Document:

FIXED RATE SENIOR NOTE

REGISTERED                                              REGISTERED
No. FXR                                                 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.

                                      A-1
<PAGE>

                                 MORGAN STANLEY
                   SENIOR GLOBAL MEDIUM-TERM NOTES, SERIES C
                                  (Fixed Rate)

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

                        10% SPARQS(R) DUE JUNE 15, 2005
                            MANDATORILY EXCHANGEABLE
                         FOR SHARES OF COMMON STOCK OF
                             JUNIPER NETWORKS, INC.

<TABLE>
<S>                       <C>                                 <C>                                 <C>
ORIGINAL ISSUE DATE:      INITIAL REDEMPTION                  INTEREST RATE:   % per              MATURITY DATE:
                               DATE: See "Morgan                   annum (equivalent                   See "Maturity Date"
                               Stanley Call Right"                 to $        per annum per           below.
                               below.                              SPARQS)

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

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

IF SPECIFIED              REDEMPTION NOTICE                   APPLICABILITY OF                    If yes, state Issue Price:
     CURRENCY OTHER            PERIOD: At least 10                 ANNUAL INTEREST                     N/A
     THAN U.S. DOLLARS,        days but no more than               PAYMENTS: N/A
     OPTION TO ELECT           30 days.  See "Morgan
     PAYMENT IN U.S.           Stanley Call Right" and
     DOLLARS: N/A              "Morgan Stanley Notice
                               Date" below.

EXCHANGE RATE             TAX REDEMPTION                      PRICE APPLICABLE                    ORIGINAL YIELD TO
     AGENT: N/A                AND PAYMENT OF                 UPON OPTIONAL                            MATURITY: N/A
                               ADDITIONAL                     REPAYMENT: N/A
                               AMOUNTS: N/A

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

For the purposes of this note, paragraph number 10 of Section 2.08 of the
Amended and Restated Indenture, dated as of May 1, 1999, between the Issuer and
JP Morgan Chase Bank (formerly known as The Chase Manhattan Bank) as Trustee,
shall not apply.

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

Maturity Date................   June 15, 2005, subject to acceleration as
                                described below in "Price Event Acceleration"
                                and "Alternate Exchange Calculation in Case of
                                an Event of Default" and subject

                                      A-2

<PAGE>

                                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.......

                                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 15, 2005, but
                                no interest will accrue on this SPARQS or on
                                such payment during the period from or after
                                the scheduled Maturity Date.

Record Date..................   Notwithstanding the definition of "Record Date"
                                on page 22 hereof, the Record Date for each
                                Interest Payment Date, including the Interest
                                Payment Date scheduled to

                                      A-3

<PAGE>

                                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    , 2004 or on the Maturity Date
                                (including the Maturity Date as it may be
                                extended and regardless of whether the Maturity
                                Date is a Trading Day), the Issuer may call the
                                SPARQS, in whole but not in part, for mandatory
                                exchange for the Call Price paid in cash
                                (together with accrued but unpaid interest) on
                                the Call Date.

                                On the Morgan Stanley Notice Date, the Issuer
                                shall give notice of the Issuer's exercise of
                                the Morgan Stanley Call Right (i) to the holder
                                of this SPARQS by mailing notice of such
                                exercise, specifying the Call Date on which the
                                Issuer shall effect such exchange, by first
                                class mail, postage prepaid, to the holder's
                                last address as it shall appear upon the
                                registry books, (ii) to the Trustee by telephone
                                or facsimile confirmed by mailing such notice to
                                the Trustee by first class mail, postage
                                prepaid, at its

                                      A-4

<PAGE>

                                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
                                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

                                      A-5
<PAGE>

                                Call Right.

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

Final Call Notice Date.......   June 5, 2005; provided that if June 5, 2005 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    ,
                                2004 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.

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 Juniper Networks, Inc. ("Juniper
                                Networks Stock") at the Exchange Ratio, and the
                                Issuer shall deliver with respect to each $
                                principal amount of this SPARQS an amount of
                                Juniper Networks Stock equal to the Exchange
                                Ratio.

                                The amount of Juniper Networks Stock to be
                                delivered at

                                      A-6
<PAGE>

                                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
                                Juniper Networks 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 maturity.

                                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
                                maturity of this SPARQS), of the amount of
                                Juniper Networks 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 Juniper
                                Networks Stock (or of any other securities
                                included in Exchange Property, if applicable);
                                provided that if the maturity date of this
                                SPARQS is accelerated (x) because of a Price
                                Event Acceleration (as described under "Price
                                Event Acceleration" below) or (y) because of an
                                Event of Default Acceleration (as defined under
                                "Alternate Exchange Calculation in Case of an
                                Event of Default" below), the Issuer shall give
                                notice of such acceleration as promptly as
                                possible, and in no case later than (A) in the
                                case of an Event of Default Acceleration, two
                                Trading Days following such deemed maturity date
                                or (B) in the case of a Price Event
                                Acceleration, 10:30 a.m. on the Trading Day
                                immediately prior to the date of acceleration
                                (as defined under "Price Event Acceleration"
                                below), (i) to the holder of this SPARQS by
                                mailing notice of such acceleration by first
                                class mail, postage prepaid, to the holder's
                                last address as it shall appear upon the
                                registry books, (ii) to the Trustee by telephone
                                or facsimile confirmed by mailing such notice to
                                the Trustee by first class mail, postage
                                prepaid, at its New York office and (iii) to the
                                Depositary by telephone or facsimile confirmed
                                by mailing such notice

                                      A-7
<PAGE>

                                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 Juniper Networks 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 Juniper Networks Stock (or any Exchange
                                Property) and cash in respect of interest and
                                any fractional share of Juniper Networks Stock
                                (or any Exchange Property) and cash otherwise
                                due upon any acceleration described above to
                                the Trustee for delivery to the holder of this
                                Note. References to payment "per SPARQS" refer
                                to each $      principal amount of this SPARQS.

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

                                      A-8
<PAGE>

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

Exchange Ratio...............       , subject to adjustment for corporate events
                                relating to Juniper Networks, Inc. ("Juniper
                                Networks") described under "Antidilution
                                Adjustments" below.

Closing Price................   The Closing Price for one share of Juniper
                                Networks 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 Juniper Networks 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 Juniper
                                Networks Stock (or any such other security) is
                                listed or admitted to trading,

                                      A-9
<PAGE>

                                o   if Juniper Networks 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 Juniper Networks Stock (or any such other
                                security) is not listed or admitted to trading
                                on any national securities exchange or 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 Juniper Networks 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 Juniper Networks
                                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 Juniper Networks 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 Juniper Networks 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.

                                     A-10
<PAGE>

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

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

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

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

                                        2. If Juniper Networks Stock is subject
                                (i) to a stock dividend (issuance of additional
                                shares of Juniper Networks Stock) that is given
                                ratably to all holders of shares of Juniper
                                Networks Stock or (ii) to a distribution of
                                Juniper Networks Stock as a result of the
                                triggering of any provision of the corporate
                                charter of Juniper Networks, then once the
                                dividend has become effective and Juniper
                                Networks Stock is trading ex-dividend, the

                                     A-11
<PAGE>

                                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 Juniper Networks Stock and (ii) the
                                prior Exchange Ratio.

                                        3. If Juniper Networks issues rights or
                                warrants to all holders of Juniper Networks
                                Stock to subscribe for or purchase Juniper
                                Networks Stock at an exercise price per share
                                less than the Closing Price of Juniper Networks
                                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 Juniper
                                Networks Stock outstanding immediately prior to
                                the issuance of such rights or warrants plus
                                the number of additional shares of Juniper
                                Networks Stock offered for subscription or
                                purchase pursuant to such rights or warrants
                                and the denominator of which shall be the
                                number of shares of Juniper Networks Stock
                                outstanding immediately prior to the issuance
                                of such rights or warrants plus the number of
                                additional shares of Juniper Networks Stock
                                which the aggregate offering price of the total
                                number of shares of Juniper Networks 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
                                Juniper Networks 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 Juniper Networks Stock
                                of any cash dividend or special dividend or
                                distribution that is identified by Juniper
                                Networks 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

                                     A-12
<PAGE>

                                Juniper Networks as an extraordinary or special
                                dividend or distribution) distributed per share
                                of Juniper Networks Stock over the immediately
                                preceding cash dividend or other cash
                                distribution, if any, per share of Juniper
                                Networks 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 Juniper Networks Stock on
                                the Trading Day preceding the "ex-dividend date"
                                (that is, the day on and after which
                                transactions in Juniper Networks Stock on an
                                organized securities exchange or trading system
                                no longer carry the right to receive that cash
                                dividend or other cash distribution) for the
                                payment of such cash dividend or other cash
                                distribution (such Closing Price, the "Base
                                Closing Price") and (c) the full cash value of
                                any non- cash dividend or distribution per share
                                of Juniper Networks 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 Juniper Networks Stock includes
                                an Extraordinary Dividend, the Exchange Ratio
                                with respect to Juniper Networks 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
                                Juniper Networks 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.

                                     A-13
<PAGE>

                                        5. Any of the following shall
                                constitute a Reorganization Event: (i) Juniper
                                Networks Stock is reclassified or changed,
                                including, without limitation, as a result of
                                the issuance of any tracking stock by Juniper
                                Networks, (ii) Juniper Networks has been
                                subject to any merger, combination or
                                consolidation and is not the surviving entity,
                                (iii) Juniper Networks completes a statutory
                                exchange of securities with another corporation
                                (other than pursuant to clause (ii) above),
                                (iv) Juniper Networks is liquidated, (v)
                                Juniper Networks issues to all of its
                                shareholders equity securities of an issuer
                                other than Juniper Networks (other than in a
                                transaction described in clause (ii), (iii) or
                                (iv) above) (a "spinoff stock") or (vi) Juniper
                                Networks 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 Juniper Networks
                                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) shall be determined in
                                accordance with the following:

                                (a) if Juniper Networks Stock continues to be
                                outstanding, Juniper Networks 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 Juniper Networks Stock
                                where Juniper Networks is not the surviving
                                entity, the number of shares of the New Stock
                                received with respect to one share of Juniper
                                Networks Stock multiplied by the Exchange Ratio
                                for Juniper Networks Stock on the Trading Day
                                immediately prior to the effective date of the
                                Reorganization Event (the "New

                                     A-14
<PAGE>

                                Stock Exchange Ratio"), as adjusted to the third
                                Trading Day prior to the scheduled Maturity Date
                                (taking into account any adjustments for
                                distributions described under clause (c)(i)
                                below); and

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

                                   (i) if the combined value of the amount of
                                   Non-Stock Exchange Property received per
                                   share of Juniper Networks 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
                                   Juniper Networks Stock is less than 25% of
                                   the Closing Price of Juniper Networks Stock
                                   on the Trading Day immediately prior to the
                                   effective date of such Reorganization Event,
                                   a number of shares of Juniper Networks
                                   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
                                   Juniper Networks 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 Juniper Networks 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 Juniper Networks 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 Juniper Networks Stock on
                                   the Trading Day immediately prior to the
                                   effective date relating to such
                                   Reorganization Event or, if Juniper Networks
                                   Stock is surrendered exclusively for
                                   Non-Stock Exchange Property (in each case, a
                                   "Reference Basket Event"), an initially
                                   equal-dollar weighted basket of three

                                     A-15
<PAGE>

                                   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 Juniper
                                   Networks 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 Juniper Networks; 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 Juniper Networks. 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 Juniper
                                   Networks Stock on the Trading Day immediately
                                   prior to the effective date of such
                                   Reorganization Event and (c) 0.3333333.

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

                                     A-16
<PAGE>

                                   (i)   if applicable, Juniper Networks Stock
                                         at the Exchange Ratio then in effect;
                                         and

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

                                   (iii) 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 "Juniper Networks Stock"
                                under "No Fractional Shares," "Closing Price"
                                and "Market Disruption Event" shall be deemed
                                to also refer to any New Stock or Reference
                                Basket Stock, and (ii) all other references in
                                this SPARQS to "Juniper Networks 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 Juniper Networks 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

                                     A-17
<PAGE>

                                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 Maturity
                                Date.

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

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

                                The Calculation Agent shall provide information
                                as to any adjustments to the Exchange Ratio or
                                to the method of calculating the amount payable
                                upon exchange at maturity of the SPARQS made
                                pursuant to paragraphs 1 through

                                     A-18
<PAGE>

                                5 above upon written request by any holder of
                                this SPARQS.

Market Disruption Event......   "Market Disruption Event" means, with respect
                                to Juniper Networks Stock:

                                   (i) a suspension, absence or material
                                   limitation of trading of Juniper Networks
                                   Stock on the primary market for Juniper
                                   Networks 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 Juniper
                                   Networks Stock as a result of which the
                                   reported trading prices for Juniper Networks
                                   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 Juniper Networks 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 15, 2005,
                                   Mandatorily Exchangeable for Shares of Common
                                   Stock of Juniper Networks.

                                For purposes of determining whether a Market
                                Disruption Event has occurred: (i) 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, (ii) a
                                decision to permanently discontinue trading in
                                the relevant options contract shall not
                                constitute a Market Disruption Event, (iii)
                                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

                                     A-19
<PAGE>

                                Calculation Agent) on trading during significant
                                market fluctuations shall constitute a
                                suspension, absence or material limitation of
                                trading, (iv) a suspension of trading in options
                                contracts on Juniper Networks Stock by the
                                primary securities market trading in such
                                options, if available, by reason of (a) a price
                                change exceeding limits set by such securities
                                exchange or market, (b) an imbalance of orders
                                relating to such contracts or (c) a disparity in
                                bid and ask quotes relating to such contracts
                                shall constitute a suspension, absence or
                                material limitation of trading in options
                                contracts related to Juniper Networks Stock and
                                (v) a suspension, absence or material limitation
                                of trading on the primary securities market on
                                which options contracts related to Juniper
                                Networks 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 Juniper Networks Stock
                                (and/or the value of any Exchange Property) as
                                of the date of such acceleration and (y) the
                                then current Exchange Ratio and (ii) the Call
                                Price calculated as though the date of
                                acceleration were the Call Date (but in no event
                                less than the Call Price for the first Call
                                Date), in each case plus accrued but unpaid
                                interest to but excluding the date of
                                acceleration; provided that if the Issuer has
                                called the SPARQS in accordance with the Morgan
                                Stanley Call Right, the amount declared due and
                                payable upon any such acceleration shall be an
                                amount in cash for each $       principal amount
                                of this SPARQS equal to the Call Price for the
                                Call Date specified in the Issuer's notice of
                                mandatory exchange, plus accrued but unpaid
                                interest to but excluding the date of
                                acceleration.

Treatment of SPARQS for
United States Federal
Income Tax Purposes..........   The Issuer, by its sale of this SPARQS, and the
                                holder of this SPARQS (and any successor holder
                                of, or holder of a beneficial interest in, this
                                SPARQS), by its respective

                                     A-20
<PAGE>

                                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 an investment 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"),
                                Juniper Networks 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 Juniper Networks
                                Stock pursuant to the Terminable Forward
                                Contract (the "Deposit"), which Deposit bears a
                                quarterly compounded yield of      % per annum.

                                     A-21
<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 Juniper Networks 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 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

                                     A-22
<PAGE>

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 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.

                                     A-23
<PAGE>

        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-24
<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,
     as Trustee

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

                                     A-25
<PAGE>

                              REVERSE OF SECURITY

        This Note is one of a duly authorized issue of Senior Global
Medium-Term Notes, Series C, having maturities more than nine months from the
date of issue (the "Notes") of the Issuer. The Notes are issuable under an
Amended and Restated Senior Indenture, dated as of May 1, 1999, between the
Issuer and JPMorgan Chase Bank (formerly known as The Chase Manhattan 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 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 if this Note
is issued with original issue discount, this Note will be repayable on the
applicable Optional Repayment Date or Dates at

                                     A-26
<PAGE>

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

                                     A-27
<PAGE>

        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 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

                                     A-28
<PAGE>

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 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

                                     A-29
<PAGE>

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 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;

                                     A-30
<PAGE>

                (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
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.

                                     A-31
<PAGE>

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

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

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

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

                                     A-32
<PAGE>

        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 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-33
<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-34
<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-35
<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 will be issued for the
portion not being repaid): _________________.

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

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

                                      A-36FIXED RATE SENIOR NOTE

REGISTERED                                                  REGISTERED
No. FXR                                                     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.

                                       A-1

<PAGE>

                                 MORGAN STANLEY
                    SENIOR GLOBAL MEDIUM-TERM NOTES, SERIES C
                                  (Fixed Rate)

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

                         10% SPARQS(R) DUE JUNE 15, 2005
                            MANDATORILY EXCHANGEABLE
                          FOR SHARES OF COMMON STOCK OF
                           JETBLUE AIRWAYS CORPORATION

<TABLE>
<S>                           <C>                               <C>                                <C>
ORIGINAL ISSUE DATE:          INITIAL REDEMPTION                INTEREST RATE:  % per              MATURITY DATE:
                                   DATE: See "Morgan                 annum (equivalent                  See "Maturity Date"
                                   Stanley Call Right"               to $        per annum per          below.
                                   below.                            SPARQS)

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

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

IF SPECIFIED                  REDEMPTION NOTICE                 APPLICABILITY OF                   If yes, state Issue Price:
     CURRENCY OTHER                PERIOD: At least 10               ANNUAL INTEREST                    N/A
     THAN U.S. DOLLARS,            days but no more than             PAYMENTS: N/A
     OPTION TO ELECT               30 days.  See "Morgan
     PAYMENT IN U.S.               Stanley Call Right" and
     DOLLARS: N/A                  "Morgan Stanley Notice
                                   Date" below.

EXCHANGE RATE                 TAX REDEMPTION                    PRICE APPLICABLE                   ORIGINAL YIELD TO
     AGENT: N/A                    AND PAYMENT OF               UPON OPTIONAL                           MATURITY: N/A
                                   ADDITIONAL                   REPAYMENT: N/A
                                   AMOUNTS: N/A

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

For the purposes of this note, paragraph number 10 of Section 2.08 of the
Amended and Restated Indenture, dated as of May 1, 1999, between the Issuer and
JP Morgan Chase Bank (formerly known as The Chase Manhattan Bank) as Trustee,
shall not apply.

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

Maturity Date................   June 15, 2005, subject to acceleration as
                                described below in "Price Event Acceleration"
                                and "Alternate Exchange Calculation in Case of
                                an Event of Default" and subject

                                       A-2

<PAGE>

                                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.......

                                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 15, 2005, but
                                no interest will accrue on this SPARQS or on
                                such payment during the period from or after the
                                scheduled Maturity Date.

Record Date..................   Notwithstanding the definition of "Record Date"
                                on page 22 hereof, the Record Date for each
                                Interest Payment Date, including the Interest
                                Payment Date scheduled to

                                       A-3

<PAGE>

                                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    , 2004 or on the Maturity Date
                                (including the Maturity Date as it may be
                                extended and regardless of whether the Maturity
                                Date is a Trading Day), the Issuer may call the
                                SPARQS, in whole but not in part, for mandatory
                                exchange for the Call Price paid in cash
                                (together with accrued but unpaid interest) on
                                the Call Date.

                                On the Morgan Stanley Notice Date, the Issuer
                                shall give notice of the Issuer's exercise of
                                the Morgan Stanley Call Right (i) to the holder
                                of this SPARQS by mailing notice of such
                                exercise, specifying the Call Date on which the
                                Issuer shall effect such exchange, by first
                                class mail, postage prepaid, to the holder's
                                last address as it shall appear upon the
                                registry books, (ii) to the Trustee by
                                telephone or facsimile confirmed by mailing
                                such notice to the Trustee by first class mail,
                                postage prepaid, at its

                                       A-4

<PAGE>

                                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 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

                                       A-5

<PAGE>

                                Call Right.

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

Final Call Notice Date.......   June 5, 2005; provided that if June 5, 2005 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    ,
                                2004 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.

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
                                JetBlue Airways Corporation ("JetBlue Airways
                                Stock") at the Exchange Ratio, and the Issuer
                                shall deliver with respect to each $ principal
                                amount of this SPARQS an amount of JetBlue
                                Airways Stock equal to the Exchange Ratio.

                                The amount of JetBlue Airways Stock to be
                                delivered at

                                       A-6

<PAGE>

                                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
                                JetBlue Airways 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 maturity.

                                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 maturity of this
                                SPARQS), of the amount of JetBlue Airways 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 JetBlue Airways Stock (or of any other
                                securities included in Exchange Property, if
                                applicable); provided that if the maturity date
                                of this SPARQS is accelerated (x) because of a
                                Price Event Acceleration (as described under
                                "Price Event Acceleration" below) or (y) because
                                of an Event of Default Acceleration (as defined
                                under "Alternate Exchange Calculation in Case of
                                an Event of Default" below), the Issuer shall
                                give notice of such acceleration as promptly as
                                possible, and in no case later than (A) in the
                                case of an Event of Default Acceleration, two
                                Trading Days following such deemed maturity date
                                or (B) in the case of a Price Event
                                Acceleration, 10:30 a.m. on the Trading Day
                                immediately prior to the date of acceleration
                                (as defined under "Price Event Acceleration"
                                below), (i) to the holder of this SPARQS by
                                mailing notice of such acceleration by first
                                class mail, postage prepaid, to the holder's
                                last address as it shall appear upon the
                                registry books, (ii) to the Trustee by telephone
                                or facsimile confirmed by mailing such notice to
                                the Trustee by first class mail, postage
                                prepaid, at its New York office and (iii) to the
                                Depositary by telephone or facsimile confirmed
                                by mailing such notice to the

                                       A-7

<PAGE>

                                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
                                JetBlue Airways 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 JetBlue
                                Airways Stock (or any Exchange Property) and
                                cash in respect of interest and any fractional
                                share of JetBlue Airways Stock (or any Exchange
                                Property) and cash otherwise due upon any
                                acceleration described above to the Trustee for
                                delivery to the holder of this Note. References
                                to payment "per SPARQS" refer to each $
                                principal amount of this SPARQS.

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

                                       A-8

<PAGE>

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

Exchange Ratio...............       , subject to adjustment for corporate events
                                relating to JetBlue Airways Corporation
                                ("JetBlue Airways") described under
                                "Antidilution Adjustments" below.

Closing Price................   The Closing Price for one share of JetBlue
                                Airways 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 JetBlue Airways 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 JetBlue
                                Airways Stock (or any such other security) is
                                listed or admitted to trading,

                                       A-9

<PAGE>

                                o   if JetBlue Airways 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 JetBlue Airways Stock (or any such other
                                security) is not listed or admitted to trading
                                on any national securities exchange or 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 JetBlue Airways 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 JetBlue Airways
                                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 JetBlue Airways 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
                                JetBlue Airways 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.

                                      A-10

<PAGE>

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

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

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

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

                                        2. If JetBlue Airways Stock is subject
                                (i) to a stock dividend (issuance of additional
                                shares of JetBlue Airways Stock) that is given
                                ratably to all holders of shares of JetBlue
                                Airways Stock or (ii) to a distribution of
                                JetBlue Airways Stock as a result of the
                                triggering of any provision of the corporate
                                charter of JetBlue Airways, then once the
                                dividend has become effective and JetBlue
                                Airways Stock is trading ex-dividend, the
                                Exchange Ratio shall be adjusted so that the new
                                Exchange Ratio shall

                                      A-11

<PAGE>

                                equal the prior Exchange Ratio plus the product
                                of (i) the number of shares issued with respect
                                to one share of JetBlue Airways Stock and (ii)
                                the prior Exchange Ratio.

                                        3. If JetBlue Airways issues rights or
                                warrants to all holders of JetBlue Airways Stock
                                to subscribe for or purchase JetBlue Airways
                                Stock at an exercise price per share less than
                                the Closing Price of JetBlue Airways 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 JetBlue Airways Stock
                                outstanding immediately prior to the issuance of
                                such rights or warrants plus the number of
                                additional shares of JetBlue Airways Stock
                                offered for subscription or purchase pursuant to
                                such rights or warrants and the denominator of
                                which shall be the number of shares of JetBlue
                                Airways Stock outstanding immediately prior to
                                the issuance of such rights or warrants plus the
                                number of additional shares of JetBlue Airways
                                Stock which the aggregate offering price of the
                                total number of shares of JetBlue Airways 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 JetBlue
                                Airways 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 JetBlue Airways Stock of any cash
                                dividend or special dividend or distribution
                                that is identified by JetBlue Airways 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 JetBlue Airways as an
                                extraordinary or special dividend or
                                distribution) distributed per share of JetBlue
                                Airways

                                      A-12

<PAGE>

                                Stock over the immediately preceding cash
                                dividend or other cash distribution, if any, per
                                share of JetBlue Airways 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 JetBlue Airways Stock on
                                the Trading Day preceding the "ex-dividend date"
                                (that is, the day on and after which
                                transactions in JetBlue Airways Stock on an
                                organized securities exchange or trading system
                                no longer carry the right to receive that cash
                                dividend or other cash distribution) for the
                                payment of such cash dividend or other cash
                                distribution (such Closing Price, the "Base
                                Closing Price") and (c) the full cash value of
                                any non- cash dividend or distribution per share
                                of JetBlue Airways 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 JetBlue Airways Stock includes
                                an Extraordinary Dividend, the Exchange Ratio
                                with respect to JetBlue Airways 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 JetBlue Airways 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) JetBlue Airways
                                Stock is

                                      A-13

<PAGE>

                                reclassified or changed, including, without
                                limitation, as a result of the issuance of any
                                tracking stock by JetBlue Airways, (ii) JetBlue
                                Airways has been subject to any merger,
                                combination or consolidation and is not the
                                surviving entity, (iii) JetBlue Airways
                                completes a statutory exchange of securities
                                with another corporation (other than pursuant to
                                clause (ii) above), (iv) JetBlue Airways is
                                liquidated, (v) JetBlue Airways issues to all of
                                its shareholders equity securities of an issuer
                                other than JetBlue Airways (other than in a
                                transaction described in clause (ii), (iii) or
                                (iv) above) (a "spinoff stock") or (vi) JetBlue
                                Airways 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 JetBlue Airways
                                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)
                                shall be determined in accordance with the
                                following:

                                (a) if JetBlue Airways Stock continues to be
                                outstanding, JetBlue Airways 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 JetBlue Airways Stock
                                where JetBlue Airways is not the surviving
                                entity, the number of shares of the New Stock
                                received with respect to one share of JetBlue
                                Airways Stock multiplied by the Exchange Ratio
                                for JetBlue Airways 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

                                      A-14

<PAGE>

                                account any adjustments for distributions
                                described under clause (c)(i) below); and

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

                                   (i) if the combined value of the amount of
                                   Non-Stock Exchange Property received per
                                   share of JetBlue Airways 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 JetBlue
                                   Airways Stock is less than 25% of the Closing
                                   Price of JetBlue Airways Stock on the Trading
                                   Day immediately prior to the effective date
                                   of such Reorganization Event, a number of
                                   shares of JetBlue Airways 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 JetBlue Airways 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 JetBlue Airways 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 JetBlue Airways 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 JetBlue Airways Stock on the Trading
                                   Day immediately prior to the effective date
                                   relating to such Reorganization Event or, if
                                   JetBlue Airways Stock is surrendered
                                   exclusively for Non-Stock Exchange Property
                                   (in each case, a "Reference Basket Event"),
                                   an initially equal-dollar weighted basket of
                                   three Reference Basket Stocks (as defined
                                   below) with an aggregate value on the
                                   effective date of such

                                      A-15

<PAGE>

                                   Reorganization Event equal to the Non-Stock
                                   Exchange Property Value multiplied by the
                                   Exchange Ratio in effect for JetBlue Airways
                                   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 JetBlue
                                   Airways; 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 JetBlue Airways. 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 JetBlue Airways Stock on the
                                   Trading Day immediately prior to the
                                   effective date of such Reorganization Event
                                   and (c) 0.3333333.

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

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

                                      A-16

<PAGE>

                                   (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 "JetBlue Airways Stock" under
                                "No Fractional Shares," "Closing Price" and
                                "Market Disruption Event" shall be deemed to
                                also refer to any New Stock or Reference Basket
                                Stock, and (ii) all other references in this
                                SPARQS to "JetBlue Airways 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 JetBlue
                                Airways 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

                                      A-17

<PAGE>

                                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 Maturity
                                Date.

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

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

                                The Calculation Agent shall provide information
                                as to any adjustments to the Exchange Ratio or
                                to the method of calculating the amount payable
                                upon exchange at maturity of the SPARQS made
                                pursuant to paragraphs 1 through 5 above upon
                                written request by any holder of this SPARQS.

                                      A-18

<PAGE>

Market Disruption Event......   "Market Disruption Event" means, with respect to
                                JetBlue Airways Stock:

                                   (i) a suspension, absence or material
                                   limitation of trading of JetBlue Airways
                                   Stock on the primary market for JetBlue
                                   Airways 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 JetBlue
                                   Airways Stock as a result of which the
                                   reported trading prices for JetBlue Airways
                                   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 JetBlue Airways
                                   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 15, 2005,
                                   Mandatorily Exchangeable for Shares of Common
                                   Stock of JetBlue Airways.

                                For purposes of determining whether a Market
                                Disruption Event has occurred: (i) 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, (ii) a
                                decision to permanently discontinue trading in
                                the relevant options contract shall not
                                constitute a Market Disruption Event, (iii)
                                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, (iv)
                                a suspension of trading

                                      A-19

<PAGE>

                                in options contracts on JetBlue Airways Stock by
                                the primary securities market trading in such
                                options, if available, by reason of (a) a price
                                change exceeding limits set by such securities
                                exchange or market, (b) an imbalance of orders
                                relating to such contracts or (c) a disparity in
                                bid and ask quotes relating to such contracts
                                shall constitute a suspension, absence or
                                material limitation of trading in options
                                contracts related to JetBlue Airways Stock and
                                (v) a suspension, absence or material limitation
                                of trading on the primary securities market on
                                which options contracts related to JetBlue
                                Airways 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 JetBlue Airways Stock
                                (and/or the value of any Exchange Property) as
                                of the date of such acceleration and (y) the
                                then current Exchange Ratio and (ii) the Call
                                Price calculated as though the date of
                                acceleration were the Call Date (but in no event
                                less than the Call Price for the first Call
                                Date), in each case plus accrued but unpaid
                                interest to but excluding the date of
                                acceleration; provided that if the Issuer has
                                called the SPARQS in accordance with the Morgan
                                Stanley Call Right, the amount declared due and
                                payable upon any such acceleration shall be an
                                amount in cash for each $        principal
                                amount of this SPARQS equal to the Call Price
                                for the Call Date specified in the Issuer's
                                notice of mandatory exchange, plus accrued but
                                unpaid interest to but excluding the date of
                                acceleration.

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

                                      A-20

<PAGE>

                                this SPARQS for all tax purposes as an
                                investment 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"), JetBlue
                                Airways 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 JetBlue Airways Stock
                                pursuant to the Terminable Forward Contract
                                (the "Deposit"), which Deposit bears a
                                quarterly compounded yield of     % per annum.

                                      A-21

<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 JetBlue Airways 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 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

                                      A-22

<PAGE>

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 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.

                                      A-23

<PAGE>

        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-24

<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,
      as Trustee

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

                                      A-25

<PAGE>

                               REVERSE OF SECURITY

        This Note is one of a duly authorized issue of Senior Global Medium-Term
Notes, Series C, having maturities more than nine months from the date of issue
(the "Notes") of the Issuer. The Notes are issuable under an Amended and
Restated Senior Indenture, dated as of May 1, 1999, between the Issuer and
JPMorgan Chase Bank (formerly known as The Chase Manhattan 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 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 if this Note
is issued with original issue discount, this Note will be repayable on the
applicable Optional Repayment Date or Dates at

                                      A-26

<PAGE>

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

                                      A-27

<PAGE>

        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 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

                                      A-28

<PAGE>

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 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

                                      A-29

<PAGE>

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 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;

                                      A-30

<PAGE>

                (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
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.

                                      A-31

<PAGE>

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

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

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

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

                                      A-32

<PAGE>

        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 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-33

<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-34

<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-35

<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 will be issued for the
portion not being repaid): ___________________.

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

                                      A-36

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00067-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00067-of-00352.parquet"}]]