of this SPARQS a number of shares
      of the Underlying Stock equal to the Exchange Ratio.

                 

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

                 

                The
      Issuer shall, or shall cause the Calculation Agent to, provide written
      notice to the Trustee at its New York Office and to the Depositary, on
      which notice the Trustee and Depositary may conclusively rely, on or prior
      to 10:30 a.m. on the Trading Day immediately

              

      

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

       

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

                 

                The
      Issuer shall, or shall cause the Calculation Agent to, deliver any such
      shares of the Underlying Stock (or any Exchange Property) and cash in
      respect of interest 

              

      

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

       

      
        	 	 	
                and any
      fractional share of the Underlying Stock (or any Exchange Property) and
      cash otherwise due upon any acceleration described above to the Trustee
      for delivery to the holder of this Note.  References to payment
      “per SPARQS” refer to each Stated Principal Amount of this
      SPARQS.

                 

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

              
	 	 	 
	

                Price
      Event Acceleration

              	 	

                If
      on any two consecutive Trading Days during the period prior to and ending
      on the third Business Day immediately preceding the Maturity Date, the
      product of the Closing Price of the Underlying Stock and the Exchange
      Ratio is less than the Acceleration Trigger Price, the Maturity Date of
      this SPARQS shall be deemed to be accelerated to the third Business Day
      immediately following such second Trading Day (the “date of
      acceleration”).  Upon such acceleration, the holder of each
      Stated Principal Amount of this SPARQS shall receive per SPARQS on the
      date of acceleration:

              
	 	 	 
	 	 	

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

                 

                (ii)
      accrued but unpaid interest on each Stated Principal Amount of this SPARQS
      to but excluding the date of acceleration; and

                 

                (iii)
      an amount of cash as determined by the Calculation Agent equal to the sum
      of the present values of the remaining scheduled payments of interest on
      each Stated Principal Amount of this SPARQS (excluding the amounts
      included in clause (ii) above) discounted to the date of
      acceleration.  The present value of each remaining scheduled
      payment shall be based on the comparable yield that the Issuer would pay
      on a 

              

      

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

       

      
        	 	 	
                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.

              
	 	 	 
	 	 	

                The
      holder of this SPARQS shall not be entitled to receive the return of each
      Stated Principal Amount of this SPARQS upon a Price Event
      Acceleration.

              
	 	 	 
	

                No
      Fractional Shares

              	 	

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

              
	 	 	 
	

                Closing
      Price

              	 	

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

              

      

       

      
      

      
        
          	
                  
                  

                	
                  ·

                	
                  if
      the Underlying Stock (or any such other security) is listed or admitted to
      trading on a national securities exchange (other than The NASDAQ Stock
      Market LLC (the “NASDAQ”)), the last reported sale price, regular way, of
      the principal trading session on such day on the principal national
      securities exchange registered under the Securities Exchange Act of 1934,
      as amended (the “Exchange Act”), on which the Underlying Stock (or any
      such other security) is listed or admitted to
  trading,

                

        

      

       

      
        
          	
                	
                  ·

                	
                  if
      the Underlying Stock (or any such other security) is a security of the
      NASDAQ, the official closing price published by the NASDAQ on such day,
      or

                

        

      

       

      
        
          	
                	
                  ·

                	
                  if
      the Underlying Stock (or any such other security) is not listed or
      admitted to trading on any national securities exchange but is included in
      the OTC Bulletin Board Service (the “OTC Bulletin Board”) operated by the
      Financial Industry Regulatory Authority, Inc., the last reported sale
      price of the

                

        

      

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      
        
           

          
            
              	
                    	
                       

                    	
                      principal
      trading session on the OTC Bulletin Board on such
  day.

                    

            

          

           

        

        
          	 	 	

                  If
      the Underlying Stock (or any such other security) is listed or admitted to
      trading on any national securities exchange but the last reported sale
      price or the official closing price published by NASDAQ, as applicable, is
      not available pursuant to the preceding sentence, then the Closing Price
      for one share of the Underlying Stock (or one unit of any such other
      security) on any Trading Day shall mean the last reported sale price of
      the principal trading session on the over-the-counter market as reported
      on the NASDAQ or the OTC Bulletin Board on such day.  If a
      Market Disruption Event occurs with respect to the Underlying Stock (or
      any such other security) or the last reported sale price or the official
      closing price published by NASDAQ, as applicable, for the Underlying Stock
      (or any such other security) is not available pursuant to either of the
      two preceding sentences, then the Closing Price for any Trading Day shall
      be the mean, as determined by the Calculation Agent, of the bid prices for
      the Underlying Stock (or any such other security) for such Trading Day
      obtained from as many recognized dealers in such security, but not
      exceeding three, as shall 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 “OTC Bulletin Board Service” shall 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 LLC (“NYSE”), the American Stock
      Exchange LLC, the NASDAQ, the Chicago Mercantile Exchange, the Chicago
      Board of Options Exchange and in the over-the-counter market for equity
      securities in the United States and, if the principal trading market of
      the Underlying Stock is outside the United States, in such principal
      trading market.

                
	 	 	 
	

                  Calculation
      Agent

                	 	

                  Morgan
      Stanley & Co. Incorporated (“MS & Co.”) and its
      successors.

                   

                  All
      calculations with respect to the Exchange Ratio and Call Price for the
      SPARQS shall be made by the

                

        

         

        
          
            
            

          

          
            11

            
              

            

          

          
            
            

          

        

         

         

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

                   

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

                
	 	 	 
	

                  Antidilution
      Adjustments

                	 	

                  The
      Exchange Ratio shall be adjusted as follows:

                   

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

                   

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

                   

                  3. If
      the Underlying Company issues rights or warrants to all holders of the
      Underlying Stock to subscribe for or purchase Underlying Stock at an
      exercise price per share less than the Closing Price of the Underlying
      Stock on both (i) the date the exercise

                

        

         

        
          
            
            

          

          
            12

            
              

            

          

          
            
            

          

        

         

         

        
          	 	 	
                  price of
      such rights or warrants is determined and (ii) the expiration date of such
      rights or warrants, and if the expiration date of such rights or warrants
      precedes the maturity of this SPARQS, then the Exchange Ratio shall be
      adjusted to equal the product of the prior Exchange Ratio and a fraction,
      the numerator of which shall be the number of shares of the Underlying
      Stock outstanding immediately prior to the issuance of such rights or
      warrants plus the number of additional shares of Underlying Stock offered
      for subscription or purchase pursuant to such rights or warrants and the
      denominator of which shall be the number of shares of Underlying Stock
      outstanding immediately prior to the issuance of such rights or warrants
      plus the number of additional shares of Underlying Stock which the
      aggregate offering price of the total number of shares of Underlying Stock
      so offered for subscription or purchase pursuant to such rights or
      warrants would purchase at the Closing Price on the expiration date of
      such rights or warrants, which shall be determined by multiplying such
      total number of shares offered by the exercise price of such rights or
      warrants and dividing the product so obtained by such Closing
      Price.

                   

                  4. There
      shall be no adjustments to the Exchange Ratio to reflect cash dividends or
      other distributions paid with respect to the Underlying Stock other than
      distributions described in paragraph 2, paragraph 3 and clauses (i), (iv)
      and (v) of the first sentence of paragraph 5 and Extraordinary Dividends
      as described below.  A cash dividend or other distribution with
      respect to the Underlying Stock shall be deemed to be an “Extraordinary
      Dividend” if such cash dividend or distribution exceeds the immediately
      preceding non-Extraordinary Dividend for the Underlying Stock by an amount
      equal to at least 10% of the Closing Price of the Underlying Stock (as
      adjusted for any subsequent corporate event requiring an adjustment
      hereunder, such as a stock split or reverse stock split) on the Trading
      Day preceding the ex-dividend date (that is, the day on and after which
      transactions in the Underlying Stock on the primary U.S. organized
      securities exchange or trading system on which the Underlying Stock is
      traded or trading system no longer carry the right to receive that cash
      dividend or that cash distribution) for the payment of such
    

                

        

         

        
          
            
            

          

          
            13

            
              

            

          

          
            
            

          

        

         

         

        
          	 	 	
                  Extraordinary
      Dividend (such closing price, the “Base Closing
      Price”).  Subject to the following sentence, if an Extraordinary
      Dividend occurs with respect to the Underlying Stock, the Exchange Ratio
      with respect to the Underlying Stock shall be adjusted on the ex-dividend
      date with respect to such Extraordinary Dividend so that the new Exchange
      Ratio shall equal the product of (i) the then current Exchange Ratio and
      (ii) a fraction, the numerator of which is the Base Closing Price, and the
      denominator of which is the amount by which the Base Closing Price exceeds
      the Extraordinary Dividend Amount.  If any Extraordinary
      Dividend Amount 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 “Extraordinary
      Dividend Amount” with respect to an Extraordinary Dividend for the
      Underlying Stock shall equal (i) in the case of cash dividends or other
      distributions that constitute regular dividends, the amount per share of
      such Extraordinary Dividend minus the amount per share of the immediately
      preceding non-Extraordinary Dividend for the Underlying Stock or (ii) in
      the case of cash dividends or other distributions that do not constitute
      regular dividends, the amount per share of such Extraordinary
      Dividend.  The value of the non-cash component of an
      Extraordinary Dividend shall be determined on the ex-dividend date for
      such distribution by the Calculation Agent, whose determination shall be
      conclusive in the absence of manifest error.  A distribution on
      the Underlying Stock described in clause (i), (iv) or (v) of the first
      sentence of paragraph 5 below shall cause an adjustment to the Exchange
      Ratio pursuant only to clause (i), (iv) or (v) of the first sentence of
      paragraph 5, as applicable.

                   

                  5.
      Any of the following shall constitute a Reorganization
      Event:  (i) the Underlying Stock is reclassified or changed,
      including, without limitation, as a result of the issuance of any tracking
      stock by the Underlying Company, (ii) the Underlying Company has been
      subject to any merger, combination or

                

        

         

        
          
            
            

          

          
            14

            
              

            

          

          
            
            

          

        

         

         

        
          	 	 	consolidation and is
      not the surviving entity, (iii) the Underlying Company completes a
      statutory exchange of securities with another corporation (other than
      pursuant to clause (ii) above), (iv) the Underlying Company is liquidated,
      (v) the Underlying Company issues to all of its shareholders equity
      securities of an issuer other than the Underlying Company (other than in a
      transaction described in clause (ii), (iii) or (iv) above) (a “spinoff
      stock”) or (vi) the Underlying Stock is the subject of a tender or
      exchange offer or going private transaction on all of the outstanding
      shares.  If any Reorganization Event occurs, in each case as a
      result of which the holders of the Underlying Stock receive any equity
      security listed on a national securities exchange or traded on NASDAQ (a
      “Marketable Security”), other securities or other property, assets or cash
      (collectively “Exchange Property”), the amount payable upon exchange at
      maturity with respect to each Stated Principal Amount of this SPARQS
      following the effective date for such Reorganization Event (or, if
      applicable, in the case of spinoff stock, the ex-dividend date for the
      distribution of such spinoff stock) and any required adjustment to the
      Exchange Ratio shall be determined in accordance with the
    following:
	 	 	 
	 	 	

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

                   

                  (b) for
      each Marketable Security received in such Reorganization Event (each a
      “New Stock”), including the issuance of any tracking stock or spinoff
      stock or the receipt of any stock received in exchange for the Underlying
      Stock, the number of shares of the New Stock received with respect to one
      share of Underlying Stock multiplied by the Exchange Ratio for Underlying
      Stock on the Trading Day immediately prior to the effective date of the
      Reorganization Event (the “New Stock Exchange Ratio”), as adjusted to the
      third Trading 

                

        

         

        
          
            
            

          

          
            15

            
              

            

          

          
            
            

          

        

         

         

        
          	 	 	
                  Day prior to the
      scheduled Maturity Date (taking into account any adjustments for
      distributions described under clause (c)(i) below); and

                   

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

                
	 	 	 
	 	 	

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

                   

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

                

        

         

        
          
            
            

          

          
            16

            
              

            

          

          
            
            

          

        

         

         

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

                

        

         

        
          
            
            

          

          
            17

            
              

            

          

          
            
            

          

        

         

         

        
          	 	 	
                  Trading Day
      immediately prior to the effective date of such Reorganization Event and
      (c) 0.3333333.

                
	 	 	 
	 	 	

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

                
	 	 	 
	 	 	

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

                   

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

                   

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

                
	 	 	 

        

      

      
        
          	 	 	

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

                   

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

                   

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

                

        

         

        
          
            
            

          

          
            18

            
              

            

          

          
            
            

          

        

         

         

        
          	 	 	
                  “Underlying Stock”
      under “No Fractional Shares,” “Closing Price” and “Market Disruption
      Event” shall be deemed to also refer to any New Stock or Reference Basket
      Stock, and (ii) all other references in this SPARQS to “Underlying Stock”
      shall be deemed to refer to the Exchange Property into which this SPARQS
      is thereafter exchangeable and references to a “share” or “shares” of
      Underlying Stock shall be deemed to refer to the applicable unit or units
      of such Exchange Property, including any New Stock or Reference Basket
      Stock, unless the context otherwise requires.  The New Stock
      Exchange Ratio(s) or Basket Stock Exchange Ratios resulting from any
      Reorganization Event described in paragraph 5 above or similar adjustment
      under paragraph 4 above shall be subject to the adjustments set forth in
      paragraphs 1 through 5 hereof.

                   

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

                   

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

                

        

         

        
          
            
            

          

          
            19

            
              

            

          

          
            
            

          

        

         

         

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

                   

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

                
	 	 	 
	

                  Market
      Disruption Event

                	 	

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

                
	 	 	 
	 	 	

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

                   

                  (ii)
      a determination by the Calculation Agent in its sole discretion that any
      event described in clause (i) above materially interfered with the ability
      of the Issuer or any of its affiliates to unwind or adjust all or a
      material portion of the hedge with respect to this issuance of
      SPARQS.

                

        

         

        
          
            
            

          

          
            20

            
              

            

          

          
            
            

          

        

         

         

        
          	 	 	

                  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 primary market, (2) a decision
      to permanently discontinue trading in the relevant options contract shall
      not constitute a Market Disruption Event, (3) limitations pursuant to NYSE
      Rule 80A (or any applicable rule or regulation enacted or promulgated by
      the NYSE, any other self-regulatory organization or  the
      Securities and Exchange Commission of scope similar to NYSE Rule 80A as
      determined by the Calculation Agent) on trading during significant market
      fluctuations shall constitute a suspension, absence or material limitation
      of trading, (4) a suspension of trading in options contracts on the
      Underlying Stock by the primary securities market trading in such options,
      if available, by reason of (x) a price change exceeding limits set by such
      securities exchange or market, (y) an imbalance of orders relating to such
      contracts or (z) a disparity in bid and ask quotes relating to such
      contracts shall constitute a suspension, absence or material limitation of
      trading in options contracts related to the Underlying Stock and (5) a
      suspension, absence or material limitation of trading on the primary
      securities market on which options contracts related to the Underlying
      Stock are traded shall not include any time when such securities market is
      itself closed for trading under ordinary circumstances.

                
	 	 	 
	

                  Alternate
      Exchange Calculation

                	 	 
	

                  in
      Case of an Event of Default

                	 	

                  In
      case an event of default with respect to the SPARQS shall have occurred
      and be continuing, the amount declared due and payable per each Stated
      Principal Amount of this SPARQS upon any acceleration of this SPARQS (an
      “Event of Default Acceleration”) shall be determined by the Calculation
      Agent and shall be an amount in cash equal to the lesser of (i) the
      product of (x) the Closing Price of the Underlying Stock (and/or the value
      of any Exchange Property) as of the date of such acceleration and (y) the
      then current Exchange Ratio and (ii) the Call Price calculated as though
      the date of acceleration were the Call Date (but in no event less than the
      Call Price for the first Call Date), in each

                

        

         

        
          
            
            

          

          
            21

            
              

            

          

          
            
            

          

        

         

         

        
          	 	 	case plus accrued but
      unpaid interest to but excluding the date of acceleration; provided that if the
      Issuer has called the SPARQS in accordance with the Morgan Stanley Call
      Right, the amount declared due and payable upon any such acceleration
      shall be an amount in cash for each Stated Principal Amount of this SPARQS
      equal to the Call Price for the Call Date specified in the Issuer’s notice
      of mandatory exchange, plus accrued but unpaid interest to but excluding
      the date of acceleration.

        

      

       

       

      
        
           

        

        
          22

          
            

          

        

        
           

        

      

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

       

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

       

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

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

       

      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.

       

      
        
           

        

        
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      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.

                
	 
	
                  THE
      BANK OF NEW YORK,

                  as
      Trustee

                
	 
	 
	
                  By:
      

                	 
      
	
                  Authorized
      Signatory

                

        

      

       

       

      

      
        
           

        

        
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      FORM
OF REVERSE OF SECURITY

       

      This Note
is one of a duly authorized issue of Senior Global Medium-Term Notes, Series F
(the “Notes”) of the
Issuer.  The Notes are issuable under a Senior Indenture, dated as of
November 1, 2004, between the Issuer and The Bank of New York, a New York
banking corporation (as successor Trustee to 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 The Bank of New York (as
successor to JPMorgan Chase Bank, N.A.) at its corporate trust office in The
City of New York as the paying agent (the “Paying Agent,” which term
includes any additional or successor Paying Agent appointed by the Issuer) with
respect to the Notes.  The terms of individual Notes may vary with
respect to interest rates, interest rate formulas, issue dates, maturity dates,
or otherwise, all as provided in the Senior Indenture.  To the extent
not inconsistent herewith, the terms of the Senior Indenture are hereby
incorporated by reference herein.

      

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

       

      If so indicated on the face hereof,
this Note may be redeemed in whole or in part at the option of the Issuer on or
after the Initial Redemption Date specified on the face hereof on the terms set
forth on the face hereof, together with interest accrued and unpaid hereon to
the date of redemption.  If this Note is subject to “Annual Redemption
Percentage Reduction,” the Initial Redemption Percentage indicated on the face
hereof will be reduced on each anniversary of the Initial Redemption Date by the
Annual Redemption Percentage Reduction specified on the face hereof until the
redemption price of this Note is 100% of the principal amount hereof, together
with interest accrued and unpaid hereon to the date of redemption.  If
the face hereof indicates that this Note is subject to “Modified Payment upon
Acceleration or Redemption”, the amount of principal payable upon redemption
will be limited to the aggregate principal amount hereof multiplied by the sum
of the Issue Price specified on the face hereof (expressed as a percentage of
the aggregate principal amount) plus the original issue discount accrued from
the Interest Accrual Date to the date of redemption (expressed as a percentage
of the aggregate principal amount), with the amount of original issue discount
accrued being calculated using a constant yield method (as described
below).  Notice of redemption shall be mailed to the registered
holders of the Notes designated for redemption at their addresses as the same
shall appear on the Note register not less than 30 nor more than 60 calendar
days prior to the date fixed for redemption or within the Redemption Notice
Period specified on the face hereof, subject to all the conditions and
provisions of the Senior Indenture.  In the event of redemption of
this Note in part only, a new Note or Notes for the amount of the unredeemed
portion hereof shall be issued in the name of the holder hereof upon the
cancellation hereof.

      

      
        
          
          

        

        
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      If so indicated on the face of this
Note, this Note will be subject to repayment at the option of the holder on the
Optional Repayment Date or Dates specified on the face hereof on the terms set
forth herein.  On any Optional Repayment Date, this Note will be
repayable in whole or in part in increments of $1,000 or, if this Note is
denominated in a Specified Currency other than U.S. dollars, in increments of
1,000 units of such Specified Currency (provided that any remaining principal
amount hereof shall not be less than the minimum authorized denomination hereof)
at the option of the holder hereof at a price equal to 100% of the principal
amount to be repaid, together with interest accrued and unpaid hereon to the
date of repayment, provided
that if the face hereof indicates that this Note is subject to “Modified
Payment upon Acceleration or Redemption”, the amount of principal payable upon
repayment will be limited to the aggregate principal amount hereof multiplied by
the sum of the Issue Price specified on the face hereof (expressed as a
percentage of the aggregate principal amount) plus the original issue discount
accrued from the Interest Accrual Date to the date of
repayment  (expressed as a percentage of the aggregate principal
amount), with the amount of original issue discount accrued being calculated
using a constant yield method (as described below).  For this Note to
be repaid at the option of the holder hereof, the Paying Agent must receive at
its corporate trust office in the Borough of Manhattan, The City of New York, at
least 15 but not more than 30 calendar days prior to the date of repayment, (i)
this Note with the form entitled “Option to Elect Repayment” below duly
completed or (ii) a telegram, telex, facsimile transmission or a letter from a
member of a national securities exchange or the Financial Industry Regulatory
Authority, 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.

       

      
        
          
          

        

        
          28

          
            

          

        

        
          
          

        

      

       

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

       

       

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

       

       

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

       

       

      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 

       

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

       

       

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

       

       

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

       

      If the face hereof indicates that this
Note is subject to “Modified Payment upon Acceleration or Redemption,” then (i)
if the principal hereof is declared to be due and payable as described in the
preceding paragraph, the amount of principal due and payable with respect to
this Note shall be limited to the aggregate principal amount hereof multiplied
by the sum of the Issue Price specified on the face hereof (expressed as a
percentage of the aggregate principal amount) plus the original issue discount
accrued from the Interest Accrual Date to the date of declaration (expressed as
a percentage of the aggregate principal amount), with the amount of original
issue discount accrued being calculated using a constant yield method (as
described in the next paragraph), (ii) for the purpose of any vote of
securityholders taken pursuant to the Senior Indenture prior to the acceleration
of payment of this Note, the principal amount hereof shall equal the amount that
would be due and payable hereon, calculated as set forth in clause (i) 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 

       

      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

       

       

      acceleration
of payment of this Note, the principal amount hereof shall equal the amount of
principal due and payable with respect to this Note, calculated as set forth in
clause (i) above.

       

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

       

      If the face hereof indicates that this
Note is subject to “Tax Redemption and Payment of Additional Amounts,” this Note
may be redeemed, as a whole, at the option of the Issuer at any time prior to
maturity, upon the giving of a notice of redemption as described below, at a
redemption price equal to 100% of the principal amount hereof, together with
accrued interest to the date fixed for redemption (except that if this Note is
subject to “Modified Payment upon Acceleration or Redemption,” the amount of
principal so payable will be limited to the aggregate principal amount hereof
multiplied by the sum of the Issue Price specified on the face hereof (expressed
as a percentage of the aggregate principal amount) plus the original issue
discount accrued from the Interest Accrual Date to the date of redemption
(expressed as a percentage of the aggregate principal amount), with the amount
of original issue discount accrued being calculated using a constant yield
method (as described above)), if the Issuer determines that, as a result of any
change in or amendment to the laws (including a holding, judgment or as ordered
by a court of competent jurisdiction), or any regulations or rulings promulgated
thereunder, of the United States or of any political subdivision or taxing
authority thereof or therein affecting taxation, or any change in official
position regarding the application or interpretation of such laws, regulations
or rulings, which change or amendment occurs, becomes effective or, in the case
of a change in official position, is announced on or after the Initial Offering
Date hereof, the Issuer has or will become obligated to pay Additional Amounts,
as defined below, with respect to this Note as described below.  Prior
to the giving of any notice of redemption pursuant to this paragraph, the Issuer
shall deliver to the Trustee (i) a certificate stating that the Issuer is
entitled to effect such redemption and setting forth a statement of facts
showing that the conditions precedent to the right of the Issuer to so redeem
have occurred, and (ii) an opinion of independent legal counsel
satisfactory to the Trustee to such effect based on such statement of facts;
provided that no such
notice of redemption shall be given earlier than 60 calendar days prior to the
earliest date on which the Issuer would be obligated to pay such Additional
Amounts if a payment in respect of this Note were then due.

       

       

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

       

      
        
          
          

        

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

       

       

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

       

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

       

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

       

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

       

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

       

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

       

       

      
        
          
          

        

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

       

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

       

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

       

      The Senior
Indenture permits the Issuer and the Trustee, with the consent of the holders of
not less than a majority in aggregate principal amount of the debt securities of
all series issued under the Senior Indenture then outstanding and affected
(voting as one class), to execute supplemental indentures adding any provisions
to or changing in any manner the rights of the holders of each series so
affected; provided that
the Issuer and the Trustee may not, without the consent of the holder of each
outstanding debt security affected thereby, (a) extend the final maturity of any
such debt security, or reduce the principal amount thereof, or reduce the rate
or extend the time of payment of interest thereon, or reduce any amount payable
on redemption thereof, or change the currency of payment thereof, or modify or
amend the provisions for conversion of any currency into any other currency, or
modify or amend the provisions for conversion or exchange of the debt security
for securities of the Issuer or other entities or for other property or the cash
value of the property (other than as provided in the antidilution provisions or
other similar adjustment provisions of the debt securities or otherwise in
accordance with the terms thereof), or impair or affect the rights of any holder
to institute suit for the payment thereof or (b) reduce the aforesaid percentage
in principal amount of debt securities the consent of the holders of which is
required for any such supplemental indenture.

       

      Except as
set forth below, if the principal of, premium, if any, or interest on this Note
is payable in a Specified Currency other than U.S. dollars and such Specified
Currency is not available to the Issuer for making payments hereon due to the
imposition of exchange controls or other circumstances beyond the control of the
Issuer or is no longer used by the government of the country issuing such
currency or for the settlement of transactions by public institutions within the
international banking community, then the Issuer will be entitled to satisfy its
obligations to the holder of this Note by making such payments in U.S. dollars
on the basis of the Market Exchange Rate on the date of such payment or, if the
Market Exchange Rate is not available on such date, as of the most recent
practicable date; provided, however, that if the euro

       

      
        
          
          

        

        
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      has been
substituted for such Specified Currency, the Issuer may at its option (or shall,
if so required by applicable law) without the consent of the holder of this Note
effect the payment of principal of, premium, if any, or interest on any Note
denominated in such Specified Currency in euro in lieu of such Specified
Currency in conformity with legally applicable measures taken pursuant to, or by
virtue of, the Treaty establishing the European Community, as
amended.  Any payment made under such circumstances in U.S. dollars or
euro where the required payment is in an unavailable Specified Currency will not
constitute an Event of Default.  If such Market Exchange Rate is not
then available to the Issuer or is not published for a particular Specified
Currency, the Market Exchange Rate will be based on the highest bid quotation in
The City of New York received by the Exchange Rate Agent at approximately 11:00
a.m., New York City time, on the second Business Day preceding the date of such
payment from three recognized foreign exchange dealers (the “Exchange Dealers”) for the
purchase by the quoting Exchange Dealer of the Specified Currency for U.S.
dollars for settlement on the payment date, in the aggregate amount of the
Specified Currency payable to those holders or beneficial owners of Notes and at
which the applicable Exchange Dealer commits to execute a
contract.  One of the Exchange Dealers providing quotations may be the
Exchange Rate Agent unless the Exchange Rate Agent is an affiliate of the
Issuer.  If those bid quotations are not available, the Exchange Rate
Agent shall determine the market exchange rate at its sole
discretion.

       

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

       

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

       

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

       

      With
respect to moneys paid by the Issuer and held by the Trustee or any Paying Agent
for payment of the principal of or interest or premium, if any, on any Notes
that remain unclaimed at the end of two years after such principal, interest or
premium shall have become due and payable (whether at maturity or upon call for
redemption or otherwise), (i) the Trustee or such Paying Agent shall notify the
holders of such Notes that such moneys shall be repaid to the 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 

       

      
        
          
          

        

        
          34

          
            

          

        

        
          
          

        

      

       

       

      of the
Trustee or such Paying Agent with respect to such moneys shall thereupon cease,
without, however, limiting in any way any obligation that the Issuer may have to
pay the principal of or interest or premium, if any, on this Note as the same
shall become due.

       

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

       

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

       

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

       

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

       

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

       

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

       

      
        
           

        

        
          35

          
            

          

        

        
           

        

      

      

       

      ABBREVIATIONS

       

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

       

      
         

        TEN
COM   –   as tenants in common

         

        TEN
ENT    –   as tenants by the
entireties

         

        
          JT
TEN        –   as joint
tenants with right of survivorship and not as tenants in
common

        

         

        UNIF GIFT
MIN ACT – ______________________Custodian
__________________________

        (Minor)                                                      (Cust)

         

        Under
Uniform Gifts to Minors Act ______________________________

        (State)

         

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

         

        _______________________

      

       

      
        
           

        

        
          36

          
            

          

        

        
           

        

      

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

       

      ____________________________________________

      [PLEASE
INSERT SOCIAL SECURITY OR OTHER

      IDENTIFYING
NUMBER OF ASSIGNEE]

       

      
         

          
            

          

        

         

          
            

             

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

            

          

        

         

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

           

        

        Dated:_______________________

         

        
          	
                  NOTICE:

                	
                  

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

                  

                

        

      

       

       

      
        
           

        

        
          37

          
            

          

        

        
           

        

      

      

       

      OPTION
TO ELECT REPAYMENT

       

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

      
      

      
        
          

        

         

          
            

          

        

         

          
            

          

        

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

         

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

           

        

        
           

          
            	Dated:
      ______________________________	 
	 	
                    

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

                    

                  

          

        

      

       

       
38

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