Document:

Exhibit 4.1

      

    

	 FORM OF FLOATING RATE SENIOR
          NOTE
	 	 	 
	 REGISTERED	  	 U.S. $
	No. FLR-1	 	CUSIP: 

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

 

 MORGAN STANLEY

  SENIOR GLOBAL MEDIUM-TERM NOTES, SERIES
  F

  (Floating Rate)

 CAPITAL PROTECTED NOTE DUE JULY
      20, 2010

  BASED ON THE VALUE OF A GLOBAL BASKET
  OF THREE INDICES

  	BASE RATE: None	 ORIGINAL ISSUE DATE: 	 MATURITY DATE: See “Maturity
          Date” below.
	 INDEX MATURITY: N/A	 INTEREST ACCRUAL DATE: N/A	 INTEREST PAYMENT DATE(S): N/A
	 SPREAD (PLUS OR MINUS): N/A	 INITIAL INTEREST RATE: N/A	 INTEREST PAYMENT PERIOD: N/A
	SPREAD MULTIPLIER: N/A	 INITIAL INTEREST RESET DATE:
          N/A	INTEREST RESET PERIOD: N/A
	 REPORTING SERVICE: N/A	 MAXIMUM INTEREST RATE: N/A	 INTEREST RESET DATE(S): N/A
	INDEX CURRENCY: N/A	 MINIMUM INTEREST RATE: N/A	 CALCULATION AGENT: See “Calculation
          Agent” below.
	EXCHANGE RATE AGENT: N/A	 INITIAL REDEMPTION DATE: N/A	 SPECIFIED CURRENCY: U.S. dollars
	 	INITIAL REDEMPTION PERCENTAGE:
          N/A	 IF
            SPECIFIED CURRENCY OTHER THAN U.S. DOLLARS, OPTION TO
            ELECT PAYMENT IN U.S. DOLLARS: N/A

	 	 ANNUAL REDEMPTION PERCENTAGE
          REDUCTION: N/A	 DESIGNATED CMT TELERATE PAGE:
          N/A
	 	 OPTIONAL REPAYMENT DATE(S):
          N/A	DESIGNATED CMT MATURITY INDEX:
      N/A
	 	 	 
	 	 REDEMPTION NOTICE PERIOD: N/A	 
	 	TAX
            REDEMPTION AND PAYMENT OF ADDITIONAL AMOUNTS: NO
	 
	 	 IF YES, STATE INITIAL OFFERING
          DATE: N/A	 OTHER PROVISIONS: See below.

	 	 	 
	Denominations

      Stated Principal Amount 
	  	$

      $

	 	 	 
	Pricing Date	 	 

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	Basket Setting Date
	  	With respect to the
          Dow Jones Industrial Average Index, the Pricing Date. With respect
          to the Dow Jones EURO STOXX 50 Index and the Nikkei 225 Index, the
          Index Business Day immediately following the Pricing Date.

	 	 	 
	Maturity Date
	  	July 20, 2010, subject
          to extension in accordance with the following paragraph in the event
          of a Market Disruption Event on the Determination Date.

      If, due to a Market Disruption Event or otherwise,
          the Determination Date with respect to any Underlying Index is postponed
          so that it falls less than two scheduled Trading Days prior to the
          scheduled Maturity Date, the Maturity Date shall be the second scheduled
          Trading Day following the Determination Date with respect to any Underlying
          Index so postponed. See “Determination Date” below.

      In the event that the Determination Date with
          respect to any Underlying Index is postponed 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 one Business Day
          following the scheduled Determination Date, (i) to the holder of this
          Note by mailing notice of such postponement by first class mail, postage
          prepaid, to the holder’s last address as it shall appear upon
          the registry books, (ii) to the Trustee by telephone or facsimile confirmed
          by mailing such notice to the Trustee by first class mail, postage
          prepaid, at its New York office and (iii) to The Depository Trust Company
          (the “Depositary”) by telephone or facsimile confirmed by
          mailing such notice to the Depositary by first class mail, postage
          prepaid. Any notice that is mailed in the manner herein provided shall
          be conclusively presumed to have been duly given, whether or not the
          holder of this Note receives the notice.

	 	 	 
	Underlying Indices
	  	The Underlying Indices
          and their respective Percentage Weightings, Initial Index Closing Values
          and Multipliers are set forth in the table below.

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	 	 Basket Indices	  	 Bloomberg

    Page	  	 Percentage

    Weighting	  	 Initial Index

    Closing Value	  	 Multiplier
	 	 
 	 	 
 	 	 
 	 	 
 	 	 
 
	 	 Dow Jones Industrial
        Average Index: 	  	 INDU 	  	 33.33% 	  	  	  	  
	 	 Dow Jones EURO
        STOXX 50 Index: 	  	 SX5E 	  	 33.33% 	  	  	  	  
	 	 Nikkei 225 Index: 	  	 NKY 	  	 33.33% 	  	  	  	  

	  	  	References to Underlying
          Indices shall include any Successor Indices (as defined under “Discontinuance
          of any Underlying Index; Alteration of Method of Calculation” below),
          unless the context requires otherwise.

	 	 	 
	Payment at Maturity
	  	At maturity, upon delivery
          of this Note to the Trustee, the Issuer shall pay with respect to each
          Stated Principal Amount of this Note an amount in cash equal to the
          Stated Principal Amount of this Note plus the Supplemental Redemption
          Amount, if any.

      The Issuer shall, or shall cause the Calculation
          Agent to, (i) 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 Payment at Maturity on or prior to 10:30 a.m. on
          the Trading Day preceding the Maturity Date (but if such Trading Day
          is not a Business Day, prior to the close of business on the Business
          Day preceding the Maturity Date) and (ii) deliver the aggregate cash
          amount due with respect to this Note to the Trustee for delivery to
          the holder of this Note on the Maturity Date.

	 	 	 
	Supplemental Redemption

   Amount
	  	

        The Supplemental Redemption Amount shall be equal to (i) the Stated Principal
              Amount times (ii)
              the Participation Rate times (iii) the Index Percent
              Change; provided that
              the Supplemental Redemption Amount shall not be less than zero.
              The Calculation Agent shall calculate the Supplemental Redemption
              Amount on the Determination Date.

	 	 	 
	Index Percent Change
	  	The Index Percent Change
          is a fraction, the numerator of which shall be the Final Index Value minus the
          Initial Index Value and the denominator of which shall be the Initial
          Index Value. The Index Percent Change is described by the following
          formula:

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	 	 	Final Index Value – Initial
          Index Value

    Initial Index Value
	 	 	 
	Participation Rate

      Basket Closing Value
	  	         %

      The Basket Closing Value on the Determination
          Date shall equal the sum of the products of the Index Closing Value
          of each Underlying Index on the Determination Date and the relevant
          Multiplier. In certain circumstances, the Basket Closing Value shall
          be based on the alternate calculation of the Underlying Indices described
          under “Discontinuance of any Underlying Index; Alteration of Method
          of Calculation.”

	 	 	 
	Initial Index Value	 	 
	 	 	 
	Final Index Value

      Index Closing Value

       
	  	The Basket Closing Value
          on the Determination Date.

      The Index Closing Value of any Underlying
          Index on any Index Business Day shall equal the closing value of such
          Underlying Index or any Successor Index (as defined under “Discontinuance
          of any Underlying Index; Alteration of Method of Calculation” below)
          as displayed on the applicable Bloomberg Page at the regular weekday
          close of trading on that Index Business Day. In certain circumstances,
          the Index Closing Value of the Underlying Index shall be based on the
          alternate calculation of the Underlying Index described under “Discontinuance
          of any Underlying Index; Alteration of Method of Calculation.”

      In this Note, references to an Underlying
          Index shall include any Successor Index of such Underlying Index, unless
          the context requires otherwise.

	 	 	 
	Bloomberg Page
	  	The display page so
          designated by Bloomberg Financial Markets (“Bloomberg”),
          as noted under “Underlying Indices” above, or any other display
          page that may replace that display page on Bloomberg and any successor
          service thereto. If Bloomberg or any successor service no longer displays
          the Index Closing Value of any of the Underlying Indices, then the

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	  	  	Calculation Agent shall
          designate an alternate source of such Index Closing Value, which shall
          be the publisher of such index, unless the Calculation Agent, in its
          sole discretion, determines that an alternate service has become the
          market standard for transactions related to such index.

	 	 	 
	Determination Date
	  	The Determination Date
          shall be July 15, 2010, subject to adjustment for non-Index Business
          Days or Market Disruption Events with respect to an Underlying Index
          as described in the following paragraph.

      If a Market Disruption Event with respect
          to an Underlying Index occurs on the scheduled Determination Date or
          if such Determination Date is not an Index Business Day, the Index
          Closing Value for such Determination Date will be determined on the
          immediately succeeding Index Business Day on which no Market Disruption
          Event shall have occurred; provided
          that a Market Disruption Event
          with respect to any particular Underlying Index will not be a Market
          Disruption Event with respect to any other Underlying Index.

	 	 	 
	Trading Day
	  	A day, as determined
          by the Calculation Agent, on which trading is generally conducted on
          the Relevant Exchange(s).

	 	 	 
	Index Business Day
	  	Any Trading Day other
          than a Saturday or Sunday on which the Underlying Indices (or Successor
          Indices) are calculated.

	 	 	 
	Market Disruption Event
	  	Market Disruption Event
          means, with respect to any Underlying Index, the occurrence or existence
          of any of the following events, as determined by the Calculation Agent
          in its sole discretion:

      (i) a suspension, absence or material limitation
          of trading of stocks then constituting 20 percent or more of the level
          of any Underlying Index (or the relevant successor index) on the Relevant
          Exchange(s) for such securities for more than two hours of trading
          or during 

 6

 

	 	  	the one-half hour period
          preceding the close of the principal trading session
          on such Relevant Exchange(s);

      (ii) a breakdown or failure in the price and
          trade reporting systems of any Relevant Exchange as a result of which
          the reported trading prices for stocks then constituting 20 percent
          or more of the level of any Underlying Index (or the relevant successor
          index) during the last one-half hour preceding the close of the principal
          trading session on such Relevant Exchange(s) are materially inaccurate;
          and

      (iii) the suspension, material limitation
          or absence of trading on any major securities market for trading in
          futures or options contracts or exchange traded funds related to an
          Underlying Index (or the relevant successor index) for more than two
          hours of trading or during the one-half hour period preceding the close
          of the principal trading session on such market.

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

      For purposes of determining whether a Market
          Disruption Event has occurred: (1) a limitation on the hours or number
          of days of trading will not constitute a Market Disruption Event if
          it results from an announced change in the regular business hours of
          the Relevant Exchange or market, (2) a decision to permanently discontinue
          trading in the relevant futures or options contract or exchange traded
          fund will not constitute a Market Disruption Event, (3) limitations
          pursuant to the rules of any Relevant Exchange similar to NYSE Rule
          80A (or any applicable rule or regulation enacted or promulgated by
          any other self- 

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	  	  	regulatory organization
          or any government agency of scope similar to NYSE
          Rule 80A as determined by the Calculation Agent) on trading during
          significant market fluctuations will constitute a suspension, absence
          or material limitation of trading, (4) a suspension of trading in futures
          or options contracts or exchange traded funds on an Underlying Index
          by the primary securities market trading in such contracts or funds
          by reason of (a) a price change exceeding limits set by such exchange
          or market, (b) an imbalance of orders relating to such contracts or
          funds, or (c) a disparity in bid and ask quotes relating to such contracts
          or funds will constitute a suspension, absence or material limitation
          of trading in futures or options contracts or exchange traded funds
          related to an Underlying Index and (5) a “suspension, absence
          or material limitation of trading” on any Relevant Exchange or
          on the primary market on which futures or options contracts or exchange
          traded funds related to an Underlying Index are traded will not include
          any time when such market is itself closed for trading under ordinary
          circumstances.

	 	 	 
	Relevant Exchange
	  	Relevant Exchange means
          the primary exchange(s) or market(s) of trading for (i) any security
          then included in any Underlying Index, or any Successor Index, and
          (ii) any futures or options contracts related to such Underlying Index
          or to any security then included in any Underlying Index.

	 	 	 
	Alternate Exchange Calculation

    in Case of an Event of Default
      	  	

      If an event of default
          with respect to this Note shall have occurred and be continuing, the
          Calculation Agent will determine the amount declared due and payable
          for each Stated Principal Amount of this Note upon any acceleration
          of this Note (the “Acceleration Amount”), which shall be
          equal to such Stated Principal Amount (the “Acceleration Amount”),
          plus the Supplemental Redemption Amount, if any, determined as though
          the Basket Closing Value for the Determination Date (if scheduled to
          occur on or after the date of such acceleration) was the Basket Closing
          Value on the date of acceleration.

    

 8

 

	  	  	If the maturity of this
          Note is accelerated because of an event of default as described above,
          the Issuer shall, or shall cause the Calculation
          Agent to, provide written notice to the Trustee at its New York office,
          on which notice the Trustee may conclusively rely, and to the Depositary
          of the Acceleration Amount and the aggregate cash amount due with respect
          to this Note as promptly as possible and in no event later than two
          Business Days after the date of acceleration.

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

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

      All calculations with respect to the Basket
          Closing Value on the Determination Date, the Final Index Value and
          the Supplemental Redemption Amount, if any, 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
          determination of the amount of cash payable per Note shall be rounded
          to the nearest ten- thousandth, with five one hundred-thousandths rounded
          upward (e.g.,
          .76545 would be rounded up to .7655); and all dollar amounts paid on
          the aggregate principal amount of this Note shall be rounded to the
          nearest cent, with one-half cent rounded upward.

	 	 	 
	Discontinuance of any Underlying
          Index; 

           Alteration of Method of Calculation

    	  	

      If the publication of
          any Underlying Index is discontinued and a successor or substitute
          index that MS & Co., as the Calculation Agent, determines, in its
          sole discretion, to be comparable to the discontinued Underlying Index
          (such index being referred to herein as a “Successor Index”)
          is published, then any subsequent Index Closing Value shall be determined
          by reference to the value of such Successor Index at the regular official
          weekday close of the principal 

 9

 

	 	  	trading session of the
          Relevant Exchange or market for the Successor Index
          on the date that any Index Closing Value is to be determined.

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

      If the publication of an Underlying Index
          is discontinued prior to, and such discontinuance is continuing on,
          the date that any Index Closing Value is to be determined and MS & Co.,
          as the Calculation Agent, determines, in its sole discretion, that
          no Successor Index is available at such time, then the Calculation
          Agent shall determine the relevant Index Closing Value for such date
          in accordance with the formula for calculating such Underlying Index
          last in effect prior to such discontinuance, without rebalancing or
          substitution, using the closing price (or, if trading in the relevant
          securities has been materially suspended or materially limited, its
          good faith estimate of the closing price that would have prevailed
          but for such suspension or limitation) at the close of the principal
          trading session of the Relevant Exchange on such date of each security
          most recently comprising such Underlying Index on the Relevant Exchange.

      If at any time the method of calculating an
          Underlying Index or a Successor Index, or the value thereof, is changed
          in a material respect, or if an Underlying Index or a Successor Index
          is in any other way modified so that such index does not, in the opinion
          of MS & Co., as the Calculation Agent, fairly represent the value
          of such Underlying Index or such Successor Index had such changes or
          modifications not been made, then, from and after such time, the Calculation
          Agent shall, at the close of business in New York City on each date
          on which the Index Closing Value for such Underlying Index is to be
          determined, make such calculations and adjustments as, in the good
          faith judgment of the Calculation Agent, may be necessary in order
          to arrive at a value of a stock index comparable to such Underlying
          Index or such 

 10

 

	  	  	Successor Index, as
          the case may be, as if such changes or modifications
          had not been made, and the Calculation Agent shall determine the Final
          Index Value with reference to such Underlying Index or such Successor
          Index, as adjusted. Accordingly, if the method of calculating such
          Underlying Index or a Successor Index is modified so that the value
          of such index is a fraction of what it would have been if it had not
          been modified (e.g.,
          due to a split in the index), then the Calculation Agent shall adjust
          such index in order to arrive at a value of such Underlying Index or
    such Successor Index as if it had not been modified (i.e., as if such
    split had not occurred).

 11

 

      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 cash, as determined in accordance
    with the provisions set forth under “Payment 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 the maturity) and to pay interest thereon from
    and including the Interest Accrual Date specified above at a rate per annum
    equal to the Initial Interest Rate specified above or determined in accordance
    with the provisions specified on the reverse hereof until the Initial Interest
    Reset Date specified above, and thereafter at a rate per annum determined
    in accordance with the provisions specified on the reverse hereof until the
    principal hereof is paid or duly made available for payment. Unless such
    rate is otherwise specified on the face hereof, the Calculation Agent shall
    determine the Initial Interest Rate for this Note in accordance with the
    provisions specified on the reverse hereof. The Issuer will pay interest
    in arrears weekly, monthly, quarterly, semiannually or annually as specified
    above as the Interest Payment Period on each Interest Payment Date (as specified
    above), commencing with the first Interest Payment Date next succeeding the
    Interest Accrual Date specified above, and on the Maturity Date (or 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 an Interest Payment
    Date (other than the Maturity Date or redemption or repayment date) would
    fall on a day that is not a Business Day, as defined on the reverse hereof,
    such Interest Payment Date shall be the following day that is a Business
    Day, except that if the Base Rate specified above is LIBOR or EURIBOR and
    such next Business Day falls in the next calendar month, such Interest Payment
    Date shall be the immediately preceding day that is a Business Day; and provided,
    further, that if the Maturity Date or
    redemption or repayment date would fall on a day that is not a Business Day,
    such payment shall be made on the following day that is a Business Day and
    no interest shall accrue for the period from and after such Maturity Date
    or redemption or repayment date.

      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) (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.

 

 12

 

       Payment
      of the principal of and premium, if any, and interest on this Note 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
      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 principal,
    premium, if any, and interest 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.

 13

 

       If
      the holder elects to receive all or a portion of payments of principal
      of, premium, if any, and interest on this Note, if denominated in a Specified
      Currency other than U.S. dollars, in U.S. dollars, the Exchange Rate Agent
      (as defined on the reverse hereof) will convert such payments into U.S.
      dollars. In the event of such an election, payment in respect of this Note
      will be based upon the exchange rate as
    determined by the Exchange Rate Agent based on the highest bid quotation
    in The City of New York received by such Exchange Rate Agent at approximately
    11:00 a.m., New York City time, on the second Business Day preceding the
    applicable payment date from three recognized foreign exchange dealers (one
    of which may be the Exchange Rate Agent unless such Exchange Rate Agent is
    an affiliate of the Issuer) for the purchase by the quoting dealer of the
    Specified Currency for U.S. dollars for settlement on such payment date in
    the amount of the Specified Currency payable in the absence of such an election
    to such holder and at which the applicable dealer commits to execute a contract.
    If such bid quotations are not available, such payment will be made in the
    Specified Currency. All currency exchange costs will be borne by the holder
    of this Note by deductions from such payments.

      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.

 14

 

     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 successor Trustee
        to JPMORGAN CHASE

      BANK, N.A.), as

       Trustee 
      
	 	 
	By:	 
	 	
        

	 	Authorized Signatory 

15

 

 FORM OF REVERSE OF SECURITY

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

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

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

      If so
    indicated on the face of this Note, this Note will be subject to repayment
    at the option of the holder on the Optional Repayment Date or Dates specified
    on the face hereof on the terms set forth herein. On any Optional Repayment
    Date, this Note will be repayable in whole or in part in increments of $1,000
    or, if this Note is denominated in a Specified Currency other than U.S. dollars,
    in increments of 1,000 units of such Specified Currency (provided that any
    remaining 

 16

 

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

      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, 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.

 17

 

      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;

 18

 

      (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.

      This
    Note will bear interest at the rate determined in accordance with the applicable
    provisions below by reference to the Base Rate shown on the face hereof based
    on the Index Maturity, if any, shown on the face hereof (i) plus or minus
    the Spread, if any, and/or (ii) multiplied by the Spread Multiplier, if any,
    specified on the face hereof. Commencing with the Initial Interest Reset
    Date specified on the face hereof, the rate at which interest on this Note
    is payable shall be reset as of each Interest Reset Date specified on the
    face hereof (as used herein, the term “Interest
    Reset Date” shall include the Initial
    Interest Reset Date). For the purpose of determining the Initial Interest
    Rate, references in this paragraph, the next succeeding paragraph and, if
    applicable, clauses (i) and (ii) under “Determination of EURIBOR” below
    to Interest Reset Date shall be deemed to mean the Original Issue Date. The
    determination of the rate of interest at which this Note will be reset on
    any Interest Reset Date shall be made on the Interest Determination Date
    (as defined below) pertaining to such Interest Reset Dates. The Interest
    Reset Dates will be the Interest Reset Dates specified on the face hereof; provided, however,
    that (a) the interest rate in effect for the period from the Interest Accrual
    Date to the Initial Interest Reset Date will be the Initial Interest Rate
    and (b) unless otherwise specified on the face hereof, the interest rate
    in effect for the ten calendar days immediately prior to maturity, redemption
    or repayment will be that in effect on the tenth calendar day preceding such
    maturity, redemption or repayment date. If any Interest Reset Date would
    otherwise be a day that is not a Business Day, such Interest Reset Date shall
    be postponed to the next succeeding day that is a Business Day, except that
    if the Base Rate specified on the face hereof is LIBOR or EURIBOR and such
    Business Day is in the next succeeding calendar month, such Interest Reset
    Date shall be the immediately preceding Business Day. 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 

 19

 

 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”).

      The
    Interest Determination Date pertaining to an Interest Reset Date for Notes
    bearing interest calculated by reference to the Federal Funds Rate, Federal
    Funds (Open) Rate and Prime Rate shall be on the Business Day prior to the
    Interest Reset Date. The Interest Determination Date pertaining to an Interest
    Reset Date for Notes bearing interest calculated by reference to the CD Rate,
    Commercial Paper Rate and CMT Rate will be the second Business Day prior
    to such Interest Reset Date. The Interest Determination Date pertaining to
    an Interest Reset Date for Notes bearing interest calculated by reference
    to EURIBOR (or to LIBOR when the Index Currency is euros) shall be the second
    TARGET Settlement Day prior such Interest Reset Date. The Interest Determination
    Date pertaining to an Interest Reset Date for Notes bearing interest calculated
    by reference to LIBOR (other than for LIBOR Notes for which the Index Currency
    is euros) shall be the second London Banking Day prior such Interest Reset
    Date, except that the Interest Determination Date pertaining to an Interest
    Reset Date for a LIBOR Note for which the Index Currency is pounds sterling
    will be such Interest Reset Date. As used herein, “London
    Banking Day” means any day on which
    dealings in deposits in the Index Currency (as defined herein) are transacted
    in the London interbank market. The Interest Determination Date pertaining
    to an Interest Reset Date for Notes bearing interest calculated by reference
    to the Treasury Rate shall be the day of the week in which such Interest
    Reset Date falls on which Treasury bills normally would be auctioned. Treasury
    Bills are normally sold at auction on Monday of each week, unless that day
    is a legal holiday, in which case the auction is normally held on the following
    Tuesday, except that the auction may be held on the preceding Friday; provided, however,
    that if an auction is held on the Friday of the week preceding such Interest
    Reset Date, the Interest Determination Date shall be such preceding Friday;
    and provided, further,
    that if an auction shall fall on any Interest Reset Date, then the Interest
    Reset Date shall instead be the first Business Day following the date of
    such auction. The Interest Determination Date pertaining to an Interest Reset
    Date for Notes bearing interest calculated by reference to two or more base
    rates will be the latest Business Day that is at least two Business Days
    before the Interest Reset Date for the applicable Note on which each base
    rate is determinable.

      Unless
    otherwise specified on the face hereof, the “Calculation
    Date” pertaining to an Interest
    Determination Date, including the Interest Determination Date as of which
    the Initial Interest Rate is determined, will be the earlier of (i) the tenth
    calendar day after such Interest Determination Date or, if such day is not
    a Business Day, the next succeeding Business Day, or (ii) the Business Day
    immediately preceding the applicable Interest Payment Date or Maturity Date
    (or, with respect to any principal amount to be redeemed or repaid, any redemption
    or repayment date), as the case may be.

 20

 

      Determination
      of CD Rate. If the Base Rate specified
      on the face hereof is the “CD
      Rate,” for any Interest Determination
      Date, the CD Rate with respect to this Note shall be the rate on that date
      for negotiable U.S. dollar certificates of deposit having the Index Maturity
      specified on the face hereof as published by the Board of Governors of
      the Federal Reserve System in “Statistical Release H.15(519), Selected
      Interest Rates,” or any successor publication of the Board of Governors
      of the Federal Reserve System (“H.15(519)”) under the heading “CDs
      (Secondary Market).” 

      The
    following procedures shall be followed if the CD Rate cannot be determined
    as described above: 

     (i) If the above rate is not published
    in H.15(519) by 3:00 p.m., New York City time, on the Calculation Date, the
    CD Rate shall be the rate on that Interest Determination Date set forth in
    the daily update of H.15(519), available through the world wide website of
    the Board of Governors of the Federal Reserve System at http://www.federalreserve.gov/releases/h15/update,
      or any successor site or publication (“H.15
      Daily Update”) for the Interest
      Determination Date for certificates of deposit having the Index Maturity
      specified on the face hereof, under the caption “CDs (Secondary Market).”

      (ii)
        If the above rate is not yet published in either H.15(519) or the H.15
    Daily Update by 3:00 p.m., New York City time, on the Calculation Date, the
    Calculation Agent shall determine the CD Rate to be the arithmetic mean of
    the secondary market offered rates as of 10:00 a.m., New York City time,
    on that Interest Determination Date of three leading nonbank dealers in negotiable
    U.S. dollar certificates of deposit in The City of New York, which may include
    the initial dealer and its affiliates, selected by the Calculation Agent
    (after consultation with the Issuer), for negotiable U.S. dollar certificates
    of deposit of major U.S. money center banks of the highest credit standing
    in the market for negotiable certificates of deposit with a remaining maturity
    closest to the Index Maturity specified on the face hereof in an amount that
    is representative for a single transaction in that market at that time.

      “Initial
    dealer” with respect to this Note means either Morgan Stanley & Co.
    Incorporated or Morgan Stanley DW Inc., as applicable.

      (iii)
    If the dealers selected by the Calculation Agent are not quoting as set forth
    above, the CD Rate for that Interest Determination Date shall remain the
    CD Rate for the immediately preceding Interest Reset Period, or, if there
    was no Interest Reset Period, the rate of interest payable shall be the Initial
    Interest Rate.

      Determination
      of Commercial Paper Rate. If the Base
      Rate specified on the face hereof is the “Commercial
      Paper Rate,” for any Interest Determination Date, the Commercial Paper
      Rate with respect to this Note shall be the Money Market Yield (as defined
      herein), calculated as described below, of the rate on that date for U.S.
      dollar commercial paper having the Index Maturity specified on the face
      hereof, as that rate is published in H.15(519), under the heading “Commercial
      Paper — Nonfinancial.”

 21

 

      The
    following procedures shall be followed if the Commercial Paper Rate cannot
    be determined as described above: (i) If the above rate is not published
    by 3:00 p.m., New York City time, on the Calculation Date, then the Commercial
    Paper Rate shall be the Money Market Yield of the rate on that Interest Determination
    Date for commercial paper of the Index Maturity specified on the face hereof
    as published in the H.15 Daily Update, or other recognized electronic source
    used for the purpose of displaying the applicable rate, under the heading “Commercial
    Paper —Nonfinancial.” 

     (ii)
  If by 3:00 p.m., New York City time, on that Calculation Date the rate is
  not yet published in either H.15(519) or the H.15 Daily Update, or other
  recognized electronic source used for the purpose of displaying the applicable
  rate, then the Calculation Agent shall determine the Commercial Paper Rate
  to be the Money Market Yield of the arithmetic mean of the offered rates
  as of 11:00 a.m., New York City time, on that Interest Determination Date
  of three leading dealers of U.S. dollar commercial paper in The City of New
  York, which may include the initial dealer and its affiliates, selected by
  the Calculation Agent (after consultation with the Issuer), for commercial
  paper of the Index Maturity specified on the face hereof, placed for an industrial
  issuer whose bond rating is “Aa,” or the equivalent, from a nationally
  recognized statistical rating agency.

      (iii)
    If the dealers selected by the Calculation Agent are not quoting as set forth
    in (ii) above, the Commercial Paper Rate for that Interest Determination
    Date shall remain the Commercial Paper Rate for the immediately preceding
    Interest Reset Period, or, if there was no Interest Reset Period, the rate
    of interest payable shall be the Initial Interest Rate.

      The “Money
      Market Yield” shall be a yield
      calculated in accordance with the following formula:

  	  	  	 D x 360 	  	  
	 Money Market Yield   =	 	 
 	 	   x 100
	 	  	 360 – (D
      x M)   	  	 

 where “D” refers to the
    applicable per year rate for commercial paper quoted on a bank discount basis
    and expressed as a decimal and “M” refers to the actual number
    of days in the interest period for which interest is being calculated.

      Determination
      of EURIBOR. If the Base Rate specified
      on the face hereof is “EURIBOR,” for
      any Interest Determination Date, EURIBOR with respect to this Note shall
      be the rate for deposits in euros as sponsored, calculated and published
      jointly by the European Banking Federation and ACI - The Financial Market
      Association, or any company established by the joint sponsors for purposes
      of compiling and publishing those rates, for the Index Maturity specified
      on the face hereof as that rate appears on the display on Moneyline Telerate,
      or any successor service, on page 248 or any other page as may replace
      page 248 on that service (“Telerate
      Page 248”) as of 11:00 a.m.,
      Brussels time.

 22

 

      The
    following procedures shall be followed if the rate cannot be determined as
    described above:

      (i) If the above rate does not appear,
    the Calculation Agent shall request the principal Euro-zone office of each
    of four major banks in the Euro-zone interbank market, as selected by the
    Calculation Agent (after consultation with the Issuer), to provide the Calculation
    Agent with its offered rate for deposits in euros, at approximately 11:00
    a.m., Brussels time, on the Interest Determination Date, to prime banks in
    the Euro-zone interbank market for the Index Maturity specified on the face
    hereof commencing on the applicable Interest Reset Date, and in a principal
    amount not less than the equivalent of U.S.$1 million in euro that is representative
      of a single transaction in euro, in that market at that time. If at least
      two quotations are provided, EURIBOR shall be the arithmetic mean of those
      quotations.

      (ii)
    If fewer than two quotations are provided, EURIBOR shall be the arithmetic
    mean of the rates quoted by four major banks in the Euro-zone interbank market,
    as selected by the Calculation Agent (after consultation with the Issuer),
    at approximately 11:00 a.m., Brussels time, on the applicable Interest Reset
    Date for loans in euro to leading European banks for a period of time equivalent
    to the Index Maturity specified on the face hereof commencing on that Interest
    Reset Date in a principal amount not less than the equivalent of U.S.$1
    million in euro.

      (iii)
    If the banks so selected by the Calculation Agent are not quoting as set
    forth above, the EURIBOR rate for that Interest Determination Date shall
    remain the EURIBOR for the immediately preceding Interest Reset Period, or,
    if there was no Interest Reset Period, the rate of interest payable shall
    be the Initial Interest Rate.

      “Euro-zone” means
    the region comprised of member states of the European Union that adopt the
    single currency in accordance with the relevant treaty of the European Union,
    as amended.

      Determination
      of the Federal Funds Rate. If the
      Base Rate specified on the face hereof is the “Federal
      Funds Rate,” for any Interest Determination Date, the Federal Funds Rate
      with respect to this Note shall be the rate on that date for U.S. dollar
      federal funds as published in H.15(519) under the heading “Federal
      Funds (Effective)” as displayed on Moneyline Telerate, or any successor
      service, on page 120 or any other page as may replace page 120 on that
      service (“Telerate Page 120”).

      The
    following procedures shall be followed if the Federal Funds Rate cannot be
    determined as described above: 

     (i) If the above rate is not published
    by 3:00 p.m., New York City time, on the Calculation Date, the Federal Funds
      Rate shall be the rate on that Interest Determination Date as published
    in the H.15 Daily Update, or other recognized electronic source used for
    the purpose of displaying the applicable rate, under the heading “Federal
      Funds (Effective).” 

     (ii) If the above rate is not yet published
    in either H.15(519) or the H.15 Daily Update, or other recognized electronic
    source used for the purpose of displaying the applicable rate, by 3:00 p.m.,
    New York City time, on the Calculation Date, the Calculation Agent shall
    determine the 

 23

 

 Federal Funds Rate to be the arithmetic
    mean of the rates for the last transaction in overnight U.S. dollar federal
    funds prior to 9:00 a.m., New York City time, on that Interest Determination
    Date, by each of three leading brokers of U.S. dollar federal funds transactions
    in The City of New York, which may include the initial dealer and its affiliates,
    selected by the Calculation Agent (after consultation with the Issuer).

      (iii)
    If the brokers selected by the Calculation Agent are not quoting as set forth
    in (ii) above, the Federal Funds Rate for that Interest Determination Date
    shall remain the Federal Funds Rate for the immediately preceding Interest
    Reset Period, or, if there was no Interest Reset Period, the rate of interest
    payable shall be the Initial Interest Rate.

      Determination
      of Federal Funds (Open) Rate. If the
      Base Rate specified on the face hereof is the “Federal
      Funds (Open) Rate”, for any Interest
      Determination Date, the Federal Funds (Open) Rate with respect to this
      Note shall be the rate on that date for U.S. dollar federal funds as published
      in H.15(519) under the heading “Federal Funds (Open)” as displayed
      on Moneyline Telerate, or any successor service, on page 5 or any other
      page as may replace page 5 on that service, (“Telerate
      Page 5”).

      The
    following procedures shall be followed if the Federal Funds (Open) Rate cannot
    be determined as described above:

	 If the above rate is not published by 3:00 p.m.,
      New York City time, on the Calculation
      Date, the Federal Funds (Open) Rate will be the rate on that Interest Determination
      Date as published in the H.15 Daily Update, or other recognized electronic
      source used for the purpose of displaying the applicable rate, under the heading “Federal
      Funds (Open).”

      

      
	 If the above rate is not yet published in either
      H.15(519) or the H.15 Daily Update, or other
      recognized electronic source used for the purpose of displaying the applicable rate,
      by 3:00 p.m., New York City time, on the Calculation Date, the Calculation Agent
      will determine the Federal Funds (Open) Rate to be the arithmetic mean
      of the rates for the last transaction
      in overnight U.S. dollar federal funds (based on the Federal
      Funds (Open) Rate) prior to 9:00 a.m., New York City time, on that Interest Determination
      Date, by each of three leading brokers of U.S. dollar federal funds transactions
      in the City of New York, which may include the agent and its affiliates, selected
      by the Calculation Agent, after consultation with the Issuer.

      

      
	 If the brokers selected by the Calculation Agent
      are not quoting as set forth above, the Federal
      Funds (Open) Rate for that Interest Determination Date shall remain the Federal
      Funds (Open) Rate for the immediately preceding Interest Reset Period,
      or, if there was no Interest Reset Period,
      the rate of interest payable will be the Initial Interest
      Rate.

      Determination
      of LIBOR. If the Base Rate specified
      on the face hereof is “LIBOR,” LIBOR
      with respect to this Note shall be based on London Interbank Offered Rate.
      The Calculation Agent shall determine LIBOR for each Interest Determination
      Date as follows:

 24

 

      (i)
    As of the Interest Determination Date, LIBOR shall be either (a) if “LIBOR
    Reuters” is specified as the Reporting
    Service on the face hereof, the arithmetic mean of the offered rates for
    deposits in the Index Currency having the Index Maturity designated on the
    face hereof, commencing on the second London Banking Day immediately following
    that Interest Determination Date, that appear on the Designated LIBOR Page,
    as defined below, as of 11:00 a.m., London time, on that Interest Determination
    Date, if at least two offered rates appear on the Designated LIBOR Page;
    except that if the specified Designated LIBOR Page, by its terms provides
    only for a single rate, that single rate shall be used; or (b) if “LIBOR
    Telerate” is specified as the Reporting
    Service on the face hereof, the rate for deposits in the Index Currency having
    the Index Maturity designated on the face hereof, commencing on the second
    London Banking Day immediately following that Interest Determination Date
    or, if pounds sterling is the Index Currency, commencing on that Interest
    Determination Date, that appears on the Designated LIBOR Page at approximately
    11:00 a.m., London time, on that Interest Determination Date. 

      (ii)
    If (a) fewer than two offered rates appear and LIBOR Reuters is specified
    on the face hereof, or (b) no rate appears and the face hereof specifies
    either (x) LIBOR Telerate or (y) LIBOR Reuters and the Designated LIBOR Page
    by its terms provides only for a single rate, then the Calculation Agent
    shall request the principal London offices of each of four major reference
    banks in the London interbank market, as selected by the Calculation Agent
    (after consultation with the Issuer), to provide the Calculation Agent with
    its offered quotation for deposits in the Index Currency for the period of
    the Index Maturity specified on the face hereof commencing on the second
    London Banking Day immediately following the Interest Determination Date
    or, if pounds sterling is the Index Currency, commencing on that Interest
    Determination Date, to prime banks in the London interbank market at approximately
    11:00 a.m., London time, on that Interest Determination Date and in a principal
    amount that is representative of a single transaction in that Index Currency
    in that market at that time.

      (iii)
    If at least two quotations are provided, LIBOR determined on that Interest
    Determination Date shall be the arithmetic mean of those quotations. If fewer
    than two quotations are provided, LIBOR shall be determined for the applicable
    Interest Reset Date as the arithmetic mean of the rates quoted at approximately
    11:00 a.m., London time, or some other time specified on the face hereof,
    in the applicable principal financial center for the country of the Index
    Currency on that Interest Reset Date, by three major banks in that principal
    financial center selected by the Calculation Agent (after consultation with
    the Issuer) for loans in the Index Currency to leading European banks, having
    the Index Maturity specified on the face hereof and in a principal amount
    that is representative of a single transaction in that Index Currency in
    that market at that time. 

      (iv)
    If the banks so selected by the Calculation Agent are not quoting as set
    forth above, the LIBOR rate for that Interest Determination Date shall remain
    the LIBOR for the immediately preceding Interest Reset Period, or, if there
    was no Interest Reset Period, the rate of interest payable shall be the Initial
    Interest Rate.

 25

 

      The “Index
      Currency” means the currency
      specified on the face hereof as the currency for which LIBOR shall be calculated,
      or, if the euro is substituted for that currency, the Index Currency shall
      be the euro. If that currency is not specified on the face hereof, the
      Index Currency shall be U.S. dollars.

      “Designated
      LIBOR Page” means either: (a)
      if LIBOR Reuters is designated as the Reporting Service on the face hereof,
      the display on the Reuters Money 3000 Service for the purpose of displaying
      the London interbank rates of major banks for the applicable Index Currency
      or its designated successor, or (b) if LIBOR Telerate is designated as
      the Reporting Service on the face hereof, the display on Moneyline Telerate,
      or any successor service, on the page specified on the face hereof, or
      any other page as may replace that page on that service, for the purpose
      of displaying the London interbank rates of major banks for the applicable
      Index Currency.

      If neither
    LIBOR Reuters nor LIBOR Telerate is specified on the face hereof, LIBOR for
    the applicable Index Currency shall be determined as if LIBOR Telerate were
    specified, and, if the U.S. dollar is the Index Currency, as if Page 3750
    had been specified.

      Determination
      of Prime Rate. If the Base Rate specified
      on the face hereof is “Prime Rate,” for
      any Interest Determination Date, the Prime Rate with respect to this Note
      shall be the rate on that date as published in H.15(519) under the heading “Bank
      Prime Loan.” 

     The following procedures shall be followed
    if the Prime Rate cannot be determined as described above: 

     (i) If the above rate is
        not published prior to 3:00 p.m., New York City time, on the Calculation
        Date, then the Prime Rate shall be the rate on that Interest Determination
        Date as published in the H.15 Daily Update under the heading “Bank
        Prime Loan.”

      (ii) If the above rate is not published
    in either H.15(519) or the H.15 Daily Update by 3:00 p.m., New York City
    time, on the Calculation Date, then the Calculation Agent shall determine
    the Prime Rate to be the arithmetic mean of the rates of interest publicly
    announced by each bank that appears on the Reuters Screen USPRIME 1 Page,
    as defined below, as that bank’s Prime Rate or base lending rate as in effect for that
          Interest Determination Date.

      (iii)
    If fewer than four rates for that Interest Determination Date appear on the
    Reuters Screen USPRIME 1 Page by 3:00 p.m., New York City time, on the Calculation
    Date, the Calculation Agent shall determine the Prime Rate to be the arithmetic
    mean of the Prime Rates quoted on the basis of the actual number of days
    in the year divided by 360 as of the close of business on that Interest Determination
    Date by at least three major banks in The City of New York, which may include
    affiliates of the initial dealer, selected by the Calculation Agent (after
    consultation with the Issuer).

      (iv)
    If the banks selected by the Calculation Agent are not quoting as set forth
    above, the Prime Rate for that Interest Determination Date shall remain the
    Prime Rate for the immediately preceding Interest Reset Period, or, if there
    was no Interest Reset Period, the rate of interest payable shall be the Initial
    Interest Rate.

 26

 

      “Reuters
      Screen USPRIME 1 Page” means
      the display designated as page “USPRIME 1” on the Reuters Money
      3000 Service, or any successor service, or any other page as may replace
      the USPRIME 1 Page on that service for the purpose of displaying prime
      rates or base lending rates of major U.S. banks.

      Determination
      of Treasury Rate. If the Base Rate
      specified on the face hereof is “Treasury
      Rate,” the Treasury Rate with
      respect to this Note shall be 

     (i) the rate from the Auction held
    on the applicable Interest Determination Date (the “Auction”)
        of direct obligations of the United States (“Treasury
        Bills”) having the Index Maturity
        specified on the face hereof as that rate appears under the caption “INVESTMENT
        RATE” on the display on Moneyline Telerate, or any successor service,
        on page 56 or any other page as may replace page 56 on that service (“Telerate
        Page 56”) or page 57 or any other
        page as may replace page 57 on that service (“Telerate
        Page 57”); or

      (ii) if the rate
          described in (i) above is not published by 3:00 p.m., New York City
    time, on the Calculation Date, the Bond Equivalent Yield of the rate for
    the applicable Treasury Bills as published in the H.15 Daily Update, or other
          recognized electronic source used for the purpose of displaying the
    applicable rate, under the caption “U.S. Government Securities/Treasury Bills/Auction
          High”; or 

     (iii) if the rate described in (ii)
    above is not published by 3:00 p.m., New York City time, on the related Calculation
    Date, the Bond Equivalent Yield of the Auction rate of the applicable Treasury
    Bills, announced by the United States Department of the Treasury; or

      (iv)
      if the rate described in (iii) above is not announced by the United States
      Department of the Treasury, or if the Auction is not held, the Bond Equivalent
      Yield of the rate on the applicable Interest Determination Date of Treasury
      Bills having the Index Maturity specified on the face hereof published
    in H.15(519) under the caption “U.S. Government Securities/Treasury Bills/Secondary
              Market”; or 

     (v) if the rate described in (iv) above
    is not so published by 3:00 p.m., New York City time, on the related Calculation
    Date, the rate on the applicable Interest Determination Date of the applicable
    Treasury Bills as published in the H.15 Daily Update, or other recognized
    electronic source used for the purpose of displaying the applicable rate,
    under the caption “U.S. Government Securities/Treasury Bills/Secondary Market”;
                or 

     (vi) if the rate described in (v) above
    is not so published by 3:00 p.m., New York City time, on the related Calculation
    Date, the rate on the applicable Interest Determination Date calculated by
    the Calculation Agent as the Bond Equivalent Yield of the arithmetic mean
    of the secondary market bid rates, as of approximately 3:30 p.m., New York
    City time, on the applicable Interest Determination Date, of three primary
    U.S. government securities dealers, which may include the initial dealer
    and its affiliates, selected by the Calculation Agent, for the issue of Treasury
    Bills with a remaining maturity closest to the Index Maturity specified on
    the face hereof; or

 27

 

      (vii)
    if the dealers selected by the Calculation Agent are not quoting as described
    in (vi), the Treasury Rate for the immediately preceding Interest Reset Period,
    or, if there was no Interest Reset Period, the rate of interest payable shall
    be the Initial Interest Rate.

      The “Bond
      Equivalent Yield” means a yield
      calculated in accordance with the following formula and expressed as a
      percentage:

  	  	  	 D x N 	  	  
	 Bond Equivalent
      Yield   = 	 	
        

      	 	   x 100
	 	  	 360 – (D
            x M)  	  	 

 where “D” refers to the
    applicable per annum rate for Treasury Bills quoted on a bank discount basis, “N” refers
    to 365 or 366, as the case may be, and “M” refers to the actual
    number of days in the interest period for which interest is being calculated.

      Determination
      of CMT Rate. If the Base Rate specified
      on the face hereof is the “CMT
      Rate,” for any Interest Determination
      Date, the CMT Rate with respect to this Note shall be the rate displayed
      on the Designated CMT Telerate Page (as defined below) under the caption “...
      Treasury Constant Maturities ... Federal Reserve Board Release H.15...
      Mondays Approximately 3:45 p.m.,” under the column for the Designated
      CMT Maturity Index, as defined below, for: 

     (1) the rate on that Interest
        Determination Date, if the Designated CMT Telerate Page is 7051; and

      (2) the week or the month, as applicable,
    ended immediately preceding the week in which the related Interest Determination
    Date occurs, if the Designated CMT Telerate Page is 7052.

      The
    following procedures shall be followed if the CMT Rate cannot be determined
    as described above:

      (i) If the above rate is no longer
    displayed on the relevant page, or if not displayed by 3:00 p.m., New York
    City time, on the related Calculation Date, then the CMT Rate shall be the
    Treasury Constant Maturity rate for the Designated CMT Maturity Index as
    published in the relevant H.15(519).

      (ii)
    If the above rate is no longer published, or if not published by 3:00 p.m.,
    New York City time, on the related Calculation Date, then the CMT Rate shall
    be the Treasury Constant Maturity Rate for the Designated CMT Maturity Index
    or other U.S. Treasury rate for the Designated CMT Maturity Index on the
    Interest Determination Date as may then be published by either the Board
    of Governors of the Federal Reserve System or the United States Department
    of the Treasury that the Calculation Agent determines to be comparable to
    the rate formerly displayed on the Designated CMT Telerate Page and published
    in the relevant H.15(519).

      (iii)
    If the information set forth above is not provided by 3:00 p.m., New York
    City time, on the related Calculation Date, then the Calculation Agent shall
    determine the CMT Rate to be a yield to maturity, based on the arithmetic
    mean of the secondary market closing offer side prices 

 28

 

 as of approximately 3:30 p.m., New
    York City time, on the Interest Determination Date, reported, according to
    their written records, by three leading primary U.S. government securities
    dealers (“Reference Dealers”) in
    The City of New York, which may include the initial dealer or its affiliates,
    selected by the Calculation Agent as described in the following sentence.
    The Calculation Agent shall select five reference dealers (after consultation
    with the Issuer) and shall eliminate the highest quotation or, in the event
    of equality, one of the highest, and the lowest quotation or, in the event
    of equality, one of the lowest, for the most recently issued direct noncallable
    fixed rate obligations of the United States (“Treasury
    Notes”) with an original maturity
    of approximately the Designated CMT Maturity Index, a remaining term to maturity
    of no more than 1 year shorter than that Designated CMT Maturity Index and
    in a principal amount that is representative for a single transaction in
    the securities in that market at that time. If two Treasury Notes with an
    original maturity as described above have remaining terms to maturity equally
    close to the Designated CMT Maturity Index, the quotes for the Treasury Note
    with the shorter remaining term to maturity shall be used.

      (iv)
    If the Calculation Agent cannot obtain three Treasury Notes quotations as
    described in (iii) above, the Calculation Agent shall determine the CMT Rate
    to be a yield to maturity based on the arithmetic mean of the secondary market
    offer side prices as of approximately 3:30 p.m., New York City time, on the
    Interest Determination Date of three reference dealers in The City of New
    York, selected using the same method described in (iii) above, for Treasury
    Notes with an original maturity equal to the number of years closest to but
    not less than the Designated CMT Maturity Index and a remaining term to maturity
    closest to the Designated CMT Maturity Index and in a principal amount that
    is representative for a single transaction in the securities in that market
    at that time.

      (v)
    If three or four, and not five, of the reference dealers are quoting as described
    in (iv) above, then the CMT Rate for that Interest Determination Date shall
    be based on the arithmetic mean of the offer prices obtained and neither
    the highest nor the lowest of those quotes shall be eliminated.

      (vi)
    If fewer than three reference dealers selected by the Calculation Agent are
    quoting as described in (iv) above, the CMT Rate for that Interest Determination
    Date shall remain the CMT Rate for the immediately preceding Interest Reset
    Period, or, if there was no Interest Reset Period, the rate of interest payable
    shall be the Initial Interest Rate.

      “Designated
      CMT Telerate Page” means the
      display on Moneyline Telerate, or any successor service, on the page designated
      on the face hereof or any other page as may replace that page on that service
      for the purpose of displaying Treasury Constant Maturities as reported
      in H.15(519). If no page is specified on the face hereof, the Designated
      CMT Telerate Page shall be 7052, for the most recent week.

      “Designated
      CMT Maturity Index” means the
      original period to maturity of the U.S. Treasury securities, which is either
      1, 2, 3, 5, 7, 10, 20 or 30 years, as specified in the applicable pricing
      supplement for which the CMT Rate shall be calculated. If no maturity is
      specified on the face hereof, the Designated CMT Maturity Index shall be
      two years.

 29

 

      Notwithstanding
    the foregoing, the interest rate hereon shall not be greater than the Maximum
    Interest Rate, if any, or less than the Minimum Interest Rate, if any, specified
    on the face hereof. The Calculation Agent shall calculate the interest rate
    hereon in accordance with the foregoing on or before each Calculation Date.
    The interest rate on this Note will in no event be higher than the maximum
    rate permitted by New York law, as the same may be modified by United States
    Federal law of general application.

      At the
    request of the holder hereof, the Calculation Agent will provide to the holder
    hereof the interest rate hereon then in effect and, if determined, the interest
    rate that will become effective as of the next Interest Reset Date.

      Unless
    otherwise indicated on the face hereof, interest payments on this Note shall
    be the amount of interest accrued from and including the Interest Accrual
    Date or from and including the last date to which interest has been paid
    or duly provided for to but excluding the Interest Payment Dates or the Maturity
    Date (or any earlier redemption or repayment date), as the case may be. Accrued
    interest hereon shall be an amount calculated by multiplying the face amount
    hereof by an accrued interest factor. Such accrued interest factor shall
    be computed by adding the interest factor calculated for each day in the
    period for which interest is being paid. The interest factor for each such
    date shall be computed by dividing the interest rate applicable to such day
    (i) by 360 if the Base Rate is CD Rate, Commercial Paper Rate, EURIBOR, Federal
    Funds Rate, Federal Funds (Open) Rate, Prime Rate or LIBOR (except if the
    Index Currency is pounds sterling); (ii) by 365 if the Base Rate is LIBOR
    and the Index Currency is pounds sterling; or (iii) by the actual number
    of days in the year if the Base Rate is the Treasury Rate or the CMT Rate.
    All percentages resulting from any calculation of the rate of interest on
    this Note will be rounded, if necessary, to the nearest one hundred-thousandth
    of a percentage point with (.000005% being rounded up to .00001%) and all
    U.S. dollar amounts used in or resulting from such calculation on this Note
    will be rounded to the nearest cent, with one-half cent rounded upward. All
    Japanese Yen amounts used in or resulting from such calculations will be
    rounded downwards to the next lower whole Japanese Yen amount. All amounts
    denominated in any other currency used in or resulting from such calculations
    will be rounded to the nearest two decimal places in such currency, with
    .005 being rounded up to .01. The interest rate in effect on any Interest
    Reset Date will be the applicable rate as reset on such date. The interest
    rate applicable to any other day is the interest rate from the immediately
    preceding Interest Reset Date (or, if none, the Initial Interest Rate).

      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 

 30

 

 only in denominations of the equivalent
    of U.S. $1,000 (rounded to an integral multiple of 1,000 units of such
    Specified Currency), or any amount in excess thereof which is an integral
    multiple of 1,000 units of such Specified Currency, as determined by reference
    to the noon dollar buying rate in The City of New York for cable transfers
    of such Specified Currency published by the Federal Reserve Bank of New York
    (the “Market Exchange Rate”)
    on the Business Day immediately preceding the date of issuance.

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

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

      The
    Senior Indenture provides that (a) if an Event of Default (as defined in
    the Senior Indenture) due to the default in payment of principal of or premium,
    if any, or interest on, any 

 31

 

 series of debt securities issued under
    the Senior Indenture, including the series of 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.

      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, (i) 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 (ii) 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

 32

 

 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 or 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.

      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 

 33

 

 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 and 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 or 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 non-resident alien individual, (ii) a
    foreign corporation, (iii) a non-resident alien fiduciary or a foreign estate
    or trust or (iv) a foreign partnership one or more members of which is, for
    U.S. federal income tax purposes, a non-resident alien individual, a foreign
    corporation or a non-resident 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.

 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:

 34

 

	 	 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.

  ______________________________

35

  

     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.

36

  

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.

37Exhibit
                4.1 

        

      

	 
	 FORM OF
          FIXED RATE SENIOR NOTE 
	 	 	 
	 REGISTERED 	  	 REGISTERED 
	 No. FXR-1 	  	 U.S. $ 
	  	  	 CUSIP: 

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

 

 MORGAN STANLEY

  SENIOR GLOBAL MEDIUM-TERM NOTE,
  SERIES F

 PERFORMANCE LEVERAGED
        UPSIDE SECURITIES (“PLUS”)

      PLUS
        DUE NOVEMBER 20, 2007

  MANDATORILY EXCHANGEABLE

  FOR AN AMOUNT PAYABLE IN U.S. DOLLARS

  BASED ON THE VALUE OF THE PHLX OIL SERVICE SECTORSM INDEX

	ORIGINAL
          ISSUE DATE:
	 INITIAL
          REDEMPTION DATE: N/A
	 INTEREST
          RATE: None
	 MATURITY
          DATE: See “Maturity Date” below.

	 INTEREST
          ACCRUAL DATE: N/A
	 INITIAL
          REDEMPTION PERCENTAGE: N/A
	INTEREST
          PAYMENT DATE(S): N/A
	 OPTIONAL
          REPAYMENT DATE(S): N/A

	SPECIFIED
          CURRENCY: U.S. dollars
	 ANNUAL
          REDEMPTION PERCENTAGE REDUCTION: N/A
	 INTEREST
          PAYMENT PERIOD: N/A
	 APPLICABILITY
          OF MODIFIEDPAYMENT 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: N/A
	 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 Index

      Underlying Index Publisher

              Initial Index Value

      Pricing Date
	  	$10 per PLUS

      PHLX Oil Service SectorSM Index

      Philadelphia Stock Exchange, Inc.
      
	 	 	 
	Denominations	 	$10 and integral multiples thereof

 2

 

	 Bull Market or
        Bear Market PLUS 	  	 Bull Market PLUS 
	 	 	 
	 Maximum Payment
        at Maturity 	  	 $ 
	 	 	 
	 Minimum Payment
        at Maturity 	  	  
	   if
        Bear Market PLUS 	  	 N/A 
	 	 	 
	Leverage Factor

      Index Valuation Date
	  	       %

      November 16, 2007; provided that
          if there is a Market Disruption Event on the scheduled Index Valuation
          Date or if the scheduled Index Valuation Date is not otherwise an Index
          Business Day, the Index Valuation Date shall be the immediately succeeding
          Index Business Day during which no Market Disruption Event shall have
          occurred. See “Maturity Date.”

	 	 	 
	Maturity Date
	  	November 20, 2007, subject
          to extension if the scheduled Index Valuation Date is postponed in
          accordance with the definition thereof. If the Index Valuation Date
          is postponed so that it falls less than two scheduled Index Business
          Days prior to the scheduled Maturity Date, the Maturity Date shall
          be the second scheduled Index Business Day following the Index Valuation
          Date as postponed. See “Index Valuation Date.”

      In the event that the Maturity Date of the
          PLUS is postponed due to postponement of the Index Valuation Date as
          described in the immediately preceding paragraph, the Issuer shall
          give notice of such postponement and, once it has been determined,
          of the date to which the Maturity Date has been rescheduled (i) to
          the holder of this PLUS by mailing notice of such postponement by first
          class mail, postage prepaid, to the holder’s last address as it
          shall appear upon the registry books, (ii) to the Trustee by telephone
          or facsimile confirmed by mailing such notice to the Trustee by first
          class mail, postage prepaid, at its New York office and (iii) to The
          Depository Trust Company (the “Depositary”) by telephone
          or facsimile confirmed by mailing such notice to the Depositary by
          first class mail, postage prepaid. Any notice that is mailed in the
          manner herein provided shall be conclusively presumed to have been
          duly given, whether or not the holder of this PLUS receives the notice.
          The Issuer shall give such notice as promptly as possible, and in

 3

 

	  	  	no case later than (i)
          with respect to notice of postponement of the Maturity Date, the Business
          Day immediately following the scheduled Index Valuation Date, and (ii)
          with respect to notice of the date to which the Maturity Date has been
          rescheduled, the Business Day immediately following the actual Index
          Valuation Date for determining the Final Index Value (as defined below).

	 	 	 
	Payment at Maturity
	  	At maturity, upon delivery
          of this PLUS to the Trustee, the Issuer shall pay with respect to each
          Stated Principal Amount of this PLUS an amount in cash equal to:

      1. For
            a Bull Market PLUS, (i) if the
            Final Index Value is greater than the Initial Index Value, the lesser
            of (a) the Stated Principal Amount plus the Leveraged Upside Payment
            and (b) the Maximum Payment at Maturity or (ii) if the Final Index
            Value is less than or equal to the Initial Index Value, the Stated
            Principal Amount times the Index Performance Factor, subject to the
            Minimum Payment at Maturity.

      2. For
            a Bear Market PLUS, (i) if the
            Final Index Value is less than the Initial Index Value, the lesser
            of (a) the Stated Principal Amount plus the Enhanced Downside Payment
            and (b) the Maximum Payment at Maturity or (ii) if the Final Index
            Value is greater than or equal to the Initial Index Value, the Stated
            Principal Amount minus the Upside Reduction Amount, subject to the
            Minimum Payment at Maturity.

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

	 
	 Applicable
          only for BULL MARKET PLUS 

 4

 

	
        Leveraged Upside Payment

      
	  	The product of (i) the
          Stated Principal Amount and (ii) the Leverage Factor and (iii) the
          Index Percent Increase.

	 	 	 
	
        Index Performance Factor

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

	 
	 Applicable
          only for BEAR MARKET PLUS 
	 	 	 
	
        Enhanced Downside Payment

      
	  	The product of (i) the
          Stated Principal Amount and (ii) the Leverage Factor and (iii) the
          Index Percent Decrease.

	 	 	 
	
        Upside Reduction Amount

      
	  	The product of (i) the
          Stated Principal Amount and (ii) the Index Percent Increase.

	 	 	 
	
        Index Percent Decrease

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

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

	 	 	 
	Final Index Value
	  	The Index Closing Value
          of the Underlying Index on the Index Valuation Date.

	 	 	 
	Index Closing Value
	  	The Index Closing Value
          on any Index Business Day shall equal the closing value of the Underlying
          Index or any Successor Index (as defined under “Discontinuance
          of the Underlying Index; Alteration of Method of Calculation” below)
          published at the regular weekday close of trading on that Index Business
          Day, as determined by the Calculation Agent. In certain circumstances,
          the Index Closing Value shall be based on the alternate calculation
          of the Underlying Index described under “Discontinuance of the
          Underlying Index; Alteration of Method of Calculation.”

	 	 	 
	Trading Day
	  	A day, as determined
          by the Calculation Agent, on which trading is generally conducted on
          the New York Stock Exchange, Inc. (“NYSE”), the American
          Stock Exchange LLC (“AMEX”), the Nasdaq National

 5

 

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

	 	 	 
	Index Business Day
	  	A day, as determined
          by the Calculation Agent, on which trading is generally conducted on
          the Relevant Exchange and on any exchange on which futures or options
          contracts related to the Underlying Index (or Successor Index) are
          traded, other than a day on which trading on such exchange is scheduled
          to close prior to its regular final weekday closing price.

	 	 	 
	Relevant Exchange
	  	Relevant Exchange means
          the primary exchange(s) or market(s) of trading for (i) any security
          (or any combination thereof) then included in the Underlying Index
          or any Successor Index and (ii) any futures or options contracts related
          to such Underlying Index or to any security then included in the Underlying
          Index.

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

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

      All calculations with respect to the Payment
          at Maturity shall be rounded to the nearest one hundred- thousandth,
          with five one-millionths rounded upward (e.g.,
          .876545 would be rounded to .87655); all dollar amounts related to
          determination of the amount of cash payable for each Stated Principal
          Amount of this PLUS shall be rounded to the nearest ten-thousandth,
          with five one hundred-thousandths rounded upward (e.g.,
          .76545 would be rounded up to .7655); and all dollar amounts paid on
          the aggregate number of PLUS shall be rounded to the nearest cent,
          with one-half cent rounded upward.

	 	 	 

 6

 

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

		 	 
	 	  	(i) the occurrence or
          existence of a suspension, absence or material limitation of trading
          of stocks then constituting 20 percent or more of the level of the
          Underlying Index (or the Successor Index) on the Relevant Exchanges
          for such securities for more than two hours of trading or during the
          one-half hour period preceding the close of the principal trading session
          on such Relevant Exchange; or a breakdown or failure in the price and
          trade reporting systems of any Relevant Exchange as a result of which
          the reported trading prices for stocks then constituting 20 percent
          or more of the level of the Underlying Index (or the Successor Index)
          during the last one-half hour preceding the close of the principal
          trading session on such Relevant Exchange are materially inaccurate;
          or the suspension, material limitation or absence of trading on any
          major U.S. securities market for trading in futures or options contracts
          or exchange traded funds related to the Underlying Index (or the Successor
          Index) for more than two hours of trading or during the one-half hour
          period preceding the close of the principal trading session on such
          market, in each case as determined by the Calculation Agent in its
          sole discretion; and

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

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

 7

 

	  	  	For the purpose of determining
          whether a Market Disruption Event has occurred: (1) a limitation on
          the hours or number of days of trading shall not constitute a Market
          Disruption Event if it results from an announced change in the regular
          business hours of the relevant exchange or market, (2) a decision to
          permanently discontinue trading in the relevant futures or options
          contract or exchange traded fund shall not constitute a Market Disruption
          Event, (3) limitations pursuant to the rules of any Relevant Exchange
          similar to NYSE Rule 80A (or any applicable rule or regulation enacted
          or promulgated by any other self- regulatory organization or any government
          agency of scope similar to NYSE Rule 80A as determined by the Calculation
          Agent) on trading during significant market fluctuations shall constitute
          a suspension, absence or material limitation of trading, (4) a suspension
          of trading in futures or options contracts on the Underlying Index
          by the primary securities market trading in such contracts by reason
          of (a) a price change exceeding limits set by such securities exchange
          or market, (b) an imbalance of orders relating to such contracts or
          (c) a disparity in bid and ask quotes relating to such contracts shall
          constitute a suspension, absence or material limitation of trading
          in futures or options contracts related to the Underlying Index and
          (5) a “suspension, absence or material limitation of trading” on
          any Relevant Exchange or on the primary market on which futures or
          options contracts related to the Underlying Index 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 PLUS shall have occurred
              and be continuing, the amount declared due and payable for each
              Stated Principal Amount of this PLUS upon any acceleration of this
              PLUS shall be determined by the Calculation Agent and shall be
              an amount in cash equal to the Payment at Maturity calculated using
              the Index Closing Value as of the date of such acceleration as
              the Final Index Value plus, if applicable, any accrued but unpaid
              interest as of the date of such acceleration.

 8

 

	  	  	If the maturity of the
          PLUS is accelerated because of an event of default as described above,
          the Issuer shall, or shall cause the Calculation Agent to, provide
          written notice to the Trustee at its New York office, on which notice
          the Trustee may conclusively rely, and to the Depositary of the cash
          amount due with respect to each Stated Principal Amount of this PLUS
          as promptly as possible and in no event later than two Business Days
          after the date of acceleration.

	 	 	 
	Discontinuance of the Underlying
          Index;

          Alteration of  Method of Calculation
	  	

        If the Underlying Index Publisher discontinues publication of the Underlying
              Index and the Underlying Index Publisher or another entity (including
              MS & Co.) publishes a successor or substitute index that the
              Calculation Agent determines, in its sole discretion, to be comparable
              to the discontinued Underlying Index (such index being referred
              to herein as a “Successor Index”), then any subsequent
              Index Closing Value shall be determined by reference to the published
              value of such Successor Index at the regular weekday close of trading
              on the Index Business Day that any Index Closing Value is to be
              determined.

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

      If the Underlying Index Publisher discontinues
          publication of the Underlying Index prior to, and such discontinuance
          is continuing on, the Index Valuation Date or the date of acceleration
          and the Calculation Agent determines, in its sole discretion, that
          no Successor Index is available at such time, then the Calculation
          Agent shall determine the Index Closing Value for such date. The Index
          Closing Value shall be computed by the Calculation Agent in accordance
          with the formula for and method of calculating the Underlying Index
          last in effect prior to such discontinuance, using the closing price
          (or, if trading in

 9

 

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

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

 10

 

      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 cash, as determined in accordance with the provisions
    set forth under “Payment 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

 11

 

 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 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

 12

 

 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.

 13

 

      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

      successor
    Trustee to JPMORGAN

          CHASE BANK, N.A.), as Trustee          
	 	 
	By:	 
	 	
      

	 	Authorized Signatory 

14

 

 FORM OF REVERSE OF SECURITY

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

 15

 

      If so
    indicated on the face of this Note, this Note will be subject to repayment
    at the option of the holder on the Optional Repayment Date or Dates specified
    on the face hereof on the terms set forth herein. On any Optional Repayment
    Date, this Note will be repayable in whole or in part in increments of $1,000
    or, if this Note is denominated in a Specified Currency other than U.S. dollars,
    in increments of 1,000 units of such Specified Currency (provided that any
    remaining principal amount hereof shall not be less than the minimum authorized
    denomination hereof) at the option of the holder hereof at a price equal
    to 100% of the principal amount to be repaid, together with interest accrued
    and unpaid hereon to the date of repayment, provided that
    if the face hereof indicates that this Note is subject to “Modified
    Payment upon Acceleration or Redemption”, the amount of principal payable
    upon repayment will be limited to the aggregate principal amount hereof multiplied
    by the sum of the Issue Price specified on the face hereof (expressed as
    a percentage of the aggregate principal amount) plus the original issue discount
    accrued from the Interest Accrual Date to the date of repayment (expressed
    as a percentage of the aggregate principal amount), with the amount of original
    issue discount accrued being calculated using a constant yield method (as
    described below). For this Note to be repaid at the option of the holder
    hereof, the Paying Agent must receive at its corporate trust office in the
    Borough of Manhattan, The City of New York, at least 15 but not more than
    30 calendar days prior to the date of repayment, (i) this Note with the form
    entitled “Option to Elect Repayment” below duly completed or (ii)
    a telegram, telex, facsimile transmission or a letter from a member of a
    national securities exchange or the National Association of Securities Dealers,
    Inc. or a commercial bank or a trust company in the United States setting
    forth the name of the holder of this Note, the principal amount hereof, the
    certificate number of this Note or a description of this Note’s tenor
    and terms, the principal amount hereof to be repaid, a statement that the
    option to elect repayment is being exercised thereby and a guarantee that
    this Note, together with the form entitled “Option to Elect Repayment” duly
    completed, will be received by the Paying Agent not later than the fifth
    Business Day after the date of such telegram, telex, facsimile transmission
    or letter; provided,
    that such telegram, telex, facsimile transmission or letter shall only be
    effective if this Note and form duly completed are received by the Paying
    Agent by such fifth Business Day. Exercise of such repayment option by the
    holder hereof shall be irrevocable. In the event of repayment of this Note
    in part only, a new Note or Notes for the amount of the unpaid portion hereof
    shall be issued in the name of the holder hereof upon the cancellation hereof.

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

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

 16

 

 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 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.

 17

 

 

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

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

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

 18

 

 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 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.

 19

 

      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;

      (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;

 20

 

     (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 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.

 21

 

 

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

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

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

      So long
    as this Note shall be outstanding, the Issuer will cause to be maintained
    an office or agency for the payment of the principal of and premium, if any,
    and interest on this Note as herein provided in the Borough of Manhattan,
    The City of New York, and an office or agency in said Borough of Manhattan
    for the registration, transfer and exchange as aforesaid of the Notes. The
    Issuer may designate other agencies for the payment of said principal, premium
    and interest at such place or places (subject to
    applicable laws and regulations) as the Issuer may decide. So long as there
    shall be such an agency, the Issuer shall keep the Trustee advised of the
    names and locations of such agencies, if any are so designated. If any European
    Union Directive on the taxation of savings comes into force, the Issuer will,
    to the extent possible as a matter of law, 

 22

 

 maintain a Paying Agent in a member
    state of the European Union that will not be obligated to withhold or deduct
    tax pursuant to any such Directive or any law implementing or complying with,
    or introduced in order to conform to, such Directive.

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

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

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

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

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

      As used
    herein, the term “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.

 23

 

 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.

  ______________________________

24

  

     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.

25

  

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.

26

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