Document:

Exhibit 4.1

                         FORM OF FIXED RATE SENIOR NOTE

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

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

<PAGE>

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

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

                                                   7% SPARQS(R) DUE JUNE 1, 2006
                                                     MANDATORILY EXCHANGEABLE
                                                   FOR SHARES OF COMMON STOCK OF
                                                     FOREST LABORATORIES, INC.

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

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

Maturity Date.................  June 1, 2006, subject to acceleration as
                                described below in "Price Event Acceleration"
                                and "Alternate

                                      A-2
<PAGE>

                                Exchange Calculation in Case of an Event of
                                Default" and subject to extension if the Final
                                Call Notice Date is postponed in accordance with
                                the following paragraph.

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

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

Interest Payment Dates........  September 1, 2005, December 1, 2005, March 1,
                                2006 and the Maturity Date.

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

                                      A-3
<PAGE>

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

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

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

Morgan Stanley Call Right.....  On any scheduled Trading Day on or after
                                November 30, 2005 or on the Maturity Date
                                (including the Maturity Date as it may be
                                extended and regardless of whether the Maturity
                                Date is a Trading Day), the Issuer may call the
                                SPARQS, in whole but not in part, for mandatory
                                exchange for the Call Price paid in cash
                                (together with accrued but unpaid interest) on
                                the Call Date.

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

                                      A-4
<PAGE>

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

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

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

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

                                      A-5
<PAGE>

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

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

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

Final Call Notice Date........  May 22, 2006; provided that if May 22, 2006 is
                                not a Trading Day or if a Market Disruption
                                Event occurs on such day, the Final Call Notice
                                Date will be the immediately succeeding Trading
                                Day on which no Market Disruption Event occurs.

Call Date.....................  The day specified in the Issuer's notice of
                                mandatory exchange, on which the Issuer shall
                                deliver cash to the holder of this SPARQS, for
                                mandatory exchange, which day may be any
                                scheduled Trading Day on or after November 30,
                                2005 or the Maturity Date (including the
                                Maturity Date as it may be extended and
                                regardless of whether the Maturity Date is a
                                scheduled Trading Day). See "Maturity Date"
                                above.

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

                                      A-6
<PAGE>

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

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

                                The Issuer shall, or shall cause the Calculation
                                Agent to, provide written notice to the Trustee
                                at its New York Office and to the Depositary, on
                                which notice the Trustee and Depositary may
                                conclusively rely, on or prior to 10:30 a.m. on
                                the Trading Day immediately prior to maturity of
                                this SPARQS (but if such Trading Day is not a
                                Business Day, prior to the close of business on
                                the Business Day preceding the maturity of this
                                SPARQS), of the amount of Forest Laboratories
                                Stock (or the amount of Exchange Property) or
                                cash to be delivered with respect to each $
                                principal amount of this SPARQS and of the
                                amount of any cash to be paid in lieu of any
                                fractional share of Forest Laboratories Stock
                                (or of any other securities included in Exchange
                                Property, if applicable); provided that if the
                                maturity date of this SPARQS is accelerated (x)
                                because of a Price Event Acceleration (as
                                described under "Price Event Acceleration"
                                below) or (y)

                                      A-7
<PAGE>

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

                                The Issuer shall, or shall cause the Calculation
                                Agent to, deliver any such shares of Forest
                                Laboratories Stock (or any Exchange Property)
                                and cash in respect of interest and any
                                fractional share of Forest Laboratories Stock
                                (or any Exchange Property) and cash otherwise
                                due upon any acceleration described above to the
                                Trustee for delivery to the holder of this Note.
                                References to payment "per SPARQS" refer to each
                                $      principal amount of this SPARQS.

                                If this SPARQS is not surrendered for exchange
                                at maturity, it shall be deemed to be no longer
                                Outstanding under, and as defined in, the Senior
                                Indenture, except with respect to the holder's
                                right to

                                      A-8
<PAGE>

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

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

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

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

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

No Fractional Shares..........  Upon delivery of this SPARQS to the Trustee at
                                maturity, the Issuer shall deliver the aggregate
                                number of shares of Forest Laboratories Stock
                                due with respect to this SPARQS, as described
                                above, but the Issuer shall pay cash in lieu of
                                delivering any fractional share of Forest
                                Laboratories Stock in an amount equal to the
                                corresponding fractional Closing Price of such
                                fraction

                                      A-9
<PAGE>

                                of a share of Forest Laboratories Stock as
                                determined by the Calculation Agent as of the
                                second scheduled Trading Day prior to maturity
                                of this SPARQS.

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

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

                                o   if Forest Laboratories Stock (or any such
                                    other security) is listed or admitted to
                                    trading on a national securities exchange,
                                    the last reported sale price, regular way,
                                    of the principal trading session on such day
                                    on the principal United States securities
                                    exchange registered under the Securities
                                    Exchange Act of 1934, as amended (the
                                    "Exchange Act"), on which Forest
                                    Laboratories Stock (or any such other
                                    security) is listed or admitted to trading,

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

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

                                If Forest Laboratories Stock (or any such other
                                security) is listed or admitted to trading on
                                any national securities exchange or is a
                                security of the Nasdaq National Market but the
                                last reported sale price or Nasdaq official
                                closing price, as applicable, is not available
                                pursuant to the preceding sentence, then the
                                Closing Price for one share of Forest
                                Laboratories

                                      A-10
<PAGE>

                                Stock (or one unit of any such other security)
                                on any Trading Day will mean the last reported
                                sale price of the principal trading session on
                                the over-the-counter market as reported on the
                                Nasdaq National Market or the OTC Bulletin Board
                                on such day. If, because of a Market Disruption
                                Event (as defined below) or otherwise, the last
                                reported sale price or Nasdaq official closing
                                price, as applicable, for Forest Laboratories
                                Stock (or any such other security) is not
                                available pursuant to either of the two
                                preceding sentences, then the Closing Price for
                                any Trading Day will be the mean, as determined
                                by the Calculation Agent, of the bid prices for
                                Forest Laboratories Stock (or any such other
                                security) obtained from as many recognized
                                dealers in such security, but not exceeding
                                three, as will make such bid prices available to
                                the Calculation Agent. Bids of MS & Co. or any
                                of its affiliates may be included in the
                                calculation of such mean, but only to the extent
                                that any such bid is the highest of the bids
                                obtained. The term "security of the Nasdaq
                                National Market" will include a security
                                included in any successor to such system, and
                                the term OTC Bulletin Board Service will include
                                any successor service thereto.

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

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

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

                                      A-11
<PAGE>

                                SPARQS shall be rounded to the nearest cent,
                                with one-half cent rounded upward.

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

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

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

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

                                3. If Forest Laboratories issues rights or
                                warrants to all holders of Forest Laboratories
                                Stock to subscribe for or purchase Forest
                                Laboratories Stock at an exercise price per
                                share less than the Closing Price of Forest
                                Laboratories Stock on both (i) the date the
                                exercise price of such rights or warrants is
                                determined and (ii) the expiration date of such
                                rights or warrants, and if the expiration date
                                of such rights or warrants precedes the maturity
                                of this SPARQS, then the Exchange Ratio shall be
                                adjusted to equal the product of the prior
                                Exchange Ratio and a fraction, the numerator of
                                which shall be the number of shares of Forest
                                Laboratories Stock outstanding immediately

                                      A-12
<PAGE>

                                prior to the issuance of such rights or warrants
                                plus the number of additional shares of Forest
                                Laboratories Stock offered for subscription or
                                purchase pursuant to such rights or warrants and
                                the denominator of which shall be the number of
                                shares of Forest Laboratories Stock outstanding
                                immediately prior to the issuance of such rights
                                or warrants plus the number of additional shares
                                of Forest Laboratories Stock which the aggregate
                                offering price of the total number of shares of
                                Forest Laboratories Stock so offered for
                                subscription or purchase pursuant to such rights
                                or warrants would purchase at the Closing Price
                                on the expiration date of such rights or
                                warrants, which shall be determined by
                                multiplying such total number of shares offered
                                by the exercise price of such rights or warrants
                                and dividing the product so obtained by such
                                Closing Price.

                                4. There shall be no adjustments to the Exchange
                                Ratio to reflect cash dividends or other
                                distributions paid with respect to Forest
                                Laboratories Stock other than distributions
                                described in paragraph 2, paragraph 3 and
                                clauses (i), (iv) and (v) of the first sentence
                                of paragraph 5 and Extraordinary Dividends.
                                "Extraordinary Dividend" means each of (a) the
                                full amount per share of Forest Laboratories
                                Stock of any cash dividend or special dividend
                                or distribution that is identified by Forest
                                Laboratories as an extraordinary or special
                                dividend or distribution, (b) the excess of any
                                cash dividend or other cash distribution (that
                                is not otherwise identified by Forest
                                Laboratories as an extraordinary or special
                                dividend or distribution) distributed per share
                                of Forest Laboratories Stock over the
                                immediately preceding cash dividend or other
                                cash distribution, if any, per share of Forest
                                Laboratories Stock that did not include an
                                Extraordinary Dividend (as adjusted for any
                                subsequent corporate event requiring an
                                adjustment hereunder, such as a stock split or
                                reverse stock split) if such excess portion of
                                the dividend or distribution is more than 5% of
                                the Closing Price of Forest Laboratories Stock
                                on the Trading Day preceding the "ex-dividend
                                date" (that is, the day on and after which
                                transactions in Forest Laboratories Stock on an
                                organized securities exchange or trading system
                                no longer carry the right to receive that cash
                                dividend or other cash distribution) for the
                                payment of

                                      A-13
<PAGE>

                                such cash dividend or other cash distribution
                                (such Closing Price, the "Base Closing Price")
                                and (c) the full cash value of any non-cash
                                dividend or distribution per share of Forest
                                Laboratories Stock (excluding Marketable
                                Securities, as defined in paragraph 5 below).
                                Subject to the following sentence, if any cash
                                dividend or distribution of such other property
                                with respect to Forest Laboratories Stock
                                includes an Extraordinary Dividend, the Exchange
                                Ratio with respect to Forest Laboratories Stock
                                shall be adjusted on the ex-dividend date so
                                that the new Exchange Ratio shall equal the
                                product of (i) the prior Exchange Ratio and (ii)
                                a fraction, the numerator of which is the Base
                                Closing Price, and the denominator of which is
                                the amount by which the Base Closing Price
                                exceeds the Extraordinary Dividend. If any
                                Extraordinary Dividend is at least 35% of the
                                Base Closing Price, then, instead of adjusting
                                the Exchange Ratio, the amount payable upon
                                exchange at maturity shall be determined as
                                described in paragraph 5 below, and the
                                Extraordinary Dividend shall be allocated to
                                Reference Basket Stocks in accordance with the
                                procedures for a Reference Basket Event as
                                described in clause (c)(ii) of paragraph 5
                                below. The value of the non-cash component of an
                                Extraordinary Dividend shall be determined on
                                the ex-dividend date for such distribution by
                                the Calculation Agent, whose determination shall
                                be conclusive in the absence of manifest error.
                                A distribution on Forest Laboratories Stock
                                described in clause (i), (iv) or (v) of the
                                first sentence of paragraph 5 below shall cause
                                an adjustment to the Exchange Ratio pursuant
                                only to clause (i), (iv) or (v) of the first
                                sentence of paragraph 5, as applicable.

                                5. Any of the following shall constitute a
                                Reorganization Event: (i) Forest Laboratories
                                Stock is reclassified or changed, including,
                                without limitation, as a result of the issuance
                                of any tracking stock by Forest Laboratories,
                                (ii) Forest Laboratories has been subject to any
                                merger, combination or consolidation and is not
                                the surviving entity, (iii) Forest Laboratories
                                completes a statutory exchange of securities
                                with another corporation (other than pursuant to
                                clause (ii) above), (iv) Forest Laboratories is
                                liquidated, (v) Forest Laboratories issues to
                                all of its shareholders

                                      A-14
<PAGE>

                                equity securities of an issuer other than Forest
                                Laboratories (other than in a transaction
                                described in clause (ii), (iii) or (iv) above)
                                (a "spinoff stock") or (vi) Forest Laboratories
                                Stock is the subject of a tender or exchange
                                offer or going private transaction on all of the
                                outstanding shares. If any Reorganization Event
                                occurs, in each case as a result of which the
                                holders of Forest Laboratories Stock receive any
                                equity security listed on a national securities
                                exchange or traded on The Nasdaq National Market
                                (a "Marketable Security"), other securities or
                                other property, assets or cash (collectively
                                "Exchange Property"), the amount payable upon
                                exchange at maturity with respect to each $
                                   principal amount of this SPARQS following the
                                effective date for such Reorganization Event
                                (or, if applicable, in the case of spinoff
                                stock, the ex-dividend date for the distribution
                                of such spinoff stock) and any required
                                adjustment to the Exchange Ratio shall be
                                determined in accordance with the following:

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

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

                                      A-15
<PAGE>

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

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

                                        (ii) if the Non-Stock Exchange Property
                                        Value is equal to or exceeds 25% of the
                                        Closing Price of Forest Laboratories
                                        Stock on the Trading Day immediately
                                        prior to the effective date relating to
                                        such Reorganization Event or, if Forest
                                        Laboratories Stock is surrendered
                                        exclusively for Non-Stock Exchange
                                        Property (in each case, a "Reference
                                        Basket Event"), an

                                      A-16
<PAGE>

                                        initially equal-dollar weighted basket
                                        of three Reference Basket Stocks (as
                                        defined below) with an aggregate value
                                        on the effective date of such
                                        Reorganization Event equal to the
                                        Non-Stock Exchange Property Value
                                        multiplied by the Exchange Ratio in
                                        effect for Forest Laboratories Stock on
                                        the Trading Day immediately prior to the
                                        effective date of such Reorganization
                                        Event. The "Reference Basket Stocks"
                                        shall be the three stocks with the
                                        largest market capitalization among the
                                        stocks that then comprise the S&P 500
                                        Index (or, if publication of such index
                                        is discontinued, any successor or
                                        substitute index selected by the
                                        Calculation Agent in its sole
                                        discretion) with the same primary
                                        Standard Industrial Classification Code
                                        ("SIC Code") as Forest Laboratories;
                                        provided, however, that a Reference
                                        Basket Stock shall not include any stock
                                        that is subject to a trading restriction
                                        under the trading restriction policies
                                        of Morgan Stanley or any of its
                                        affiliates that would materially limit
                                        the ability of Morgan Stanley or any of
                                        its affiliates to hedge the SPARQS with
                                        respect to such stock (a "Hedging
                                        Restriction"); provided further that if
                                        three Reference Basket Stocks cannot be
                                        identified from the S&P 500 Index by
                                        primary SIC Code for which a Hedging
                                        Restriction does not exist, the
                                        remaining Reference Basket Stock(s)
                                        shall be selected by the Calculation
                                        Agent from the largest market
                                        capitalization stock(s) within the same
                                        Division and Major Group classification
                                        (as defined by the Office of Management
                                        and Budget) as the primary SIC Code for
                                        Forest Laboratories. Each Reference
                                        Basket Stock shall be assigned a Basket
                                        Stock Exchange Ratio equal to the number
                                        of shares of such Reference Basket Stock
                                        with a Closing Price on the effective
                                        date of such Reorganization Event equal
                                        to the product of (a) the Non-Stock
                                        Exchange Property Value, (b) the
                                        Exchange Ratio in effect for Forest
                                        Laboratories Stock on the Trading Day
                                        immediately prior to the effective date
                                        of such Reorganization Event and (c)
                                        0.3333333.

                                      A-17
<PAGE>

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

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

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

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

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

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

                                Following the occurrence of any Reorganization
                                Event referred to in paragraphs 4 or 5 above,
                                (i) references to "Forest Laboratories Stock"
                                under "No Fractional Shares," "Closing Price"
                                and "Market Disruption Event" shall be deemed to
                                also refer to any New Stock or Reference Basket
                                Stock, and (ii) all other references

                                      A-18
<PAGE>

                                in this SPARQS to "Forest Laboratories Stock"
                                shall be deemed to refer to the Exchange
                                Property into which this SPARQS is thereafter
                                exchangeable and references to a "share" or
                                "shares" of Forest Laboratories Stock shall be
                                deemed to refer to the applicable unit or units
                                of such Exchange Property, including any New
                                Stock or Reference Basket Stock, unless the
                                context otherwise requires. The New Stock
                                Exchange Ratio(s) or Basket Stock Exchange
                                Ratios resulting from any Reorganization Event
                                described in paragraph 5 above or similar
                                adjustment under paragraph 4 above shall be
                                subject to the adjustments set forth in
                                paragraphs 1 through 5 hereof.

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

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

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

                                The Calculation Agent shall be solely
                                responsible for the determination and
                                calculation of any adjustments to the Exchange
                                Ratio, any New Stock Exchange Ratio or Basket
                                Stock Exchange Ratio or method of calculating
                                the Exchange Property Value and of any related
                                determinations and calculations with respect to
                                any distributions of stock, other securities or
                                other property

                                      A-19
<PAGE>

                                or assets (including cash) in connection with
                                any corporate event described in paragraphs 1
                                through 5 above, and its determinations and
                                calculations with respect thereto shall be
                                conclusive in the absence of manifest error.

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

Market Disruption Event.......  Market Disruption Event means, with respect to
                                Forest Laboratories Stock:

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

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

                                      A-20
<PAGE>

                                For purposes of determining whether a Market
                                Disruption Event has occurred: (1) a limitation
                                on the hours or number of days of trading shall
                                not constitute a Market Disruption Event if it
                                results from an announced change in the regular
                                business hours of the relevant exchange, (2) a
                                decision to permanently discontinue trading in
                                the relevant options contract shall not
                                constitute a Market Disruption Event, (3)
                                limitations pursuant to NYSE Rule 80A (or any
                                applicable rule or regulation enacted or
                                promulgated by the NYSE, any other
                                self-regulatory organization or the Securities
                                and Exchange Commission of scope similar to NYSE
                                Rule 80A as determined by the Calculation Agent)
                                on trading during significant market
                                fluctuations shall constitute a suspension,
                                absence or material limitation of trading, (4) a
                                suspension of trading in options contracts on
                                Forest Laboratories Stock by the primary
                                securities market trading in such options, if
                                available, by reason of (x) a price change
                                exceeding limits set by such securities exchange
                                or market, (y) an imbalance of orders relating
                                to such contracts or (z) a disparity in bid and
                                ask quotes relating to such contracts shall
                                constitute a suspension, absence or material
                                limitation of trading in options contracts
                                related to Forest Laboratories Stock and (5) a
                                suspension, absence or material limitation of
                                trading on the primary securities market on
                                which options contracts related to Forest
                                Laboratories Stock are traded shall not include
                                any time when such securities market is itself
                                closed for trading under ordinary circumstances.

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

                                      A-21
<PAGE>

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

Treatment of SPARQS for
 United States Federal
 Income Tax Purposes..........  The Issuer, by its sale of this SPARQS, and the
                                holder of this SPARQS (and any successor holder
                                of, or holder of a beneficial interest in, this
                                SPARQS), by its respective purchase hereof,
                                agree (in the absence of an administrative
                                determination or judicial ruling to the
                                contrary) to characterize each $     principal
                                amount of this SPARQS for all tax purposes as a
                                unit consisting of (A) a terminable contract
                                (the "Terminable Forward Contract") that (i)
                                requires the holder of this SPARQS (subject to
                                the Morgan Stanley Call Right) to purchase, and
                                the Issuer to sell, for an amount equal to
                                $      (the "Forward Price"), Forest
                                Laboratories Stock at maturity and (ii) allows
                                the Issuer, upon exercise of the Morgan Stanley
                                Call Right, to terminate the Terminable Forward
                                Contract by returning to such holder the Deposit
                                (as defined below) and paying to such holder an
                                amount of cash equal to the difference between
                                the Deposit and the Call Price and (B) a deposit
                                with the Issuer of a fixed amount of cash, equal
                                to the Issue Price per each $      principal
                                amount of this SPARQS, to secure the holder's
                                obligation to purchase Forest Laboratories Stock
                                pursuant to the Terminable Forward Contract (the
                                "Deposit"), which Deposit bears a quarterly
                                compounded yield of    % per annum.

                                      A-22
<PAGE>

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

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

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

                                      A-23
<PAGE>

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

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

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

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

                                      A-24
<PAGE>

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

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

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

                                      A-25
<PAGE>

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

DATED:                               MORGAN STANLEY

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

TRUSTEE'S CERTIFICATE OF
   AUTHENTICATION

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

JPMORGAN CHASE BANK, N.A., as
   Trustee

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

                                      A-26
<PAGE>

                               REVERSE OF SECURITY

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

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

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

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

                                      A-27
<PAGE>

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

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

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

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

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

                                      A-28
<PAGE>

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

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

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

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

                                      A-29
<PAGE>

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

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

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

                                      A-30
<PAGE>

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

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

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

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

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

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

                                      A-31
<PAGE>

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

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

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

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

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

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

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

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

                                      A-32
<PAGE>

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

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

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

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

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

                                      A-33
<PAGE>

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

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

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

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

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

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

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

                                      A-34
<PAGE>

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

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

                                      A-35
<PAGE>

                                  ABBREVIATIONS

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

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

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

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

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

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

                                      A-36
<PAGE>

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

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

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

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

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

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

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

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

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

                                      A-37
<PAGE>

                            OPTION TO ELECT REPAYMENT

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

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

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

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

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

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

                                      A-38EXHIBIT 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.

<PAGE>

<TABLE>
                                                           MORGAN STANLEY
                                              SENIOR GLOBAL MEDIUM-TERM NOTES, SERIES F

                                          PERFORMANCE LEVERAGED UPSIDE SECURITIES ("PLUS")

                                                      PLUS DUE AUGUST 30, 2006
                                                      MANDATORILY EXCHANGEABLE
                                                FOR AN AMOUNT PAYABLE IN U.S. DOLLARS
                                                BASED ON THE VALUE OF COMMON STOCK OF
                                                      TEN HOMEBUILDER COMPANIES

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

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

                                      PS-2
<PAGE>

                              If due to a Market Disruption Event with respect
                              to a Basket Stock or otherwise, the Basket
                              Valuation Date occurs on or after August 29, 2006,
                              the Maturity Date shall be the second scheduled
                              Trading Day following the Basket Valuation Date as
                              postponed. See "Basket Valuation Date" below.

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

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

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

                                      PS-3
<PAGE>

                              and (b) the Maximum Payment at Maturity (as
                              defined below) or (ii) if the Final Basket Value
                              is less than or equal to the Initial Basket Value,
                              $10 times the Basket Performance Factor (as
                              defined below).

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

Leveraged Upside Payment ...  The product of (i) $10 and (ii) 200% and (iii) the
                              Basket Percent Increase (as defined below).

Maximum Payment at Maturity.  $

Basket Stocks...............  The Basket Stocks are the common stocks of the ten
                              issuers set forth in the table below. The table
                              also indicates the ticker symbol for each Basket
                              Stock, the securities exchange on which each
                              Basket Stock is listed and the Exchange Ratio with
                              respect to each Basket Stock.

                                     Issuer of       Ticker             Exchange
                                    Basket Stock     Symbol   Exchange   Ratio
                              ---------------------- ------   --------  --------
                              Beazer Homes USA, Inc.   BZH     NYSE
                              Centex Corporation       CTX     NYSE
                              D.R. Horton, Inc.        DHI     NYSE
                              Hovnanian Enterprises,
                                Inc.                   HOV     NYSE
                              KB Home                  KBH     NYSE
                              Lennar Corporation       LEN     NYSE
                              M.D.C. Holdings, Inc.    MDC     NYSE
                              Pulte Homes, Inc.        PHM     NYSE
                              The Ryland Group, Inc.   RYL     NYSE
                              Standard Pacific Corp.   SPF     NYSE

Basket .....................  The Basket is initially composed of the common
                              stock of ten homebuilder companies, and consists
                              of a number of shares of each Basket Stock equal
                              to the Exchange Ratio with respect to such Basket
                              Stock.

Exchange Ratio..............  The Exchange Ratio for each Basket Stock is set
                              forth in the table under "--Basket Stocks" above
                              and will

                                      PS-4
<PAGE>

                              remain constant for the term of this PLUS, subject
                              to adjustment for certain corporate and other
                              events relating to that Basket Stock and for
                              adjustments relating to the Basket. See
                              "Adjustments to the Exchange Ratios" below.

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

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

Final Basket Value..........  The Basket Value on the Basket Valuation Date.

Basket Valuation Date.......  August 28, 2006; provided that if August 28, 2006
                              is not a Trading Day or if a Market Disruption
                              Event occurs on such date with respect to any
                              Basket Stock, the Basket Valuation Date will be
                              the first Trading Day occurring on or after August
                              29, 2006 during which no Market Disruption Event
                              shall have occurred with respect to any Basket
                              Stock.

Initial Basket Value........

Basket Value................  The Basket Value on any date shall equal the sum
                              of the products of the Closing Price and the
                              Exchange Ratio for each Basket Stock, each
                              determined as of such date by the Calculation
                              Agent.

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

                              o if a Basket Stock (or any such other security)
                                is listed or admitted to trading on a national
                                securities exchange, the last reported sale
                                price, regular way, of the principal trading
                                session on such day on the principal securities
                                exchange registered under the Securities
                                Exchange Act of 1934, as amended (the "Exchange
                                Act"), on which such Basket Stock (or any such
                                other security) is listed or admitted to
                                trading,

                                      PS-5
<PAGE>

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

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

                              If a Basket Stock (or any such other security) is
                              listed or admitted to trading on any national
                              securities exchange or is a security of the Nasdaq
                              National Market but the last reported sale price
                              or Nasdaq official closing price, as applicable,
                              is not available pursuant to the preceding
                              sentence, then the Closing Price for one share of
                              such Basket Stock (or one unit of any such other
                              security) on any Trading Day shall mean the last
                              reported sale price of the principal trading
                              session on the over-the-counter market as reported
                              on the Nasdaq National Market or the OTC Bulletin
                              Board on such day. If, because of a Market
                              Disruption Event (as defined below) or otherwise,
                              the last reported sale price or Nasdaq official
                              closing price, as applicable, for a Basket Stock
                              (or any such other security) is not available
                              pursuant to either of the two preceding sentences,
                              then the Closing Price for any Trading Day shall
                              be the mean, as determined by the Calculation
                              Agent, of the bid prices for such Basket Stock (or
                              any such other security) obtained from as many
                              recognized dealers in such security, but not
                              exceeding three, as will make such bid prices
                              available to the Calculation Agent. Bids of MS &
                              Co. or any of its affiliates may be included in
                              the calculation of such mean, but only to the
                              extent that any such bid is the highest of the
                              bids obtained. The term "security of the Nasdaq
                              National Market" will include a security

                                      PS-6
<PAGE>

                              included in any successor to such system, and the
                              term "OTC Bulletin Board Service" will include any
                              successor service thereto.

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

Calculation Agent...........  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, if any, shall be rounded to the nearest
                              one billionth, with five ten-billionths rounded
                              upward (e.g., .8765432105 would be rounded to
                              .876543211); all dollar amounts related to
                              determination of the amount of cash payable for
                              each $10 principal amount of this PLUS shall be
                              rounded to the nearest ten-thousandth, with five
                              one hundred-thousandths rounded upward (e.g.,
                              .76545 would be rounded up to .7655); and all
                              dollar amounts paid on the aggregate number of
                              PLUS shall be rounded to the nearest cent, with
                              one-half cent rounded upward.

Market Disruption Event.....  Market Disruption Event means, with respect to any
                              Basket Stock:

                                   (i) the occurrence or existence of a
                                   suspension, absence or material limitation of
                                   trading of such Basket Stock on the primary
                                   market for such Basket Stock for more than
                                   two hours of trading or during the one-half
                                   hour period preceding the close of the
                                   principal trading session in such market; or
                                   a breakdown or failure in the price and trade
                                   reporting systems of the primary market for
                                   such

                                      PS-7
<PAGE>

                                   Basket Stock as a result of which the
                                   reported trading prices for such Basket Stock
                                   during the last one-half hour preceding the
                                   close of the principal trading session in
                                   such market are materially inaccurate; or the
                                   suspension, absence or material limitation of
                                   trading on the primary market for trading in
                                   options contracts related to such Basket
                                   Stock, if available, during the one-half hour
                                   period preceding the close of the principal
                                   trading session in the applicable market, in
                                   each case as determined by the Calculation
                                   Agent in its sole discretion; and

                                    (ii) a determination by the Calculation
                                    Agent in its sole discretion that any event
                                    described in clause (i) above materially
                                    interfered with the ability of the Issuer or
                                    any of its affiliates to unwind or adjust
                                    all or a material portion of the hedge
                                    position with respect to the PLUS due August
                                    30, 2006, Mandatorily Exchangeable for an
                                    Amount Payable in U.S. Dollars Based on the
                                    Value of Common Stock of Ten Homebuilder
                                    Companies.

                              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 any Basket
                              Stock by the primary securities market trading in
                              such contracts by reason of (a) a price change
                              exceeding limits set by such securities

                                      PS-8
<PAGE>

                              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 such Basket Stock and (5) a
                              suspension, absence or material limitation of
                              trading on the primary securities market on which
                              options contracts related to any Basket Stock are
                              traded shall not include any time when such
                              securities market is itself closed for trading
                              under ordinary circumstances.

Relevant Exchange...........  Relevant Exchange means the primary exchange or
                              market of trading for any security (or any
                              combination thereof) then included in the Basket.

Alternate Exchange
  Calculation in Case of an
  Event of Default..........  In case an event of default with respect to the
                              PLUS shall have occurred and be continuing, the
                              amount declared due and payable for each $10
                              principal amount of this PLUS upon any
                              acceleration of this PLUS shall be determined by
                              the Calculation Agent and shall be an amount in
                              cash equal to the Payment at Maturity calculated
                              as though the Basket Value for any Basket
                              Valuation Date scheduled to occur on or after such
                              date of acceleration were the Basket Value on the
                              date of acceleration.

                              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
                              aggregate cash amount due with respect to each $10
                              principal amount of this PLUS as promptly as
                              possible and in no event later than two Business
                              Days after the date of acceleration.

Adjustments to the Exchange
  Ratios....................  The Exchange Ratio with respect to a Basket Stock
                              shall be adjusted as follows:

                              1. If a Basket Stock is subject to a stock split
                              or reverse stock split, then once such split has
                              become effective, the Exchange Ratio for such
                              Basket Stock

                                      PS-9
<PAGE>

                              shall be adjusted to equal the product of the
                              prior Exchange Ratio for such Basket Stock and the
                              number of shares issued in such stock split or
                              reverse stock split with respect to one share of
                              such Basket Stock.

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

                              3. There shall be no adjustments to the Exchange
                              Ratio for any Basket Stock to reflect cash
                              dividends or other distributions paid with respect
                              to the Basket Stock other than distributions
                              described in clauses (i), (iv) and (v) of
                              paragraph 5 below and Extraordinary Dividends as
                              described below. "Extraordinary Dividend" means
                              each of (a) the full amount per share of a Basket
                              Stock of any cash dividend or special dividend or
                              distribution that is identified by the issuer of a
                              Basket Stock as an extraordinary or special
                              dividend or distribution, (b) the excess of any
                              cash dividend or other cash distribution (that is
                              not otherwise identified by the issuer of a Basket
                              Stock as an extraordinary or special dividend or
                              distribution) distributed per share of a Basket
                              Stock over the immediately preceding cash dividend
                              or other cash distribution, if any, per share of
                              such Basket Stock that did not include an
                              Extraordinary Dividend (as adjusted for any
                              subsequent corporate event requiring an adjustment
                              hereunder, such as a stock split or reverse stock
                              split) if such excess portion of the dividend or
                              distribution is more than 5% of the Closing Price
                              of such Basket Stock on the Trading Day preceding
                              the

                                     PS-10
<PAGE>

                              "ex-dividend date" (that is, the day on and after
                              which transactions in a Basket Stock on the
                              primary organized securities exchange or trading
                              system for such Basket Stock no longer carry the
                              right to receive that cash dividend or other cash
                              distribution) for the payment of such cash
                              dividend or other cash distribution and (c) the
                              full cash value of any non-cash dividend or
                              distribution per share of a Basket Stock for which
                              an adjustment is not made pursuant to paragraph 2
                              or paragraph 5. If an Extraordinary Dividend
                              occurs with respect to a Basket Stock, the
                              Exchange Ratio with respect to such Basket Stock
                              shall be adjusted on the ex-dividend date with
                              respect to such Extraordinary Dividend so that the
                              new Exchange Ratio for such Basket Stock shall
                              equal the product of (i) the then current Exchange
                              Ratio for such Basket Stock and (ii) a fraction,
                              the numerator of which is the Closing Price of the
                              Basket Stock on the Trading Day preceding the
                              ex-dividend date, and the denominator of which is
                              the amount by which the Closing Price of the
                              Basket Stock on the Trading Day preceding the
                              ex-dividend date exceeds the Extraordinary
                              Dividend Amount. The "Extraordinary Dividend
                              Amount" with respect to an Extraordinary Dividend
                              for a Basket Stock shall equal (i) in the case of
                              cash dividends or other distributions that
                              constitute regular dividends, the amount per share
                              of such Extraordinary Dividend minus the amount
                              per share of the immediately preceding
                              non-Extraordinary Dividend for such Basket Stock
                              or (ii) in the case of cash dividends or other
                              distributions that do not constitute regular
                              dividends, the amount per share of such
                              Extraordinary Dividend. To the extent that an
                              Extraordinary Dividend is not paid in cash, the
                              value of the non-cash component shall be
                              determined by the Calculation Agent, whose
                              determination shall be conclusive, absent manifest
                              error. A distribution on a Basket Stock described
                              in clause (i), (iv) or (v) of paragraph 5 below
                              that also constitutes an Extraordinary Dividend
                              shall cause an adjustment to the Exchange Ratio
                              pursuant only to clause (i), (iv) or (v) of
                              paragraph 5, as applicable.

                              4. If the issuer of a Basket Stock issues rights
                              or warrants to all holders of a Basket Stock to
                              subscribe

                                     PS-11
<PAGE>

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

                              5. Any of the following shall constitute a
                              Reorganization Event: (i) there occurs any
                              reclassification or change of a Basket Stock,
                              including, without limitation, as a result of the
                              issuance of any tracking stock by the issuer of
                              such Basket Stock, (ii) the issuer of a Basket
                              Stock or any surviving entity or subsequent
                              surviving entity of the issuer of such Basket
                              Stock (an "Issuer Successor") has been subject to
                              a merger, combination or consolidation and is not
                              the surviving entity, (iii) any statutory exchange
                              of securities of the issuer of a Basket Stock or
                              any Issuer Successor with another corporation
                              occurs (other than pursuant to clause (ii) above),
                              (iv) the issuer of a Basket Stock is liquidated,
                              (v) the issuer of a Basket Stock issues to all of
                              its shareholders equity securities of an issuer
                              other than the issuer of such Basket Stock

                                     PS-12
<PAGE>

                              (other than in a transaction described in clause
                              (ii), (iii) or (iv) above) (a "Spinoff Event") or
                              (vi) a tender or exchange offer or going-private
                              transaction is consummated for all the outstanding
                              shares of such Basket Stock. If any Reorganization
                              Event occurs, in each case as a result of which
                              the holders of a Basket Stock are entitled to
                              receive stock, other securities or other property
                              or assets (including, without limitation, cash or
                              other classes of securities of the issuer of such
                              Basket Stock and including (x) in the case of the
                              issuance of tracking stock, the reclassified share
                              of the Basket Stock, (y) in the case of a Spin-off
                              Event, the share of the Basket Stock with respect
                              to which the spun-off security was issued and (z)
                              in the case of any other Reorganization Event
                              where the Basket Stock continues to be held by the
                              holders receiving such distribution, the Basket
                              Stock) (collectively, "Exchange Property") with
                              respect to or in exchange for such Basket Stock,
                              then in lieu of using the product of the Closing
                              Price and the Exchange Ratio for such Basket Stock
                              to calculate the Basket Value on any date, the
                              Calculation Agent shall use the Exchange Property
                              Value on such date. The Exchange Property Value at
                              any date means (i) for any property other than
                              cash or securities received in such distribution,
                              the market value, as determined by the Calculation
                              Agent, as of the date of receipt, of such Exchange
                              Property received for each share of Basket Stock,
                              as adjusted by the Exchange Ratio for such Basket
                              Stock on the date of such Reorganization Event,
                              (ii) for any security received in any such
                              distribution, an amount equal to the Closing
                              Price, as of the date on which the Exchange
                              Property Value is determined, per share of such
                              security multiplied by the quantity of such
                              security received for each share of Basket Stock,
                              as adjusted by the Exchange Ratio for such Basket
                              Stock on the date of the initial distribution of
                              such Exchange Property (such as-adjusted quantity,
                              a "New Exchange Ratio") and (iii) if the Exchange
                              Property was distributed with respect to, rather
                              than in exchange for, a Basket Stock, an amount
                              equal to the Closing Price, as of the date on
                              which the Exchange Property Value is determined,
                              for such Basket Stock multiplied by the Exchange
                              Ratio as of the date on which the Exchange

                                     PS-13
<PAGE>

                              Property Value is determined; provided that, to
                              the extent that any or all of such Exchange
                              Property consists of cash, the Exchange Ratio of
                              each Basket Stock (each an "Unaffected Basket
                              Stock") other than the Basket Stock affected by
                              such Reorganization Event (the "Affected Basket
                              Stock") shall be adjusted by multiplying (A) the
                              amount of cash received per share of the Affected
                              Basket Stock as adjusted by the applicable
                              Exchange Ratio for such Affected Basket Stock on
                              the date of such Reorganization Event by (B) a
                              fraction the numerator of which is the product of
                              the Closing Price of such Unaffected Basket Stock
                              and the Exchange Ratio of such Unaffected Basket
                              Stock each as of the Trading Day immediately
                              following the day on which a holder of the
                              Affected Basket Stock receives such cash and the
                              denominator of which is the sum of the products of
                              the Closing Price of each of the Unaffected Basket
                              Stocks and the corresponding Exchange Ratio of
                              such Unaffected Basket Stock, each determined by
                              the Calculation Agent on such Trading Day. The
                              holder of this PLUS shall not receive any interest
                              accrued on any component of any Exchange Property.
                              Any New Exchange Ratio shall also be subject to
                              the adjustments set forth in paragraphs 1 through
                              6 hereof.

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

                              6. In the event of a public announcement that a
                              Basket Stock shall no longer be listed on the NYSE
                              or any other primary U.S. securities exchange or
                              traded

                                     PS-14
<PAGE>

                              through the facilities of a U.S. national
                              securities system, that Basket Stock shall be
                              removed from the Basket (the "Removed Basket
                              Stock") effective as of the Trading Day prior to
                              the first date on which such Basket Stock is no
                              longer listed on the NYSE or any other primary
                              U.S. securities exchange or traded through the
                              facilities of a U.S. national securities system
                              (the "Delisting Date"), and the Exchange Ratio of
                              each remaining Basket Stock shall be adjusted as
                              described in the following sentence. The
                              Calculation Agent shall, as of the close of
                              trading on the Trading Day prior to the Delisting
                              Date (if the announcement of an actual delisting
                              is made after trading hours on a Trading Day or on
                              a non-Trading Day, "the Trading Day prior to the
                              Delisting Date" shall be deemed to have occurred
                              on the next Trading Day), increase the Exchange
                              Ratio of each remaining Basket Stock by a number
                              of shares of such Basket Stock equal to the amount
                              obtained by multiplying (A) the product of the
                              Closing Price of the Removed Basket Stock and the
                              Exchange Ratio of the Removed Basket Stock, each
                              determined by the Calculation Agent on such
                              Trading Day, by (B) a fraction the numerator of
                              which is the product of the Closing Price of such
                              Basket Stock and the Exchange Ratio of such Basket
                              Stock each as of such Trading Day and the
                              denominator of which is the sum of the products of
                              the Closing Price of each of the Basket Stocks
                              other than the Removed Basket Stock and the
                              corresponding Exchange Ratio of such Basket Stock,
                              each determined by the Calculation Agent on such
                              Trading Day. The Calculation Agent shall make, and
                              shall not reverse, this adjustment, even if the
                              Removed Basket Stock is subsequently listed on the
                              NYSE or other primary U.S. securities exchange or
                              traded through the facilities of a U.S. national
                              securities system at a later date.

                              No adjustment shall be made to the Basket pursuant
                              to paragraph 6 above if the Calculation Agent
                              determines that any such adjustment is not
                              necessary in light of adjustments made, or to be
                              made, pursuant to paragraph 5 above, and its
                              determinations with respect thereto shall be
                              conclusive in the absence of manifest error.

                                     PS-15
<PAGE>

                              If a Closing Price for a Basket Stock is no longer
                              available for a Basket Stock for whatever reason,
                              including the liquidation of the issuer of such
                              Basket Stock or the subjection of the issuer to a
                              proceeding under any applicable bankruptcy,
                              insolvency or other similar law, then the value of
                              such Basket Stock shall equal zero for so long as
                              no Closing Price is available. There shall be no
                              substitution for any such Basket Stock.

                              No adjustment to the Exchange Ratio for any Basket
                              Stock, including, for this purpose, any New
                              Exchange Ratio, shall be required unless such
                              adjustment would require a change of at least .1%
                              in the Exchange Ratio of such Basket Stock then in
                              effect. The Exchange Ratio resulting from any of
                              the adjustments specified above shall be rounded
                              to the nearest one billionth, with five
                              ten-billionths rounded upward. Adjustments to the
                              Exchange Ratio of a Basket Stock shall be made up
                              to and including the scheduled Basket Valuation
                              Date.

                              No adjustments to the Exchange Ratio for any
                              Basket Stock shall be required other than those
                              specified above.

                              The Calculation Agent shall be solely responsible
                              for the determination and calculation of any
                              adjustments to any Exchange Ratio for a Basket
                              Stock, or any New Stock Exchange Ratio or method
                              of calculating the Exchange Property Value and of
                              any related determinations and calculations with
                              respect to any distributions of stock, other
                              securities or other property or assets (including
                              cash) in connection with any corporate event
                              described in paragraphs 1 through 6 above, and its
                              determinations and calculations with respect
                              thereto shall be conclusive in the absence of
                              manifest error.

                              The Calculation Agent shall provide information as
                              to any adjustments to any Exchange Ratio, or to
                              the method of calculating the Basket Value on any
                              Basket Valuation Date made pursuant to paragraph 5
                              or 6 above, upon written request by any holder of
                              this PLUS.

                                     PS-16
<PAGE>

Treatment of PLUS for
  United States Federal
  Income Tax Purposes.......  The Issuer, by its sale of this PLUS, and the
                              holder of this PLUS (and any successor holder of,
                              or holder of a beneficial interest in, this PLUS),
                              by its respective purchase hereof, agree (in the
                              absence of an administrative determination or
                              judicial ruling to the contrary) to characterize
                              each $10 principal amount of this PLUS for all tax
                              purposes as a single financial contract with
                              respect to the Basket Stocks that (i) requires the
                              holder of this PLUS to pay to the Issuer at
                              inception an amount equal to $10 and (ii) entitles
                              the holder to receive at maturity an amount in
                              cash based upon the performance of the Basket
                              Stocks.

                                     PS-17
<PAGE>

     Morgan Stanley, a Delaware corporation (together with its successors and
assigns, the "Issuer"), for value received, hereby promises to pay to CEDE &
Co., or registered assignees, the amount in 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,

                                     PS-18
<PAGE>

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

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

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

     If the holder elects to receive all or a portion of payments of principal
of, premium, if any, and interest on this Note, if denominated in a Specified
Currency other than U.S. dollars, in U.S. dollars, the Exchange Rate Agent (as
defined on the reverse hereof) will convert such payments into U.S. dollars. In
the event of such an election, payment in respect of this Note will be based
upon the exchange rate as determined by the Exchange Rate Agent based on the
highest bid quotation in The City of New York received by such Exchange Rate
Agent at approximately 11:00 a.m., New York City time, on the second Business
Day preceding the applicable payment

                                     PS-19
<PAGE>

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.

                                     PS-20
<PAGE>

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

DATED:                                            MORGAN STANLEY

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

TRUSTEE'S CERTIFICATE OF
  AUTHENTICATION

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

JPMORGAN CHASE BANK, N.A.,
  as Trustee

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

                                     PS-21
<PAGE>

                               REVERSE OF SECURITY

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

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

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

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

                                     PS-22
<PAGE>

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

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

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

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

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

                                     PS-23
<PAGE>

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

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

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

                                     PS-24
<PAGE>

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

     If the face hereof indicates that this Note is subject to "Tax Redemption
and Payment of Additional Amounts," this Note may be redeemed, as a whole, at
the option of the Issuer at any time prior to maturity, upon the giving of a
notice of redemption as described below, at a redemption price equal to 100% of
the principal amount hereof, together with accrued interest to the date fixed
for redemption (except that if this Note is subject to "Modified Payment upon

                                     PS-25
<PAGE>

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

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

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

          (a) any present or future tax, assessment or other governmental charge
     that would not have been so imposed but for (i) the existence of any
     present or former connection between such holder, or between a fiduciary,
     settlor, beneficiary, member or shareholder of such holder, if such holder
     is an estate, a trust, a partnership or a corporation for United States
     federal income tax purposes, and the United States, including, without
     limitation, such holder, or such fiduciary, settlor, beneficiary, member or
     shareholder, being or having been a citizen or resident thereof or being or
     having been engaged in a trade or business or present therein or having, or
     having had, a permanent establishment therein or (ii) the presentation by

                                     PS-26
<PAGE>

     or on behalf of the holder of this Note for payment on a date more than 15
     calendar days after the date on which such payment became due and payable
     or the date on which payment thereof is duly provided for, whichever occurs
     later;

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

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

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

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

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

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

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

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

                                     PS-27
<PAGE>

the United States (or any political subdivision thereof) to be included in the
income, for tax purposes, of a beneficiary or settlor with respect to such
fiduciary or a member of such partnership or a beneficial owner who would not
have been entitled to the Additional Amounts had such beneficiary, settlor,
member or beneficial owner been the holder of this Note.

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

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

                                     PS-28
<PAGE>

aggregate amount of the Specified Currency payable to those holders or
beneficial owners of Notes and at which the applicable Exchange Dealer commits
to execute a contract. One of the Exchange Dealers providing quotations may be
the Exchange Rate Agent unless the Exchange Rate Agent is an affiliate of the
Issuer. If those bid quotations are not available, the Exchange Rate Agent shall
determine the market exchange rate at its sole discretion.

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

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

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

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

                                     PS-29
<PAGE>

registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Trustee or any such agent shall be affected
by notice to the contrary.

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

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

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

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

                                     PS-30
<PAGE>

                                  ABBREVIATIONS

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

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

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

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

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

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

                                     PS-31
<PAGE>

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

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

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

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

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

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

Dated:__________________________

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

                                     PS-32
<PAGE>

                            OPTION TO ELECT REPAYMENT

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

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

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

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

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

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

                                     PS-33

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