Document:

FORM OF FIXED RATE SENIOR NOTE

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

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

<PAGE>

                                                 MORGAN STANLEY
                                    SENIOR GLOBAL MEDIUM-TERM NOTES, SERIES F

                                PERFORMANCE LEVERAGED UPSIDE SECURITIES ("PLUS")

                                           PLUS DUE NOVEMBER 30, 2006
                                            MANDATORILY EXCHANGEABLE
                                      FOR AN AMOUNT PAYABLE IN U.S. DOLLARS
                                   BASED ON THE VALUE OF THE S&P 500(R) INDEX

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

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

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

                                       2
<PAGE>

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

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

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

                              The Issuer shall, or shall cause the Calculation
                              Agent to, (i) provide written notice to the
                              Trustee and to the Depositary of the amount of
                              cash to be delivered with respect to each $10
                              principal amount of this PLUS, on or prior to
                              10:30 a.m. on the Trading Day preceding

                                       3
<PAGE>

                              the Maturity Date (but if such Trading Day is not
                              a Business Day, prior to the close of business on
                              the Business Day preceding the Maturity Date),
                              and (ii) deliver the aggregate cash amount due
                              with respect to this PLUS to the Trustee for
                              delivery to the holder of this PLUS on the
                              Maturity Date.

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

Maximum Payment at Maturity.. $

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

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

Final Index Value............ The Index Closing Value of the S&P 500 Index on
                              the Index Valuation Date.

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

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

Initial Index Value..........

Index Closing Value.......... The Index Closing Value on any Trading Day shall
                              equal the closing value of the S&P 500 Index or
                              any Successor Index (as defined under
                              "Discontinuance of the S&P 500 Index; Alteration
                              of Method of Calculation" below) published at the
                              regular weekday close of trading on that Trading
                              Day. In certain circumstances, the Index Closing
                              Value shall be based on the alternate calculation
                              of the S&P 500 Index described under
                              "Discontinuance of the S&P 500 Index; Alteration
                              of Method of Calculation."

                                       4
<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 ("AMEX"), the Nasdaq National
                              Market, the Chicago Mercantile Exchange and the
                              Chicago Board of Options Exchange and in the
                              over-the-counter market for equity securities in
                              the United States.

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

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

                              All calculations with respect to the Payment at
                              Maturity shall be rounded to the nearest one
                              hundred-thousandth, with five one-millionths
                              rounded upward (e.g., .876545 would be rounded to
                              .87655); all dollar amounts related to
                              determination of the amount of cash payable for
                              each $10 principal amount of this PLUS shall be
                              rounded to the nearest ten-thousandth, with five
                              one hundred-thousandths rounded upward (e.g.,
                              .76545 would be rounded up to .7655); and all
                              dollar amounts paid on the aggregate number of
                              PLUS shall be rounded to the nearest cent, with
                              one-half cent rounded upward.

Market Disruption Event...... Market Disruption Event means, with respect to
                              the S&P 500 Index:

                              (i) the occurrence or existence of a suspension,
                              absence or material limitation of trading of
                              stocks then constituting 20 percent or more of
                              the level of the S&P 500 Index (or the Successor
                              Index) on the Relevant Exchanges for such
                              securities for more than two hours of trading or
                              during the one-half hour period preceding the
                              close of the principal trading session on such
                              Relevant Exchange; or a breakdown or failure in
                              the price and trade reporting systems of any
                              Relevant Exchange as a result of which the
                              reported trading prices for stocks then
                              constituting 20 percent or more of the level of
                              the S&P 500 Index (or the Successor Index) during
                              the last one-half hour preceding the

                                       5
<PAGE>

                              close of the principal trading session on such
                              Relevant Exchange are materially inaccurate; or
                              the suspension, material limitation or absence of
                              trading on any major U.S. securities market for
                              trading in futures or options contracts or
                              exchange traded funds related to the S&P 500
                              Index (or the Successor Index) for more than two
                              hours of trading or during the one-half hour
                              period preceding the close of the principal
                              trading session on such market, in each case as
                              determined by the Calculation Agent in its sole
                              discretion; and

                              (ii) a determination by the Calculation Agent in
                              its sole discretion that any event described in
                              clause (i) above materially interfered with the
                              ability of the Issuer or any of its affiliates to
                              unwind or adjust all or a material portion of the
                              hedge position with respect to the PLUS due
                              November 30, 2006, Mandatorily Exchangeable for
                              an Amount Payable in U.S. Dollars Based on the
                              Value of the S&P 500(R) Index.

                              For the purpose of determining whether a Market
                              Disruption Event exists at any time, if trading
                              in a security included in the S&P 500 Index is
                              materially suspended or materially limited at
                              that time, then the relevant percentage
                              contribution of that security to the level of the
                              S&P 500 Index shall be based on a comparison of
                              (x) the portion of the value of the S&P 500 Index
                              attributable to that security relative to (y) the
                              overall value of the S&P 500 Index, in each case
                              immediately before that suspension or limitation.

                              For the purpose of determining whether a Market
                              Disruption Event has occurred: (1) a limitation
                              on the hours or number of days of trading shall
                              not constitute a Market Disruption Event if it
                              results from an announced change in the regular
                              business hours of the relevant exchange or
                              market, (2) a decision to permanently discontinue
                              trading in the relevant futures or options
                              contract or exchange traded fund shall not
                              constitute a Market Disruption Event, (3)
                              limitations pursuant to the rules of any Relevant
                              Exchange similar to NYSE Rule 80A (or any
                              applicable rule or regulation enacted or
                              promulgated by any other self-regulatory
                              organization or any government agency of scope
                              similar to NYSE Rule 80A as determined by the
                              Calculation Agent) on trading during significant
                              market fluctuations shall constitute a
                              suspension, absence or material limitation of
                              trading, (4) a suspension of trading in futures
                              or options contracts on the S&P 500 Index by the
                              primary securities market trading in such
                              contracts by reason of (a) a price change
                              exceeding limits set by such securities exchange
                              or market, (b) an imbalance of orders relating to
                              such contracts or (c) a disparity in bid and ask
                              quotes relating to such contracts shall
                              constitute a suspension,

                                       6
<PAGE>

                              absence or material limitation of trading in
                              futures or options contracts related to the S&P
                              500 Index and (5) a "suspension, absence or
                              material limitation of trading" on any Relevant
                              Exchange or on the primary market on which
                              futures or options contracts related to the S&P
                              500 Index are traded shall not include any time
                              when such securities market is itself closed for
                              trading under ordinary circumstances.

Relevant Exchange............ Relevant Exchange means the primary U.S.
                              organized exchange or market of trading for any
                              security (or any combination thereof) then
                              included in the S&P 500 Index or any Successor
                              Index.

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

                              If the maturity of the PLUS is accelerated
                              because of an event of default as described
                              above, the Issuer shall, or shall cause the
                              Calculation Agent to, provide written notice to
                              the Trustee at its New York office, on which
                              notice the Trustee may conclusively rely, and to
                              the Depositary of the cash amount due with
                              respect to each $10 principal amount of this PLUS
                              as promptly as possible and in no event later
                              than two Business Days after the date of
                              acceleration.

Discontinuance of the
  S&P 500 Index; Alteration
  of Method of Calculation... If Standard & Poor's Corporation discontinues
                              publication of the S&P 500 Index and Standard &

                                       7
<PAGE>

                              Poor's Corporation or another entity publishes a
                              successor or substitute index that the
                              Calculation Agent determines, in its sole
                              discretion, to be comparable to the discontinued
                              S&P 500 Index (such index being referred to
                              herein as a "Successor Index"), then any
                              subsequent Index Closing Value shall be
                              determined by reference to the published value of
                              such Successor Index at the regular weekday close
                              of trading on the Trading Day that any Index
                              Closing Value is to be determined.

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

                              If Standard & Poor's Corporation discontinues
                              publication of the S&P 500 Index prior to, and
                              such discontinuance is continuing on, the Index
                              Valuation Date or the date of acceleration and
                              the Calculation Agent determines, in its sole
                              discretion, that no Successor Index is available
                              at such time, then the Calculation Agent shall
                              determine the Index Closing Value for such date.
                              The Index Closing Value shall be computed by the
                              Calculation Agent in accordance with the formula
                              for calculating the S&P 500 Index last in effect
                              prior to such discontinuance, using the closing
                              price (or, if trading in the relevant securities
                              has been materially suspended or materially
                              limited, its good faith estimate of the closing
                              price that would have prevailed but for such
                              suspension or limitation) at the close of the
                              principal trading session of the Relevant
                              Exchange on such date of each security most
                              recently constituting the S&P 500 Index without
                              any rebalancing or substitution of such
                              securities following such discontinuance.

                              If at any time the method of calculating the S&P
                              500 Index or a Successor Index, or the value
                              thereof, is changed in a material respect, or if
                              the S&P 500 Index or a Successor Index is in any
                              other way modified so that such index does not,
                              in the opinion of the Calculation Agent, fairly
                              represent the value of the S&P 500 Index or such
                              Successor Index had such changes or modifications
                              not been made, then, from and after such time,
                              the Calculation Agent shall, at the

                                       8
<PAGE>

                              close of business in New York City on the date on
                              which the Index Closing Value is to be
                              determined, make such calculations and
                              adjustments as, in the good faith judgment of the
                              Calculation Agent, may be necessary in order to
                              arrive at a value of a stock index comparable to
                              the S&P 500 Index or such Successor Index, as the
                              case may be, as if such changes or modifications
                              had not been made, and the Calculation Agent
                              shall calculate the Final Index Value with
                              reference to the S&P 500 Index or such Successor
                              Index, as adjusted. Accordingly, if the method of
                              calculating the S&P 500 Index or a Successor
                              Index is modified so that the value of such index
                              is a fraction of what it would have been if it
                              had not been modified (e.g., due to a split in
                              the index), then the Calculation Agent shall
                              adjust such index in order to arrive at a value
                              of the S&P 500 Index or such Successor Index as
                              if it had not been modified (e.g., as if such
                              split had not occurred).

Treatment of PLUS for
  United States Federal
  Income Tax Purposes........ The Issuer, by its sale of this PLUS, and the
                              holder of this PLUS (and any successor holder of,
                              or holder of a beneficial interest in, this
                              PLUS), by its respective purchase hereof, agree
                              (in the absence of an administrative
                              determination or judicial ruling to the contrary)
                              to characterize each $10 principal amount of this
                              PLUS for all tax purposes as a single financial
                              contract with respect to the S&P 500 Index that
                              (i) requires the holder of this PLUS to pay to
                              the Issuer at inception an amount equal to $10
                              and (ii) entitles the holder to receive at
                              maturity an amount in cash based upon the
                              performance of the S&P 500 Index.

                                       9
<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 cash, as determined in accordance
with the provisions set forth under "Payment at Maturity" above, due with
respect to the principal sum of U.S. $                   (UNITED STATES DOLLARS
                      ), on the Maturity Date specified above (except to the
extent redeemed or repaid prior to maturity) and to pay interest thereon at the
Interest Rate per annum specified above, from and including the Interest
Accrual Date specified above until the principal hereof is paid or duly made
available for payment weekly, monthly, quarterly, semiannually or annually in
arrears as specified above as the Interest Payment Period on each Interest
Payment Date (as specified above), commencing on the Interest Payment Date next
succeeding the Interest Accrual Date specified above, and at maturity (or on
any redemption or repayment date); provided, however, that if the Interest
Accrual Date occurs between a Record Date, as defined below, and the next
succeeding Interest Payment Date, interest payments will commence on the second
Interest Payment Date succeeding the Interest Accrual Date to the registered
holder of this Note on the Record Date with respect to such second Interest
Payment Date; and provided, further, that if this Note is subject to "Annual
Interest Payments," interest payments shall be made annually in arrears and the
term "Interest Payment Date" shall be deemed to mean the first day of March in
each year.

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

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

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

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

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

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

                                      11
<PAGE>

available, such payment will be made in the Specified Currency. All currency
exchange costs will be borne by the holder of this Note by deductions from such
payments.

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

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

                                      12
<PAGE>

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

DATED:                                   MORGAN STANLEY

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

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

JPMORGAN CHASE BANK, N.A.,
    as Trustee

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

                                      13
<PAGE>

                          FORM OF REVERSE OF SECURITY

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

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

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

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

                                      14
<PAGE>

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

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

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

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

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

                                      15
<PAGE>

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

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

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

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

                                      16
<PAGE>

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

                                      17
<PAGE>

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

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

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

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

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

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

                                      18
<PAGE>

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

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

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

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

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

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

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

                                      19
<PAGE>

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

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

                                      20
<PAGE>

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

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

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

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

     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.

                                      21
<PAGE>

     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.

                                      11
<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.

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

                                      23
<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.

                                      24
<PAGE>

                           OPTION TO ELECT REPAYMENT

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

_______________________________________________________________________________

_______________________________________________________________________________

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

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

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

                                       25FORM OF FIXED RATE SENIOR NOTE

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

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

<PAGE>

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

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

                                         7% SPARQS(R) DUE SEPTEMBER 1, 2006
                                              MANDATORILY EXCHANGEABLE
                                           FOR SHARES OF COMMON STOCK OF
                                               JUNIPER NETWORKS, INC.

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

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

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

                                       2
<PAGE>

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

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

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

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

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

                                       3
<PAGE>

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

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

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

Morgan Stanley Call Right...

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

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

                                       4
<PAGE>

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

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

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

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

                                       5
<PAGE>

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

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

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

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

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

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

                                       6
<PAGE>

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

                              The Issuer shall, or shall cause the Calculation
                              Agent to, provide written notice to the Trustee at
                              its New York Office and to the Depositary, on
                              which notice the Trustee and Depositary may
                              conclusively rely, on or prior to 10:30 a.m. on
                              the Trading Day immediately prior to maturity of
                              this SPARQS (but if such Trading Day is not a
                              Business Day, prior to the close of business on
                              the Business Day preceding the maturity of this
                              SPARQS), of the amount of 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

                                       7
<PAGE>

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

                                       8
<PAGE>

                              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 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;

                                 (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

                                       9
<PAGE>

                              the Calculation Agent as of the second scheduled
                              Trading Day prior to maturity of this SPARQS.

Exchange Ratio..............  1.0, subject to adjustment for corporate events
                              relating to Juniper Networks Stock 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,

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

                              If 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

                                       10
<PAGE>

                              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.

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

                                       11
<PAGE>

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

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

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

                              1. If 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, Inc.
                              ("Juniper Networks"), then once the dividend has
                              become effective and Juniper Networks Stock is
                              trading ex-dividend, the Exchange Ratio shall be
                              adjusted so that the new Exchange Ratio shall
                              equal the prior Exchange Ratio plus the product of
                              (i) the number of shares issued with respect to
                              one share of 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

                                       12
<PAGE>

                              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
                              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,

                                       13
<PAGE>

                              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.

                              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

                                       14
<PAGE>

                              (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) and any
                              required adjustment to the Exchange Ratio 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, 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 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

                                       15
<PAGE>

                                 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
                                    Reference Basket Stocks (as defined below)
                                    with an

                                       16
<PAGE>

                                    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.

                                       17
<PAGE>

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

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

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

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

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

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

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

                                       18
<PAGE>

                              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 Stock Exchange Ratios resulting from any
                              Reorganization Event described in paragraph 5
                              above or similar adjustment under paragraph 4
                              above shall be subject to the adjustments set
                              forth in paragraphs 1 through 5 hereof.

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

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

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

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

                                       19
<PAGE>

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

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

Market Disruption Event.....  Market Disruption Event means, with respect to
                              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
                                 September 1, 2006, Mandatorily Exchangeable for
                                 Shares of Common Stock of Juniper Networks,
                                 Inc.

                                       20
<PAGE>

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

                                       21
<PAGE>

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

Treatment of SPARQS for
  United States Federal
  Income Tax Purposes.......  The Issuer, by its sale of this SPARQS, and the
                              holder of this SPARQS (and any successor holder
                              of, or holder of a beneficial interest in, this
                              SPARQS), by its respective purchase hereof, agree
                              (in the absence of an administrative determination
                              or judicial ruling to the contrary) to
                              characterize each $         principal amount of
                              this SPARQS for all tax purposes as a unit
                              consisting of (A) a terminable contract (the
                              "Terminable Forward Contract") that (i) requires
                              the holder of this SPARQS (subject to the Morgan
                              Stanley Call Right) to purchase, and the Issuer to
                              sell, for an amount equal to $          (the
                              "Forward Price"), 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.

                                       22
<PAGE>

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

                                       23
<PAGE>

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

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

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

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

                                       24
<PAGE>

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

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

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

                                       25
<PAGE>

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

DATED:                                         MORGAN STANLEY

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

TRUSTEE'S CERTIFICATE
   OF AUTHENTICATION

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

JPMORGAN CHASE BANK, N.A.,
   as Trustee

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

                                       26
<PAGE>

                           FORM OF REVERSE OF SECURITY

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

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

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

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

                                       27
<PAGE>

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

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

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

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

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

                                       28
<PAGE>

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

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

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

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

                                       29
<PAGE>

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

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

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

                                       30
<PAGE>

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

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

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

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

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

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

                                       31
<PAGE>

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

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

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

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

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

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

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

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

                                       32
<PAGE>

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

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

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

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

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

                                       33
<PAGE>

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

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

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

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

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

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

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

                                       34
<PAGE>

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

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

                                       35
<PAGE>

                                  ABBREVIATIONS

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

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

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

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

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

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

                                       36
<PAGE>

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

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

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

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

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

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

Dated:__________________________

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

                                       37
<PAGE>

                            OPTION TO ELECT REPAYMENT

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

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

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

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

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

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

                                       38

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