Document:

FORM OF FIXED RATE SENIOR NOTE

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

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

<PAGE>

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

                          STOCK PARTICIPATION ACCRETING
                REDEMPTION QUARTERLY-PAY SECURITIESSM ("SPARQS")

                        8% SPARQS(R) DUE JANUARY 15, 2006
                            MANDATORILY EXCHANGEABLE
                          FOR SHARES OF COMMON STOCK OF
                                 MOTOROLA, INC.

<TABLE>
<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..............   January 15, 2006, subject to acceleration as
                              described below in "Price Event Acceleration" and
                              "Alternate

                                      A-2
<PAGE>

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

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

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

Interest Payment Dates.....   April 15, 2005, July 15, 2005, October 15, 2005
                              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 January 15, 2006, but no
                              interest will accrue on this SPARQS or on such
                              payment during the period from or after the
                              scheduled Maturity Date.

                                      A-3
<PAGE>

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

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

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

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

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

                                      A-4
<PAGE>

                              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 delivery of this
                              SPARQS to the Trustee. The Issuer

                                      A-5
<PAGE>

                              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.....   January 5, 2006; provided that if January 5, 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 July , 2005 or the
                              Maturity Date (including the Maturity Date as it
                              may be extended and regardless of whether the
                              Maturity Date is a scheduled Trading Day). See
                              "Maturity Date" above.

Call Price.................   The Call Price with respect to any Call Date is an
                              amount of cash per each $ principal amount of this
                              SPARQS, as calculated by the Calculation Agent,
                              such that the sum of the present values of all
                              cash flows on each $ principal amount of this
                              SPARQS to and including the Call Date (i.e., the
                              Call Price and all of the interest payments,
                              including accrued and unpaid

                              interest payable on the Call Date), discounted to
                              the Original Issue Date from the applicable
                              payment date at the Yield to Call rate of % per
                              annum computed on the basis of a 360-day year of
                              twelve 30-day months, equals the Issue Price, as
                              determined by the Calculation Agent.

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

                                      A-6
<PAGE>

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

                              The amount of Motorola 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 Motorola Stock as a result of
                              any corporate event described under "Antidilution
                              Adjustments" below, in each case, required to be
                              made through the close of business on the third
                              Trading Day prior to maturity.

                              The Issuer shall, or shall cause the Calculation
                              Agent to, provide written notice to the Trustee
                              at its New York Office and to the Depositary, on
                              which notice the Trustee and Depositary may
                              conclusively rely, on or prior to 10:30 a.m. on
                              the Trading Day immediately prior to maturity of
                              this SPARQS (but if such Trading Day is not a
                              Business Day, prior to the close of business on
                              the Business Day preceding maturity of this
                              SPARQS), of the amount of Motorola 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
                              Motorola Stock (or of any other securities
                              included in Exchange Property, if applicable);
                              provided that if the maturity date of this SPARQS
                              is accelerated (x) because of a Price Event
                              Acceleration (as described under "Price Event
                              Acceleration" below) or (y) because of an Event
                              of Default Acceleration (as defined under
                              "Alternate Exchange Calculation in Case of an
                              Event of Default" below), the Issuer shall give
                              notice of such acceleration as promptly as
                              possible, and in no case later than (A)

                                      A-7
<PAGE>

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

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

                                      A-8
<PAGE>

Price Event Acceleration...   If on any two consecutive Trading Days during the
                              period prior to and ending on the third Business
                              Day immediately preceding the Maturity Date, the
                              product of the Closing Price per share of Motorola
                              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 Motorola 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 Motorola Stock due with
                              respect to this SPARQS, as described above, but
                              the Issuer shall pay cash in lieu of delivering
                              any fractional share of Motorola Stock in an
                              amount equal to the corresponding fractional
                              Closing Price of such fraction of a share of
                              Motorola Stock as determined by the Calculation
                              Agent as of the second scheduled Trading Day prior
                              to maturity of this SPARQS.

Exchange Ratio.............   1.0, subject to adjustment for corporate events
                              relating to Motorola, Inc. ("Motorola") described
                              under "Antidilution Adjustments" below.

                                       A-9
<PAGE>

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

                              o    if Motorola 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 Motorola 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 Motorola 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
                              Motorola Stock (or one unit of any such other
                              security) on any Trading Day will mean the last
                              reported sale price of the principal trading
                              session on the over-the-counter market as reported
                              on the Nasdaq National Market or the OTC Bulletin
                              Board on such day. If, because of a Market
                              Disruption Event (as defined below) or otherwise,
                              the last reported sale price or Nasdaq official
                              closing price, as applicable, for Motorola Stock
                              (or any such other

                                      A-10
<PAGE>

                              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 Motorola 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 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:

                                      A-11
<PAGE>

                              1. If Motorola 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 Motorola Stock.

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

                              3. If Motorola issues rights or warrants to all
                              holders of Motorola Stock to subscribe for or
                              purchase Motorola Stock at an exercise price per
                              share less than the Closing Price of Motorola
                              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 Motorola Stock outstanding
                              immediately prior to the issuance of such rights
                              or warrants plus the number of additional shares
                              of Motorola Stock offered for subscription or
                              purchase pursuant to such rights or warrants and
                              the denominator of which shall be the number of
                              shares of Motorola Stock outstanding immediately
                              prior to the issuance of such rights or warrants
                              plus the number of additional shares of Motorola
                              Stock which the aggregate offering price of the
                              total number of shares of Motorola 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

                                      A-12
<PAGE>

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

                                      A-13
<PAGE>

                              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 Motorola
                              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) Motorola Stock is
                              reclassified or changed, including, without
                              limitation, as a result of the issuance of any
                              tracking stock by Motorola, (ii) Motorola has been
                              subject to any merger, combination or
                              consolidation and is not the surviving entity,
                              (iii) Motorola completes a statutory exchange of
                              securities with another corporation (other than
                              pursuant to clause (ii) above), (iv) Motorola is
                              liquidated, (v) Motorola issues to all of its
                              shareholders equity securities of an issuer other
                              than Motorola (other than in a transaction
                              described in clause (ii), (iii) or (iv) above) (a
                              "spinoff stock") or (vi) Motorola 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
                              Motorola Stock receive any equity security listed
                              on a national securities exchange or traded on The
                              Nasdaq National Market (a "Marketable Security"),
                              other securities or other property, assets or cash
                              (collectively "Exchange Property"), the amount
                              payable upon exchange at maturity with respect to
                              each $ principal amount of this SPARQS following
                              the effective date for such Reorganization Event
                              (or, if applicable, in the case of spinoff stock,
                              the ex-dividend date for the distribution of such
                              spinoff stock) shall be determined in accordance
                              with the following:

                                      A-14
<PAGE>

                                   (a) if Motorola Stock continues to be
                                   outstanding, Motorola 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 Motorola Stock, the number of shares of
                                   the New Stock received with respect to one
                                   share of Motorola Stock multiplied by the
                                   Exchange Ratio for Motorola Stock on the
                                   Trading Day immediately prior to the
                                   effective date of the Reorganization Event
                                   (the "New Stock Exchange Ratio"), as
                                   adjusted to the third Trading Day prior to
                                   the scheduled Maturity Date (taking into
                                   account any adjustments for distributions
                                   described under clause (c)(i) below); and

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

                                      (i) if the combined value of the amount of
                                      Non-Stock Exchange Property received per
                                      share of Motorola 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
                                      Motorola Stock is less than 25% of the
                                      Closing Price of Motorola Stock on the
                                      Trading Day immediately prior to the
                                      effective date of such Reorganization
                                      Event, a number of shares of Motorola
                                      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 Motorola 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 Motorola Stock on

                                      A-15
<PAGE>

                                      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 Motorola 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 Motorola Stock on the
                                      Trading Day immediately prior to the
                                      effective date relating to such
                                      Reorganization Event or, if Motorola Stock
                                      is surrendered exclusively for Non-Stock
                                      Exchange Property (in each case, a
                                      "Reference Basket Event"), an initially
                                      equal-dollar weighted basket of three
                                      Reference Basket Stocks (as defined below)
                                      with an aggregate value on the effective
                                      date of such Reorganization Event equal to
                                      the Non-Stock Exchange Property Value
                                      multiplied by the Exchange Ratio in effect
                                      for Motorola 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
                                      Motorola; 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

                                      A-16
<PAGE>

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

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

                                   (x) if applicable, Motorola 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-

                                      A-17
<PAGE>

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

                                      A-18
<PAGE>

                              adjustment would require a change of at least
                              0.1% in the Exchange Ratio then in effect. The
                              Exchange Ratio resulting from any of the
                              adjustments specified above will be rounded to
                              the nearest one hundred-thousandth, with five
                              one-millionths rounded upward. Adjustments to the
                              Exchange Ratios will be made up to the close of
                              business on the third Trading Day prior to the
                              Maturity Date.

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

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

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

Market Disruption Event....   Market Disruption Event means, with respect to
                              Motorola Stock:

                                   (i) a suspension, absence or material
                                   limitation of trading of Motorola Stock on
                                   the primary market for Motorola 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 Motorola Stock as a result of which the
                                   reported trading prices for Motorola Stock
                                   during the last one-half hour preceding the
                                   close of the principal trading session in
                                   such market are

                                      A-19
<PAGE>

                                   materially inaccurate; or the suspension,
                                   absence or material limitation of trading on
                                   the primary market for trading in options
                                   contracts related to Motorola 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 January 15, 2006,
                                   Mandatorily Exchangeable for Shares of Common
                                   Stock of Motorola, Inc.

                              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 Motorola 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 Motorola
                              Stock and (5) a suspension, absence or material
                              limitation of trading on the primary securities
                              market on which options contracts related to
                              Motorola Stock are traded shall not

                                      A-20
<PAGE>

                              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 Motorola Stock (and/or the value
                              of any Exchange Property) as of the date of such
                              acceleration and (y) the then current Exchange
                              Ratio and (ii) the Call Price calculated as though
                              the date of acceleration were the Call Date (but
                              in no event less than the Call Price for the first
                              Call Date), in each case plus accrued but unpaid
                              interest to but excluding the date of
                              acceleration; provided that if the Issuer has
                              called the SPARQS in accordance with the Morgan
                              Stanley Call Right, the amount declared due and
                              payable upon any such acceleration shall be an
                              amount in cash for each $ principal amount of this
                              SPARQS equal to the Call Price for the Call Date
                              specified in the Issuer's notice of mandatory
                              exchange, plus accrued but unpaid interest to but
                              excluding the date of acceleration.

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

                                      A-21
<PAGE>

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

                                      A-22
<PAGE>

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

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

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

                                      A-23
<PAGE>

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

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

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

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

                                      A-24
<PAGE>

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

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

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

                                      A-25
<PAGE>

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

DATED:                                 MORGAN STANLEY
                                       By:
                                            ------------------------------------
                                             Name:
                                             Title:

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

JPMORGAN CHASE BANK, N.A.,
    as Trustee

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

                                      A-26
<PAGE>

                               REVERSE OF SECURITY

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

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

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

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

                                      A-27
<PAGE>

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

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

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

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

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

                                      A-28
<PAGE>

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

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

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

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

                                      A-29
<PAGE>

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

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

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

                                      A-30
<PAGE>

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

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

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

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

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

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

                                      A-31
<PAGE>

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

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

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

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

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

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

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

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

                                      A-32
<PAGE>

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

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

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

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

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

                                      A-33
<PAGE>

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

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

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

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

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

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

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

                                      A-34
<PAGE>

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

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

                                      A-35
<PAGE>

                                  ABBREVIATIONS

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

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

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

     Under Uniform Gifts to Minors Act ______________________________
                                                 (State)

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

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

                                      A-36
<PAGE>

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

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

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

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

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

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

Dated: ______________

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

                                      A-37
<PAGE>

                            OPTION TO ELECT REPAYMENT

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

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

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

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

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

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

                                      A-38FORM OF FIXED RATE SENIOR NOTE

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

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

<PAGE>

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

                         STOCK PARTICIPATION ACCRETING
                REDEMPTION QUARTERLY-PAY SECURITIESSM ("SPARQS")

                       8% SPARQS(R) DUE JANUARY 15, 2006
                            MANDATORILY EXCHANGEABLE
                         FOR SHARES OF COMMON STOCK OF
                         TEXAS INSTRUMENTS INCORPORATED

<TABLE>
<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..............   January 15, 2006, subject to acceleration as
                              described below in "Price Event Acceleration" and
                              "Alternate

                                      A-2
<PAGE>

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

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

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

Interest Payment Dates.....   April 15, 2005, July 15, 2005, October 15, 2005
                              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 January 15, 2006, but no
                              interest will accrue on this SPARQS or on such
                              payment during the period from or after the
                              scheduled Maturity Date.

                                      A-3
<PAGE>

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

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

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

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

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

                                      A-4
<PAGE>

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
                              delivery of this SPARQS to the Trustee. The
                              Issuer

                                      A-5
<PAGE>

                              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.....   January 5, 2006; provided that if January 5, 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 July , 2005 or
                              the Maturity Date (including the Maturity Date as
                              it may be extended and regardless of whether the
                              Maturity Date is a scheduled Trading Day). See
                              "Maturity Date" above.

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

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

                                      A-6
<PAGE>

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

                              The amount of Texas Instruments 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 Texas
                              Instruments Stock as a result of any corporate
                              event described under "Antidilution Adjustments"
                              below, in each case, required to be made through
                              the close of business on the third Trading Day
                              prior to maturity.

                              The Issuer shall, or shall cause the Calculation
                              Agent to, provide written notice to the Trustee
                              at its New York Office and to the Depositary, on
                              which notice the Trustee and Depositary may
                              conclusively rely, on or prior to 10:30 a.m. on
                              the Trading Day immediately prior to maturity of
                              this SPARQS (but if such Trading Day is not a
                              Business Day, prior to the close of business on
                              the Business Day preceding maturity of this
                              SPARQS), of the amount of Texas Instruments 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 Texas Instruments Stock (or of any other
                              securities included in Exchange Property, if
                              applicable); provided that if the maturity date
                              of this SPARQS is accelerated (x) because of a
                              Price Event Acceleration (as described under
                              "Price Event Acceleration" below) or (y) because
                              of an Event of Default Acceleration (as defined
                              under "Alternate Exchange Calculation in Case of
                              an Event of Default" below), the Issuer shall

                                      A-7
<PAGE>

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

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

                                      A-8
<PAGE>

                              Instruments Stock (or any Exchange Property) and
                              any other cash due at maturity as described in
                              the preceding paragraph under this heading.

Price Event Acceleration...   If on any two consecutive Trading Days during the
                              period prior to and ending on the third Business
                              Day immediately preceding the Maturity Date, the
                              product of the Closing Price per share of Texas
                              Instruments 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 Texas Instruments
                                   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 Texas Instruments Stock due
                              with respect to this SPARQS, as described above,
                              but the Issuer shall pay cash in lieu of
                              delivering any fractional share of Texas
                              Instruments Stock in an amount equal to the
                              corresponding fractional Closing Price of such
                              fraction of a share of Texas Instruments Stock as
                              determined by the Calculation Agent as of the
                              second scheduled Trading Day prior to maturity of
                              this SPARQS.

                                      A-9
<PAGE>

Exchange Ratio.............   1.0, subject to adjustment for corporate events
                              relating to Texas Instruments Incorporated
                              ("Texas Instruments") described under
                              "Antidilution Adjustments" below.

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

                              o    if Texas Instruments 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 Texas Instruments 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 Texas Instruments 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 Texas Instruments Stock (or one unit
                              of any such other security) on any Trading Day
                              will mean the last reported sale price of the
                              principal trading session on the over-the-counter

                                     A-10
<PAGE>

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

                                     A-11
<PAGE>

                              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 Texas Instruments 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 Texas Instruments
                              Stock.

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

                              3. If Texas Instruments issues rights or warrants
                              to all holders of Texas Instruments Stock to
                              subscribe for or purchase Texas Instruments Stock
                              at an exercise price per share less than the
                              Closing Price of Texas Instruments 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 Texas Instruments Stock
                              outstanding immediately prior to the issuance of
                              such rights or

                                     A-12
<PAGE>

                              warrants plus the number of additional shares of
                              Texas Instruments Stock offered for subscription
                              or purchase pursuant to such rights or warrants
                              and the denominator of which shall be the number
                              of shares of Texas Instruments Stock outstanding
                              immediately prior to the issuance of such rights
                              or warrants plus the number of additional shares
                              of Texas Instruments Stock which the aggregate
                              offering price of the total number of shares of
                              Texas Instruments 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 Texas
                              Instruments 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 Texas Instruments Stock
                              of any cash dividend or special dividend or
                              distribution that is identified by Texas
                              Instruments 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 Texas Instruments as
                              an extraordinary or special dividend or
                              distribution) distributed per share of Texas
                              Instruments Stock over the immediately preceding
                              cash dividend or other cash distribution, if any,
                              per share of Texas Instruments 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 Texas Instruments Stock on
                              the Trading Day preceding the "ex-dividend date"
                              (that is, the day on and after which transactions
                              in Texas Instruments Stock on an organized
                              securities exchange or trading system no longer
                              carry the right to receive that cash dividend or
                              other cash distribution) for the payment of such
                              cash dividend or other cash distribution (such
                              Closing Price, the "Base Closing Price") and (c)
                              the full cash value of any non-cash dividend or
                              distribution per share of Texas Instruments Stock
                              (excluding

                                     A-13
<PAGE>

                              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 Texas Instruments Stock
                              includes an Extraordinary Dividend, the Exchange
                              Ratio with respect to Texas Instruments 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 Texas
                              Instruments 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) Texas Instruments Stock
                              is reclassified or changed, including, without
                              limitation, as a result of the issuance of any
                              tracking stock by Texas Instruments, (ii) Texas
                              Instruments has been subject to any merger,
                              combination or consolidation and is not the
                              surviving entity, (iii) Texas Instruments
                              completes a statutory exchange of securities with
                              another corporation (other than pursuant to
                              clause (ii) above), (iv) Texas Instruments is
                              liquidated, (v) Texas Instruments issues to all
                              of its shareholders equity securities of an
                              issuer other than Texas Instruments (other than
                              in a transaction described in clause (ii), (iii)
                              or (iv) above) (a "spinoff stock") or (vi) Texas
                              Instruments Stock is the subject of a tender

                                     A-14
<PAGE>

                              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 Texas Instruments
                              Stock receive any equity security listed on a
                              national securities exchange or traded on The
                              Nasdaq National Market (a "Marketable Security"),
                              other securities or other property, assets or
                              cash (collectively "Exchange Property"), the
                              amount payable upon exchange at maturity with
                              respect to each $ principal amount of this SPARQS
                              following the effective date for such
                              Reorganization Event (or, if applicable, in the
                              case of spinoff stock, the ex-dividend date for
                              the distribution of such spinoff stock) shall be
                              determined in accordance with the following:

                              (a) if Texas Instruments Stock continues to be
                              outstanding, Texas Instruments 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 Texas Instruments Stock,
                              the number of shares of the New Stock received
                              with respect to one share of Texas Instruments
                              Stock multiplied by the Exchange Ratio for Texas
                              Instruments Stock on the Trading Day immediately
                              prior to the effective date of the Reorganization
                              Event (the "New Stock Exchange Ratio"), as
                              adjusted to the third Trading Day prior to the
                              scheduled Maturity Date (taking into account any
                              adjustments for distributions described under
                              clause (c)(i) below); and

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

                                   (i) if the combined value of the amount of
                                   Non-Stock Exchange Property received per
                                   share of Texas Instruments Stock, as

                                     A-15
<PAGE>

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

                                     A-16
<PAGE>

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

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

                                     A-17
<PAGE>

                               (x) if applicable, Texas Instruments 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 "Texas Instruments Stock" under "No
                              Fractional Shares," "Closing Price" and "Market
                              Disruption Event" shall be deemed to also refer
                              to any New Stock or Reference Basket Stock, and
                              (ii) all other references in this SPARQS to
                              "Texas Instruments 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 Texas Instruments
                              Stock shall be deemed to refer to the applicable
                              unit or units of such Exchange Property,
                              including any New Stock or Reference Basket
                              Stock,

                                     A-18
<PAGE>

                              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
                              Maturity Date.

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

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

                                     A-19
<PAGE>

                              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 any
                              holder of this SPARQS.

Market Disruption Event....   "Market Disruption Event" means, with respect to
                              Texas Instruments Stock:

                                   (i) a suspension, absence or material
                                   limitation of trading of Texas Instruments
                                   Stock on the primary market for Texas
                                   Instruments 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 Texas
                                   Instruments Stock as a result of which the
                                   reported trading prices for Texas
                                   Instruments 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 Texas Instruments
                                   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 January 15, 2006,
                                   Mandatorily Exchangeable for Shares of
                                   Common Stock of Texas Instruments
                                   Incorporated.

                              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

                                     A-20
<PAGE>

                              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 Texas
                              Instruments 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 Texas Instruments
                              Stock and (5) a suspension, absence or material
                              limitation of trading on the primary securities
                              market on which options contracts related to
                              Texas Instruments 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 Texas Instruments Stock (and/or
                              the value of any Exchange Property) as of the
                              date of such acceleration and (y) the then
                              current Exchange Ratio and (ii) the Call Price
                              calculated as though the date of acceleration
                              were the Call Date (but in no event less than the
                              Call Price for the first Call Date), in each case
                              plus accrued but unpaid interest to but excluding
                              the date of acceleration; provided that if the
                              Issuer has called the SPARQS in accordance with
                              the Morgan Stanley Call Right, the amount
                              declared due and payable upon any such
                              acceleration shall be an amount in cash for each
                              $ principal amount of this SPARQS equal to the
                              Call Price for the Call Date

                                     A-21
<PAGE>

                              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 an investment unit
                              consisting of (A) a terminable contract (the
                              "Terminable Forward Contract") that (i) requires
                              the holder of this SPARQS (subject to the Morgan
                              Stanley Call Right) to purchase, and the Issuer
                              to sell, for an amount equal to $        (the
                              "Forward Price"), Texas Instruments 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 Texas Instruments Stock pursuant to the
                              Terminable Forward Contract (the "Deposit"),
                              which Deposit bears a quarterly compounded yield
                              of % per annum.

                                     A-22
<PAGE>

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

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

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

                                     A-23
<PAGE>

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

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

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

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

                                     A-24
<PAGE>

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

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

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

                                     A-25
<PAGE>

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

DATED:                                MORGAN STANLEY

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

TRUSTEE'S CERTIFICATE
   OF AUTHENTICATION

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

JPMORGAN CHASE BANK, N.A.,
   as Trustee

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

                                     A-26
<PAGE>

                              REVERSE OF SECURITY

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

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

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

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

                                     A-27
<PAGE>

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

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

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

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

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

                                     A-28
<PAGE>

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

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

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

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

                                     A-29
<PAGE>

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

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

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

                                     A-30
<PAGE>

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

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

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

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

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

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

                                     A-31
<PAGE>

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

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

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

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

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

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

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

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

                                     A-32
<PAGE>

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

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

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

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

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

                                     A-33
<PAGE>

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

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

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

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

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

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

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

                                     A-34
<PAGE>

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

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

                                     A-35
<PAGE>

                                 ABBREVIATIONS

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

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

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

     Under Uniform Gifts to Minors Act _____________________________
                                                  (State)

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

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

                                     A-36
<PAGE>

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

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

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

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

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

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

Dated: ________________

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

                                     A-37
<PAGE>

                           OPTION TO ELECT REPAYMENT

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

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

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

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

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

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

                                     A-38

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