Document:

Exhibit 4.1 

FORM OF FIXED RATE SENIOR NOTE

	 REGISTERED 	 REGISTERED 
	 No. FXR-1 	 U.S. $ 
	  	 CUSIP: 61750V824 

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

 

 MORGAN STANLEY

SENIOR GLOBAL MEDIUM-TERM NOTE, SERIES
F

(Fixed Rate)

      STOCK
      PARTICIPATION ACCRETING

  REDEMPTION QUARTERLY-PAY SECURITIESSM (“SPARQS”)

	 8% SPARQS® DUE
          FEBRUARY 20, 2008 
	 MANDATORILY EXCHANGEABLE 
	 FOR SHARES OF COMMON STOCK
          OF 
	 NOBLE ENERGY, INC.
	 

	ORIGINAL
    ISSUE DATE:
	INITIAL
    REDEMPTION DATE: See MorganStanley Call Right” below.
	INTEREST
    RATE: 8% per annum 
	MATURITY
    DATE: See “Maturity Date” below.

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

    DATE(S): N/A

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

            PAYMENT UPON ACCELERATION OR REDEMPTION:
    See “Alternate Exchange Calculation in Case of an Event of Default” below.

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

	EXCHANGE
    RATE AGENT: N/A
	TAX
    REDEMPTION AND PAYMENT OF ADDITIONAL AMOUNTS: NO
	PRICE
    APPLICABLE UPON OPTIONALREPAYMENT: N/A
	ORIGINAL YIELD TO MATURITY: N/A
	OTHER
    PROVISIONS: See below. 
	IF
    YES, STATE INITIAL OFFERING DATE: N/A
	 	 

	 Stated Principal Amount 	  	 $                 per
    SPARQS 
	 	 	 
	 Underlying Company 	  	 Noble Energy, Inc.
        (“Noble Energy”) 

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	 Underlying Stock 	  	 The common stock of
        Noble Energy 
	 	 	 
	 Pricing Date 	  	      
	 	 	 
	 Issue Price 	  	 $                    per
    each Stated Principal Amount of this  SPARQS  
	  	  	   
	 Denominations 	  	 $                     and
    integral multiples thereof  
	 	 	 
	 Acceleration Trigger Price 	  	 The product of $                     and
    the Exchange Ratio as of the Original Issue
    Date.  
	  	  	  
	Exchange Ratio
	  	                   , subject to adjustment for
          corporate events relating to the Underlying Stock described under “Antidilution
          Adjustments” below.

	 	 	 
	Yield to Call

      First Call Date

      Maturity Date
	  	     % per annum

      August 20, 2007

      February 20, 2008, subject to acceleration as described
          below in “Price Event Acceleration” and “Alternate 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 definition
          thereof. If the Final Call Notice Date is postponed because it is not
          a Trading Day or due to a Market Disruption Event and the Issuer exercises
          the Morgan Stanley Call Right, the scheduled 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

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	  	  	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
	  	May 20, 2007, August 20, 2007,
          November 20, 2007 and the Maturity Date.

      If the scheduled Maturity Date is postponed, the
          Issuer shall pay interest on the Maturity Date as postponed rather
          than on the scheduled Maturity Date, but no interest will accrue on
          this SPARQS or on such payment during the period from or after the
          scheduled Maturity Date.

	 	 	 
	Record Date
	  	Notwithstanding the definition
          of “Record Date” on page 24 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

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	  	  	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.

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

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

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	 	  	of such Call Price, (vi) that
          such delivery will be made upon presentation and surrender of this
          SPARQS, (vii) that such exchange is pursuant to the Morgan Stanley
          Call Right and (viii) if applicable, the date to which the Maturity
          Date has been extended due to a Market Disruption Event as described
          under “Maturity Date” above.

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

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

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

	 	 	 
	Final Call Notice Date
	  	February 10, 2008; provided that
          if such date 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 the First Call Date or the
          Maturity Date

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	  	  	(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 Stated 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 Stated 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
          computed on the basis of a 360-day year of twelve 30- day months, equals
          the Stated Principal Amount, as determined by the Calculation Agent.

	 	 	 
	Exchange at Maturity
	  	At maturity, subject to a prior
          call of this SPARQS for cash in an amount equal to the Call Price by
          the Issuer as described under “Morgan Stanley Call Right” above
          or any acceleration of the SPARQS, upon delivery of this SPARQS to
          the Trustee, each Stated Principal Amount of this SPARQS shall be applied
          by the Issuer as payment for a number of shares of the Underlying Stock
          at the Exchange Ratio, and the Issuer shall deliver with respect to
          each Stated Principal Amount of this SPARQS an amount of the Underlying
          Stock equal to the Exchange Ratio.

      The amount of Underlying 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 Underlying Stock
          as a result of any corporate event described under “Antidilution
          Adjustments” below, in each case, required to be made through
          the close of business on the third Trading Day prior to the scheduled
          Maturity Date.

      The Issuer shall, or shall cause the Calculation
          Agent to, provide written notice to the Trustee at its New

 7

 

	  	  	York Office and to the Depositary,
          on which notice the Trustee and Depositary may conclusively rely, on
          or prior to 10:30 a.m. on the Trading Day immediately prior to maturity
          of this SPARQS (but if such Trading Day is not a Business Day, prior
          to the close of business on the Business Day preceding the maturity
          of this SPARQS), of the amount of Underlying Stock (or the amount of
          Exchange Property) or cash to be delivered with respect to each Stated
          Principal Amount of this SPARQS and of the amount of any cash to be
          paid in lieu of any fractional share of the Underlying Stock (or of
          any other securities included in Exchange Property, if applicable); provided that
          if the maturity date of this SPARQS is accelerated (x) because of a
          Price Event Acceleration (as described under “Price Event Acceleration” below)
          or (y) because of an Event of Default Acceleration (as defined under “Alternate
          Exchange Calculation in Case of an Event of Default” below), the
          Issuer shall give notice of such acceleration as promptly as possible,
          and in no case later than (A) in the case of an Event of Default Acceleration,
          two Trading Days following such deemed maturity date or (B) in the
          case of a Price Event Acceleration, 10:30 a.m. on the Trading Day immediately
          prior to the date of acceleration (as defined under “Price Event
          Acceleration” below), (i) to the holder of this SPARQS by mailing
          notice of such acceleration by first class mail, postage prepaid, to
          the holder’s last address as it shall appear upon the registry
          books, (ii) to the Trustee by telephone or facsimile confirmed by mailing
          such notice to the Trustee by first class mail, postage prepaid, at
          its New York office and (iii) to the Depositary by telephone or facsimile
          confirmed by mailing such notice to the 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 Underlying Stock, the
          Exchange Property or any cash due with respect to such acceleration
          by such accelerated maturity date.

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	 	  	The Issuer shall, or shall
          cause the Calculation Agent to, deliver any such shares of the Underlying
          Stock (or any Exchange Property) and cash in respect of interest and
          any fractional share of the Underlying 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 Stated 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 Underlying Stock (and, if applicable, any Exchange
          Property) and any cash in respect of interest and any fractional share
          of the Underlying Stock (or any Exchange Property) and any other cash
          due at maturity as described in the preceding paragraph under this
          heading.

	 	 	 
	Price Event Acceleration
	  	If on any two consecutive Trading
          Days during the period prior to and ending on the third Business Day
          immediately preceding the Maturity Date, the product of the Closing
          Price of the Underlying Stock and the Exchange Ratio is less than the
          Acceleration Trigger Price, 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 Stated Principal Amount of this
          SPARQS shall receive per SPARQS on the date of acceleration:

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

        (ii) accrued but unpaid interest on each Stated 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 Stated Principal Amount of this SPARQS
              (excluding the amounts included in clause (ii) above) discounted to
              the date of

      

 9

 

	 	  	
      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.

    
      The holder of this SPARQS shall not be entitled to
          receive the return of each Stated Principal Amount of this SPARQS upon
          a Price Acceleration Event.

	 	 	 
	No Fractional Shares
	  	Upon delivery of this SPARQS
          to the Trustee at maturity, the Issuer shall deliver the aggregate
          number of shares of the Underlying Stock due with respect to this SPARQS,
          as described above, but the Issuer shall pay cash in lieu of delivering
          any fractional share of the Underlying Stock in an amount equal to
          the corresponding fractional Closing Price of such fraction of a share
          of the Underlying Stock as determined by the Calculation Agent as of
          the second scheduled Trading Day prior to maturity of this SPARQS.

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

	 	 	 

	 		

	if the Underlying Stock (or any
        such other security) is listed or admitted
        to trading on a national securities
        exchange (other than The NASDAQ

        Stock Market LLC (the “NASDAQ”)),
        the lastreported sale price, regular
        way, of the principaltrading session
        on such day on the principalnational securities exchange registered under theSecurities
        Exchange Act of 1934, as amended (the“Exchange
        Act”), on which the Underlying Stock(or
    any such other security) is listed or admitted totrading, 
	 	 	 
	 		

	if the Underlying Stock (or any
        such other security) is a security of
        the NASDAQ, the official closing price
    published by the NASDAQ on such day, or
	 	 	 
	 		

	if the Underlying Stock (or any
        such other security) is neither listed
        or admitted to trading on any national
    securities exchange nor a security of the

10

 

	 	  	
      NASDAQ but is included in the
              OTC Bulletin Board Service (the “OTC Bulletin Board”) operated
              by the National Association of Securities Dealers, Inc., the last reported
              sale price of the principal trading session on the OTC Bulletin Board
              on such day.

    
      If the Underlying Stock (or any such other security)
          is listed or admitted to trading on any national securities exchange
          or is a security of the NASDAQ but the last reported sale price or
          official closing price published by NASDAQ, as applicable, is not available
          pursuant to the preceding sentence, then the Closing Price for one
          share of the Underlying Stock (or one unit of any such other security)
          on any Trading Day shall mean the last reported sale price of the principal
          trading session on the over-the-counter market as reported on the NASDAQ
          or the OTC Bulletin Board on such day. If a Market Disruption Event
          (as defined below) occurs with respect to the Underlying Stock (or
          any such other security) or the last reported sale price or the official
          closing price published by NASDAQ, as applicable, for the Underlying
          Stock (or any such other security) is not available pursuant to either
          of the two preceding sentences, then the Closing Price for any Trading
          Day shall be the mean, as determined by the Calculation Agent, of the
          bid prices for the Underlying Stock (or any such other security) for
          such Trading Day obtained from as many recognized dealers in such security,
          but not exceeding three, as shall 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 “OTC
          Bulletin Board Service” shall 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, LLC (“NYSE”), the American Stock Exchange
          LLC, the NASDAQ, the Chicago Mercantile Exchange, the Chicago Board
          of Options Exchange and in the over-the-counter market for equity securities
          in the United States.

 11

 

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

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

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

	 	 	 
	Antidilution Adjustments
	  	The Exchange Ratio shall be
          adjusted as follows:

      1. If the Underlying 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 the Underlying
          Stock.

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

 12

 

	 	  	3. If the Underlying Company
          issues rights or warrants to all holders of the Underlying Stock to
          subscribe for or purchase Underlying Stock at an exercise price per
          share less than the Closing Price of the Underlying 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 the Underlying Stock outstanding
          immediately prior to the issuance of such rights or warrants plus the
          number of additional shares of Underlying Stock offered for subscription
          or purchase pursuant to such rights or warrants and the denominator
          of which shall be the number of shares of Underlying Stock outstanding
          immediately prior to the issuance of such rights or warrants plus the
          number of additional shares of Underlying Stock which the aggregate
          offering price of the total number of shares of Underlying 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 the Underlying 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 as described below. A cash
          dividend or other distribution with respect to the Underlying Stock
          shall be deemed to be an “Extraordinary Dividend” if such
          cash dividend or distribution exceeds the immediately preceding non-
          Extraordinary Dividend for the Underlying Stock by an amount equal
          to at least 10% of the Closing Price of the Underlying Stock (as adjusted
          for any subsequent corporate event requiring an adjustment hereunder,
          such as a stock split or reverse stock split) on the Trading Day preceding
          the ex-dividend date (that is, the day on and after which transactions
          in the

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	  	  	Underlying Stock on
          the primary U.S. organized securities exchange or trading system on
          which the Underlying Stock is traded or trading system no longer carry
          the right to receive that cash dividend or that cash distribution)
          for the payment of such Extraordinary Dividend (such closing price,
          the “Base
          Closing Price”). Subject
          to the following sentence, if an Extraordinary Dividend occurs with
          respect to the Underlying Stock, the Exchange Ratio with respect to
          the Underlying Stock will be adjusted on the ex- dividend date with
          respect to such Extraordinary Dividend so that the new Exchange Ratio
          shall equal the product of (i) the then current 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 Amount. If any Extraordinary
          Dividend Amount 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 “Extraordinary Dividend
          Amount” with
          respect to an Extraordinary Dividend for the Underlying Stock shall
          equal (i) in the case of cash dividends or other distributions that
          constitute regular dividends, the amount per share of such Extraordinary
    Dividend minus the amount per share of  the  immediately  preceding
    non-Extraordinary Dividend for the Underlying
          Stock or (ii) in the case of cash dividends or other distributions
          that do not constitute regular dividends, the amount per share of such
          Extraordinary Dividend. 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 the Underlying 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.

 14

 

	 	  	5. Any of the following shall
          constitute a Reorganization Event: (i) the Underlying Stock is reclassified
          or changed, including, without limitation, as a result of the issuance
          of any tracking stock by the Underlying Company, (ii) the Underlying
          Company has been subject to any merger, combination or consolidation
          and is not the surviving entity, (iii) the Underlying Company completes
          a statutory exchange of securities with another corporation (other
          than pursuant to clause (ii) above), (iv) the Underlying Company is
          liquidated, (v) the Underlying Company issues to all of its shareholders
          equity securities of an issuer other than the Underlying Company (other
          than in a transaction described in clause (ii), (iii) or (iv) above)
          (a “spinoff stock”) or (vi) the Underlying 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 the Underlying Stock receive
          any equity security listed on a national securities exchange or traded
          on NASDAQ (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 Stated
          Principal Amount of this SPARQS following the effective date for such
          Reorganization Event (or, if applicable, in the case of spinoff stock,
          the ex-dividend date for the distribution of such spinoff stock) and
          any required adjustment to the Exchange Ratio shall be determined in
          accordance with the following:

      
        (a) if the Underlying Stock continues to be outstanding,
              the Underlying 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 the Underlying Stock, the number of

      

 15

 

	 	  	
      shares of the New Stock received
              with respect to one share of Underlying Stock multiplied by the Exchange
              Ratio for Underlying 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 Underlying 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 the Underlying Stock is less than
                25% of the Closing Price of the Underlying Stock on the Trading Day
                immediately prior to the effective date of such Reorganization Event,
                a number of shares of the Underlying 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 the Underlying 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 the Underlying 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 Underlying
                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

      

    
      

 16

 

	  	  	
      
        (ii) if the Non-Stock Exchange
                  Property Value is equal to or exceeds 25% of the Closing Price of Underlying
                  Stock on the Trading Day immediately prior to the effective date relating
                  to such Reorganization Event or, if the Underlying 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 the Underlying 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 constitute 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 the Underlying Company; 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 the Underlying Company. Each
                  Reference Basket Stock shall be assigned a Basket Stock Exchange Ratio
                  equal to the number of shares of such

      

    

 17

 

	 	  	
      
        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 the Underlying 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 Stated Principal Amount of this SPARQS
          shall be the sum of:

	 	 	 (x)      	 if applicable, the Underlying 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 consideration of particular types, Exchange Property shall
          be deemed to include the amount of cash or other property delivered
          by the offeror in the tender or exchange offer (in an amount determined
          on the basis of the rate of exchange in such tender or exchange offer
          or going-private transaction). In the event of a tender or exchange
          offer or a going-private transaction with respect to Exchange Property
          in which an offeree may elect to receive cash or other property, Exchange
          Property shall be deemed to include the kind and amount of cash and
          other

 18

 

	 	  	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 “Underlying
          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 “Underlying 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 Underlying Stock shall
          be deemed to refer to the applicable unit or units of such Exchange
          Property, including any New Stock or Reference Basket Stock, unless
          the context otherwise requires. The New Stock Exchange Ratio(s) or
          Basket Stock Exchange Ratios resulting from any Reorganization Event
          described in paragraph 5 above or similar adjustment under paragraph
          4 above shall be subject to the adjustments set forth in paragraphs
          1 through 5 hereof.

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

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

 19

 

	 	  	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 the holder of this SPARQS.

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

      
        (i) a suspension, absence or material limitation
              of trading of the Underlying Stock on the primary market for the Underlying
              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 the Underlying Stock as a result
              of which the reported trading prices for the Underlying 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 the Underlying 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

      

 20

 

	 	  	
      (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 this issuance of SPARQS.

    
      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 primary
          market, (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 the Underlying 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 the Underlying Stock and (5) a suspension, absence or material limitation
          of trading on the primary securities market on which options contracts
          related to the Underlying 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 Stated 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

 21

 

	 	  	amount in cash equal to the
          lesser of (i) the product of (x) the Closing Price of the Underlying
          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 Stated 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 Stated Principal
          Amount of this SPARQS for all tax purposes as a unit consisting of
          (A) a terminable contract (the “Terminable Forward Contract”)
          that (i) requires the holder of this SPARQS (subject to the Morgan
          Stanley Call Right) to purchase, and the Issuer to sell, for an amount
          equal to $• (the “Forward
          Price”), the Underlying 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 Stated Principal Amount of this SPARQS, to secure the
          holder’s obligation to purchase the Underlying Stock pursuant
          to the Terminable Forward Contract (the “Deposit”), which
          Deposit bears a quarterly compounded yield of •% per
          annum, provided, however, that any interest payments on this SPARQS
          made to non-U.S. investors will generally be withheld upon at a rate
          of 30%.

 22

 

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

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

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

 23

 

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

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

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

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

 24

 

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

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

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

 

 25

 

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

	 DATED: 	 MORGAN STANLEY 
	 	 	 	 	 
	 	 	By:	 
	 	 	 	

	 	 	 	Name:	 
	 	 	 	Title:	Authorized Signatory 

 

  	 TRUSTEE’S CERTIFICATE

      OF AUTHENTICATION   
	 
	 This is one of the Notes referred

      to in the within-mentioned

      Senior Indenture.
	 
	 THE
            BANK OF NEW YORK, as

      Trustee 
	 	 
	 	 
	By:	 
	 	

	 	Authorized Signatory 

  

 26

 

 FORM OF REVERSE OF SECURITY

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

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

      If so indicated
    on the face hereof, this Note may be redeemed in whole or in part at the
    option of the Issuer on or after the Initial Redemption Date specified on
    the face hereof on the terms set forth on the face hereof, together with
    interest accrued and unpaid hereon to the date of redemption. If this Note
    is subject to “Annual Redemption Percentage Reduction,” the Initial
    Redemption Percentage indicated on the face hereof will be reduced on each
    anniversary of the Initial Redemption Date by the Annual Redemption Percentage
    Reduction specified on the face hereof until the redemption price of this
    Note is 100% of the principal amount hereof, together with interest accrued
    and unpaid hereon to the date of redemption. If the face hereof indicates
    that this Note is subject to “Modified Payment upon Acceleration or
    Redemption”, the amount of principal payable upon redemption will be
    limited to the aggregate principal amount hereof multiplied by the sum of
    the Issue Price specified on the face hereof (expressed as a percentage of
    the aggregate principal amount) plus the original issue discount accrued
    from the Interest Accrual Date to the date of redemption (expressed as a
    percentage of the aggregate principal amount), with the amount of original
    issue discount accrued being calculated using a constant yield method (as
    described below). Notice of redemption shall be mailed to the registered
    holders of the Notes designated for redemption at their addresses as the
    same shall appear on the Note register not less than 30 nor more than 60
    calendar days prior to the date fixed for redemption or within the Redemption
    Notice Period specified on the face hereof, subject to all the conditions
    and provisions of the Senior Indenture. In the event of redemption of this
    Note in part only, a new Note or Notes for the amount of the unredeemed portion
    hereof shall be issued in the name of the holder hereof upon the cancellation
    hereof.

 27

 

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

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

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

 28

 

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

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

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

      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

 29

 

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

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

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

 30

 

 acceleration of payment of this Note, the
    principal amount hereof shall equal the amount of principal due and payable
    with respect to this Note, calculated as set forth in clause (i) above.

      The constant
    yield shall be calculated using a 30-day month, 360-day year convention,
    a compounding period that, except for the initial period (as defined below),
    corresponds to the shortest period between Interest Payment Dates (with ratable
    accruals within a compounding period), and an assumption that the maturity
    will not be accelerated. If the period from the Original Issue Date to the
    first Interest Payment Date (the “initial period”) is shorter than
    the compounding period for this Note, a proportionate amount of the yield
    for an entire compounding period will be accrued. If the initial period is
    longer than the compounding period, then the period will be divided into
    a regular compounding period and a short period with the short period being
    treated as provided in the preceding sentence.

      If the face
    hereof indicates that this Note is subject to “Tax Redemption and Payment
    of Additional Amounts,” this Note may be redeemed, as a whole, at the
    option of the Issuer at any time prior to maturity, upon the giving of a
    notice of redemption as described below, at a redemption price equal to 100%
    of the principal amount hereof, together with accrued interest to the date
    fixed for redemption (except that if this Note is subject to “Modified
    Payment upon Acceleration or Redemption,” the amount of principal so
    payable will be limited to the aggregate principal amount hereof multiplied
    by the sum of the Issue Price specified on the face hereof (expressed as
    a percentage of the aggregate principal amount) plus the original issue discount
    accrued from the Interest Accrual Date to the date of redemption (expressed
    as a percentage of the aggregate principal amount), with the amount of original
    issue discount accrued being calculated using a constant yield method (as
    described above)), if the Issuer determines that, as a result of any change
    in or amendment to the laws (including a holding, judgment or as ordered
    by a court of competent jurisdiction), or any regulations or rulings promulgated
    thereunder, of the United States or of any political subdivision or taxing
    authority thereof or therein affecting taxation, or any change in official
    position regarding the application or interpretation of such laws, regulations
    or rulings, which change or amendment occurs, becomes effective or, in the
    case of a change in official position, is announced on or after the Initial
    Offering Date hereof, the Issuer has or will become obligated to pay Additional
    Amounts, as defined below, with respect to this Note as described below.
    Prior to the giving of any notice of redemption pursuant to this paragraph,
    the Issuer shall deliver to the Trustee (i) a certificate stating that the
    Issuer is entitled to effect such redemption and setting forth a statement
    of facts showing that the conditions precedent to the right of the Issuer
    to so redeem have occurred, and (ii) an opinion of independent legal counsel
    satisfactory to the Trustee to such effect based on such statement of facts; provided that
    no such notice of redemption shall be given earlier than 60 calendar days
    prior to the earliest date on which the Issuer would be obligated to pay
    such Additional Amounts if a payment in respect of this Note were then due.

      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.

 31

 

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

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

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

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

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

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

 32

 

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

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

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

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

      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

 33

 

 has been substituted for such Specified Currency,
    the Issuer may at its option (or shall, if so required by applicable law)
    without the consent of the holder of this Note effect the payment of principal
    of, premium, if any, or interest on any Note denominated in such Specified
    Currency in euro in lieu of such Specified Currency in conformity with legally
    applicable measures taken pursuant to, or by virtue of, the Treaty establishing
    the European Community, as amended. Any payment made under such circumstances
    in U.S. dollars or euro where the required payment is in an unavailable Specified
    Currency will not constitute an Event of Default. If such Market Exchange
    Rate is not then available to the Issuer or is not published for a particular
    Specified Currency, the Market Exchange Rate will be based on the highest
    bid quotation in The City of New York received by the Exchange Rate Agent
    at approximately 11:00 a.m., New York City time, on the second Business Day
    preceding the date of such payment from three recognized foreign exchange
    dealers (the “Exchange Dealers”)
    for the purchase by the quoting Exchange Dealer of the Specified Currency
    for U.S. dollars for settlement on the payment date, in the aggregate amount
    of the Specified Currency payable to those holders or beneficial owners of
    Notes and at which the applicable Exchange Dealer commits to execute a contract.
    One of the Exchange Dealers providing quotations may be the Exchange Rate
    Agent unless the Exchange Rate Agent is an affiliate of the Issuer. If those
    bid quotations are not available, the Exchange Rate Agent shall determine
    the market exchange rate at its sole discretion.

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

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

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

      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

 34

 

 of the Trustee or such Paying Agent with
    respect to such moneys shall thereupon cease, without, however, limiting
    in any way any obligation that the Issuer may have to pay the principal of
    or interest or premium, if any, on this Note as the same shall become due.

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

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

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

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

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

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

 35

 

 ABBREVIATIONS

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

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

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

	 	Under
        Uniform Gifts to Minors Act	 
	 
		 		
	 	  	(State)	 
	 	 	 	 
	 	 Additional
        abbreviations may also be used though not in the above list.
	 	 
	 	 	 
	 

 

36

 

  

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

 ____________________________________________

  [PLEASE INSERT SOCIAL SECURITY OR OTHER

      IDENTIFYING
NUMBER OF ASSIGNEE]

	 

	 
	 

	 
	 

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

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

 Dated: _______________________

 

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

 37

 

 OPTION TO ELECT
REPAYMENT

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

	 

	 
	 

	 
	 

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

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

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

 38FORM OF FIXED RATE SENIOR NOTE
	 	 	 
	REGISTERED 	 	REGISTERED 
	No. FXR-1 	 	U.S. $ 
		 	CUSIP: 61750V832

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

MORGAN STANLEY

SENIOR GLOBAL
MEDIUM-TERM NOTE, SERIES F

(Fixed Rate)

HIGH INCOME TRIGGER SECURITIES

% HITS DUE FEBRUARY 20, 2008

MANDATORILY EXCHANGEABLE

FOR SHARES OF COMMON
STOCK OF

APPLE INC. (the “HITS”)

	
ORIGINAL ISSUE DATE:		
INITIAL REDEMPTION

   DATE:
N/A	
INTEREST RATE:       %

   per
annum	
MATURITY DATE: See

	   “Maturity
Date” below.
	
INTEREST ACCRUAL

   DATE:	
INITIAL REDEMPTION	

   PERCENTAGE:
N/A	
INTEREST PAYMENT

   DATE(S):
See “Interest

   Payment Dates” below. 	
OPTIONAL REPAYMENT

   DATE(S):
N/A
	
SPECIFIED CURRENCY:

   U.S.
dollars	
ANNUAL REDEMPTION

   PERCENTAGE

   REDUCTION: N/A 	
INTEREST PAYMENT

   PERIOD:
Quarterly 	
APPLICABILITY OF

   MODIFIED

   PAYMENT UPON

   ACCELERATION
OR

   REDEMPTION: See

   “Alternate Exchange

   Calculation in Case of an

   Event of Default” below.
	
IF SPECIFIED

   CURRENCY OTHER

   THAN
U.S. DOLLARS,

   OPTION TO ELECT

   PAYMENT
IN U.S.

   DOLLARS: N/A 	
REDEMPTION NOTICE

   PERIOD:
N/A	
APPLICABILITY OF

   ANNUAL
INTEREST

   PAYMENTS: N/A 	
If yes, state Issue Price: N/A	
	
EXCHANGE RATE

   AGENT:
N/A	
TAX REDEMPTION AND

   PAYMENT
OF

   ADDITIONAL

   AMOUNTS:
NO	
PRICE APPLICABLE

   UPON
OPTIONAL

   REPAYMENT: N/A 	
ORIGINAL YIELD TO

   MATURITY:
N/A
	
OTHER PROVISIONS: See

   below.	
IF YES, STATE INITIAL

   OFFERING
DATE: N/A	 		 	

	
Stated Principal Amount		 		
$     
per HITS	
	 	 	 
	Underlying Company

	   Underlying Stock

	  Pricing
    Date
	 		Apple Inc. (“Apple”)

	  The common
    stock of Apple

2

	
Denominations		 		
$
and integral multiples thereof	
	 	 	 
	Initial Share Price

Trigger Level

Trigger Price

Acceleration Trigger Price

Exchange Ratio
		 		$

          %

$

$

         , which is equal to the Stated Principal Amount divided by the Initial Share Price
	
	 	 	 
	Exchange Factor
		 		             , subject to adjustment upon the occurrence of certain extraordinary dividends and corporate events affecting the Underlying Stock through and including the Determination Date, as described under
“Antidilution Adjustments” below.
	
	 	 	 
	Interest Payment Dates
		 		May 20, 2007, August 20, 2007, November 20, 2007 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 the scheduled Maturity Date, but no interest shall accrue
on this HITS or on such payment during the period from or after the scheduled Maturity Date.
	
	 	 	 
	Maturity Date
		 		February 20, 2008, subject to acceleration as described below in “Price Event Acceleration” and “Alternate Exchange Calculation in Case of an Event of Default” and subject to
extension if the Determination Date is postponed in accordance with the following paragraph.

If the Determination Date is postponed due to a Market Disruption Event or otherwise, the Maturity Date shall be postponed so that the Maturity Date shall be the second Trading Day following the Determination Date.
	
	 	 	 
	Determination Date
		 		February 15, 2008; provided that if such date is not a Trading Day or if a Market Disruption Event occurs on such day, the Determination Date
shall be the immediately succeeding Trading Day on which no Market Disruption Event occurs.
	

3

	 		 		In the event that the Determination Date and Maturity Date are postponed as described in the two immediately preceding paragraphs, the Issuer shall, or shall cause the Calculation Agent to, give notice
of such postponement and, once it has been determined, of the date to which the Maturity Date has been rescheduled, as promptly as possible, and in no case later than 10:30 a.m. on the Trading Day immediately prior to the Maturity Date (but if such
Trading Day is not a Business Day, prior to the close of business on the Business Day preceding the Maturity Date) (i) to the holder of this HITS 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 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
HITS receives the notice.
	
	 	 	 
	Record Date
		 		Notwithstanding the definition of “Record Date” on page 20 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.
	
	 	 	 
	Payment at Maturity
		 		Unless the maturity of the HITS has been accelerated, on the Maturity Date, upon delivery of this HITS to the Trustee, each Stated Principal Amount of this HITS shall be applied by the Issuer as payment
for, and the Issuer shall deliver, either:

(i) if the Trading Price of the Underlying Stock has not decreased to or below the Trigger Price at any time on any Trading Day from and including the Pricing Date to and including the Determination Date, an amount in cash
equal to the Stated Principal Amount per HITS, or
	

4

	
		 
		(ii) if the Trading Price of the Underlying Stock has decreased to or below the Trigger Price at any time on any Trading Day from and including the Pricing Date to and including the Determination Date,
a number of shares of the Underlying Stock equal to the product of the Exchange Ratio and the Exchange Factor, each determined as of the Determination Date by the Calculation Agent. See “Exchange Factor” above and “Antidilution
Adjustments” below.

The number of any shares of the Underlying Stock to be delivered at maturity shall be subject to any applicable adjustments (i) to the Exchange Factor 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 Underlying Stock as a result of any corporate event described under “Antidilution Adjustments” below, in each case, required to be made up to
the close of business on the Determination Date.

The Issuer shall, or shall cause the Calculation Agent to, provide written notice to the Trustee at its New York Office and to the Depositary, on which notice the Trustee and Depositary may conclusively rely, on or prior to
10:30 a.m. on the Trading Day immediately prior to the Maturity Date (but if such Trading Day is not a Business Day, prior to the close of business on the Business Day preceding the Maturity Date), of the amount of cash or Underlying Stock (or the
amount of Exchange Property), as applicable, to be delivered with respect to each Stated Principal Amount of this HITS and, in the event of a delivery of the Underlying Stock, of the amount of any cash to be paid in lieu of any fractional share of
the Underlying Stock (or of any other securities included in Exchange Property, if applicable); provided that, if the Maturity Date of this HITS is accelerated because of a Price Event
Acceleration (as defined below) or because of an Event of Default Acceleration (as defined in “Alternate Exchange Calculation in Case of an Event of Default” below), the Issuer shall, or shall cause the Calculation Agent to, give notice of
such acceleration and of the amount of cash or Underlying Stock (or any Exchange

	

5

	
		 
		Property) payable in connection therewith as promptly as possible and in no event later than (A) in the case of an Event of Default Acceleration, two Trading Days after the date of such acceleration
(but if such second Trading Day is not a Business Day, prior to the close of business on the Business Day preceding such second Trading Day) and (B) in the case of a Price Event Acceleration, 10:30 a.m. on the Trading Day immediately prior to the
date of acceleration (but if such Trading Day is not a Business Day, prior to the close of business on the Business Day preceding the date of acceleration), (i) to the holder of this HITS 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, and (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 HITS receives the notice. If the maturity of this HITS is accelerated in the manner described above, no interest on the amounts payable with respect to this HITS shall accrue for the period from and
after such accelerated maturity date; provided that the Issuer has deposited with the Trustee the Underlying 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 cash or shares of Underlying Stock (or any Exchange Property), as applicable, and cash in respect of interest and any fractional shares of Underlying
Stock (or any Exchange Property) and cash otherwise due upon any acceleration described above to the Trustee for delivery to the holder of this HITS. The Calculation Agent shall determine the Exchange Factor applicable at the maturity of this
HITS.

	

6

			 		If this HITS is not surrendered for exchange at maturity or upon acceleration, 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 Underlying Stock (and, if applicable, any Exchange Property) and any cash in respect of interest and any fractional shares of Underlying Stock (or any Exchange Property) and any other cash due at maturity as
described in the preceding paragraph under this heading.

References to payment “per HITS” refer to each Stated Principal Amount of this HITS.
	
	 	 	 
	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 Underlying
Stock, as determined by the Calculation Agent, and the Exchange Factor is less than the Acceleration Trigger Price, the Maturity Date of this HITS 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 this HITS shall receive per Stated Principal Amount of this HITS on the date of acceleration:

      
        (i) a number of shares of Underlying Stock equal to the product of the Exchange Ratio and the Exchange Factor, as of such date of acceleration; and

        (ii) accrued but unpaid interest to but excluding the date of acceleration plus 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 this HITS (excluding any portion of such payments of interest accrued to the date of acceleration) discounted to the date of acceleration 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

    

7

			 		
	  such remaining scheduled payment, as determined by the Calculation Agent.

    
	  The holder of this HITS shall not be entitled to receive the return of each Stated Principal Amount of this HITS upon a Price Event Acceleration.
	
	 	 	 
	No Fractional Shares
		 		Upon delivery of this HITS to the Trustee at maturity (including as a result of acceleration other than an acceleration resulting from an Event of Default), and if applicable, the Issuer shall deliver
the aggregate number of shares of Underlying Stock due with respect to this HITS, as described above, but the Issuer shall pay cash in lieu of delivering any fractional share of Underlying Stock in an amount equal to the corresponding fractional
Closing Price of such fraction of a share of Underlying Stock as determined by the Calculation Agent as of the Determination Date.
	
	 	 	 
	Closing Price
		 		The Closing Price for one share of the Underlying Stock (or one unit of any other security for which a Closing Price must be determined) on any Trading Day (as defined below) means:
	

	 		 	• 	if the Underlying Stock (or any
	    such other security)	is listed or admitted to
	    trading on a national securities exchange (other than The NASDAQ Stock Market
	    LLC (the “NASDAQ”)), the last reported sale price, regular way,
	    of the principal trading session on such day on the principal national securities
	    exchange registered under the Securities Exchange Act of 1934, as amended
	    (the “Exchange Act”), on which the Underlying Stock (or any such
	    other security) is listed or admitted to trading,
	 		 	 		 
	
	 		 	• 	if the Underlying Stock (or any such other security)	is
	    a security of the NASDAQ, the official closing price published by the NASDAQ
    on such day, or
	 		 	 		 
	
	 		 	• 	if the Underlying Stock (or any such other security)	is
	    neither listed or admitted to trading on any national securities exchange
    nor a security of the NASDAQ but is included in the OTC Bulletin

8

		 	 	Board Service (the “OTC Bulletin Board”)
        operated by the National Association of Securities Dealers, Inc., the
        last reported sale price of the principal trading session on the OTC
    Bulletin Board on such day.

		 	 
			 		If the Underlying Stock (or any such other security) is listed or admitted to trading on any national securities exchange or is a security of the NASDAQ but the last reported sale price or official closing price published by
	  NASDAQ, as applicable, is not available pursuant to the preceding sentence, then the Closing Price for one share of the Underlying Stock (or one unit of any such other security) on any Trading Day shall mean the last reported sale price of the
	  principal trading session on the over-the-counter market as reported on the NASDAQ or the OTC Bulletin Board on such day. If a Market Disruption Event (as defined below) occurs with respect to the Underlying Stock (or any such other security) or the
	  last reported sale price or the official closing price published by NASDAQ, as applicable, for the Underlying Stock (or any such other security) is not available pursuant to either of the two preceding sentences, then the Closing Price for any
	  Trading Day shall be the mean, as determined by the Calculation Agent, of the bid prices for the Underlying Stock (or any such other security) for such Trading Day obtained from as many recognized dealers in such security, but not exceeding three,
	  as shall 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
  “OTC Bulletin Board Service” shall include any successor service thereto.

	 	 	 	 
	Intraday Price
		 		The Intraday Price for one share of the Underlying Stock (or one unit of any other security for which an Intraday Price must be determined) at any time during any Trading Day (including at the close)
    means:

	 	 	 	 
	 	 	
    (i) if the Underlying Stock (or any such
      other security) is listed or admitted to trading on a national securities
      exchange (other than NASDAQ),

  

9

			 		
	  the most recently reported sale price, regular way, at such time during the principal trading session on such day on the principal national securities exchange registered under the Exchange Act on which
	    the Underlying Stock (or any such other security) is listed or admitted to trading,

	  (ii) if the Underlying Stock (or any such other security) is a security of NASDAQ, the most recently reported sale price at such time quoted by NASDAQ on such day, or

	  (iii) if the Underlying Stock (or any such other security) is not listed or admitted to trading on any national securities exchange but is included in the OTC Bulletin Board, the most recently reported sale price at such time
	    during the principal trading session on the OTC Bulletin Board on such day.

    

	 	 	 
	Trading Price
		 		Trading Price means the product of (i) the Intraday Price of one share of the Underlying Stock and (ii) the Exchange Factor, each as determined by the Calculation Agent at any time on any Trading
Day.
	
	 	 	 
	Trading Day
		 		A day, as determined by the Calculation Agent, on which trading is generally conducted on the New York Stock Exchange LLC (“NYSE”), the American Stock Exchange LLC, the NASDAQ, the Chicago
Mercantile Exchange, the Chicago Board of Options Exchange and in the over-the-counter market for equity securities in the United States and, if the principal trading market for the Underlying Stock is outside the United States, in such principal
trading market.
	
	 	 	 
	Calculation Agent
		 		Morgan Stanley & Co. Incorporated (“MS & Co.”) and its successors.

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 HITS, the
Trustee and the Issuer.

All calculations with respect to the Exchange Ratio and the Exchange Factor for this HITS shall be made
	

10

	 		 		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), and all dollar amounts paid to the holder of this HITS in the aggregate related to interest payments or the payment at maturity resulting from such calculations shall be rounded to the nearest cent with one-half cent
rounded upward.
	
	 	 	 
	Antidilution Adjustments
		 		The Exchange Factor shall be adjusted as follows:

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

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

3. If the Underlying Company issues rights or warrants to all holders of the Underlying Stock to subscribe for or purchase the Underlying Stock at an exercise price per share less than the Closing Price of the Underlying 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 HITS, then the Exchange
Factor shall be adjusted to equal the product of the prior Exchange Factor and a fraction, the numerator of which shall be
	

11

	
		 
		the number of shares of the Underlying Stock outstanding immediately prior to the issuance of such rights or warrants plus the number of additional shares of the Underlying Stock offered for
subscription or purchase pursuant to such rights or warrants and the denominator of which shall be the number of shares of the Underlying Stock outstanding immediately prior to the issuance of such rights or warrants plus the number of additional
shares of the Underlying Stock which the aggregate offering price of the total number of shares of the Underlying 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 Factor to reflect cash dividends or other distributions paid with respect to the Underlying Stock other than distributions described in paragraph 2, paragraph 3 and clauses (i),
(iv) and (v) of paragraph 5 below and Extraordinary Dividends as described below. A cash dividend or other distribution with respect to the Underlying Stock shall be deemed to be an “Extraordinary Dividend” if such cash dividend or
distribution exceeds the immediately preceding non- Extraordinary Dividend for the Underlying Stock by an amount equal to at least 10% of the Closing Price of the Underlying Stock (as adjusted for any subsequent corporate event requiring an
adjustment hereunder, such as a stock split or reverse stock split) on the Trading Day preceding the ex-dividend date (that is, the day on and after which transactions in the Underlying Stock on the primary U.S. organized securities exchange or
trading system on which the Underlying Stock is traded or trading system no longer carry the right to receive that cash dividend or that cash distribution) for the payment of such Extraordinary Dividend. If an Extraordinary Dividend occurs with
respect to the Underlying Stock, the Exchange Factor with respect to the Underlying Stock shall be adjusted on the ex-dividend date with respect

	

12

	
		 
		to such Extraordinary Dividend so that the new Exchange Factor shall equal the product of (i) the then current Exchange Factor and (ii) a fraction, the numerator of which is the Closing Price on the
Trading Day preceding the ex-dividend date, and the denominator of which is the amount by which the Closing Price on the Trading Day preceding the ex- dividend date exceeds the Extraordinary Dividend Amount. The “Extraordinary Dividend
Amount” with respect to an Extraordinary Dividend for the Underlying Stock shall equal (i) in the case of cash dividends or other distributions that constitute regular dividends, the amount per share of such Extraordinary Dividend minus the
amount per share of the immediately preceding non-Extraordinary Dividend for the Underlying Stock or (ii) in the case of cash dividends or other distributions that do not constitute regular dividends, the amount per share of such Extraordinary
Dividend. To the extent an Extraordinary Dividend is not paid in cash, the value of the non-cash component shall be determined by the Calculation Agent, whose determination shall be conclusive. A distribution on the Underlying Stock described in
clause (i), (iv) or (v) of paragraph 5 below that also constitutes an Extraordinary Dividend shall cause an adjustment to the Exchange Factor pursuant only to clause (i), (iv) or (v) of paragraph 5, as applicable.

5. If (i) there occurs any reclassification or change of the Underlying Stock, including, without limitation, as a result of the issuance of any tracking stock by the Underlying Company, (ii) the Underlying Company or any
surviving entity or subsequent surviving entity of the Underlying Company (an “Underlying Company Successor”) has been subject to a merger, combination or consolidation and is not the surviving entity, (iii) any statutory exchange of
securities of the Underlying Company or any Underlying Company Successor with another corporation occurs (other than pursuant to clause (ii) above), (iv) the Underlying Company is liquidated, (v) the Underlying Company issues to all of its
shareholders equity securities of an issuer other than the Underlying Company (other than in a transaction

	

13

	
		 
		described in clause (ii), (iii) or (iv) above) (a “Spin-off Event”) or (vi) a tender or exchange offer or going- private transaction is consummated for all the outstanding shares of the
Underlying Stock (any such event in clauses (i) through (vi), a “Reorganization Event”), the method of determining the amount payable upon exchange at maturity for each HITS shall be adjusted to provide that holders shall be entitled to
receive at maturity, in respect of the stated principal amount of each HITS either:

      
        (a) if (x) the trading price of the Underlying Stock at any time on any Trading Day from and including the Pricing Date to and including the effective date of the Reorganization Event, or (y) the Exchange Property Value (as
          defined below) at any time on any Trading Day from and including the effective date of the Reorganization Event to and including the Determination Date has not decreased to or below the Trigger Price, and amount of cash equal to the stated principal
          amount of each HITS, or

        (b) if (x) the trading price of the Underlying Stock at any time on any Trading Day from and including the Pricing Date to and including the effective date of the Reorganization Event, or (y) the Exchange Property Value (as
          defined below) at any time on any Trading Day from and including the effective date of the Reorganization Event to and including the Determination Date has decreased to or below the Trigger Price, securities, cash or any other assets distributed to
          holders of the Underlying Stock in or as a result of any such Reorganization Event, including (A) in the case of the issuance of tracking stock, the reclassified share of the Underlying Stock, (B) in the case of a Spin-off Event, the share of the
          Underlying Stock with respect to which the spun-off security was issued, and (C) in the case of any other Reorganization Event where the Underlying Stock continues to be held by the holders receiving such distribution, the Underlying Stock
          (collectively, the “Exchange Property”), in an amount equal to the amount of Exchange Property delivered with respect to a

    

14

	
		 
		
	  number of shares of the Underlying Stock equal to the Exchange Ratio times the Exchange Factor each determined at the time of the Reorganization Event.

	  

	  If Exchange Property consists of more than one type of property, the Issuer shall deliver to the Depositary, as holder of the HITS, at maturity a pro rata share of each such type of Exchange Property. If Exchange Property
includes a cash component, holders shall not receive any interest accrued on such cash component. In the event Exchange Property consists of securities, such securities shall, in turn, be subject to the antidilution adjustments set forth in
paragraphs 1 through 5.

For purposes of determining whether or not the Exchange Property Value has decreased to or below the Trigger Level at any time on any Trading Day from and including the time of the Reorganization Event to and including the
Determination Date, “Exchange Property Value” means (i) for any cash received in any Reorganization Event, the value, as determined by the Calculation Agent, as of the date of receipt, of such cash received for one share of the Underlying
Stock, as adjusted by the Exchange Factor as the time of such Reorganization Event, (ii) for any property other than cash or securities received in any such Reorganization Event, the market value, as determined by the Calculation Agent in its sole
discretion, as of the date of receipt, of such Exchange Property received for one share of the Underlying Stock, as adjusted by the Exchange Factor at the time of such Reorganization Event and (iii) for any security received in any such
Reorganization Event, an amount equal to the Intraday Price, as of the time at which the Exchange Property Value is determined, per share of such security multiplied by the quantity of such security received for each share of the Underlying Stock,
as adjusted by the Exchange Factor at the time of such Reorganization Event.

For purposes of paragraph 5 above, in the case of a consummated tender or exchange offer or going-
	

15

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

Following the occurrence of any Reorganization Event referred to in paragraph 5 above, (i) references to the “Underlying Stock” under “No Fractional Shares,” “Price Event Acceleration” and
“Alternate Exchange Calculation in Case of an Event of Default” shall be deemed to also refer to any other security received by holders of the Underlying Stock in any such Reorganization Event, and (ii) all other references in this HITS to
“Underlying Stock” shall be deemed to refer to the Exchange Property into which this HITS is thereafter exchangeable and references to a “share” or “shares” of the Underlying Stock shall be deemed to refer to the
applicable unit or units of such Exchange Property, unless the context otherwise requires.

No adjustment to the Exchange Factor shall be required unless such adjustment would require a change of at least 0.1% in the Exchange Factor then in effect. The Exchange Factor resulting from any of the adjustments specified
above shall be rounded to the nearest one hundred-thousandth, with five one- millionths rounded upward. Adjustments to the Exchange Factor shall be made up to the close of business on the Determination Date.

No adjustments to the Exchange Factor or method of calculating the Exchange Factor shall be required other than as specified above.

	

16

			 		The Calculation Agent shall be solely responsible for the determination and calculation of any adjustments to the Exchange Factor or method of calculating the Exchange Factor 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 Factor or to the method of calculating the amount payable at maturity of this HITS made pursuant to paragraph 5 above upon written request by
any holder of this HITS.
	
	 	 	 
	Market Disruption Event
		 		Market Disruption Event means, with respect to the Underlying Stock:
	

	
		 
		
	  (i) a suspension, absence or material limitation of trading of the Underlying Stock on the primary market for the Underlying 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 the Underlying Stock as a result of which the reported trading prices for the
	    Underlying 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 the Underlying 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

    

17

			 		
	  the Issuer or any of its affiliates to unwind or adjust all or a material portion of the hedge with respect to the HITS.

	  
	  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 the Underlying 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 the Underlying Stock and (5) a suspension, absence or material limitation of trading on the primary securities market on which options contracts related to the Underlying 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 HITS shall have occurred and be continuing, the amount declared due and payable per each Stated Principal Amount of this HITS upon any acceleration of
this HITS (an “Event of Default Acceleration”) shall be determined by the Calculation Agent and shall be an amount in cash equal to either (i) the Stated Principal
	

18

	 		 		Amount of this HITS plus accrued but unpaid interest to but excluding the date of such acceleration or (ii) if the Trading Price of the Underlying Stock has decreased to or below the Trigger Price at
any time on any Trading Day from and including the Pricing Date to and including the date of such acceleration, (x) the value, as determined based on the Closing Price of the Underlying Stock on the date of such acceleration, of a number of shares
of the Underlying Stock at the Exchange Ratio multiplied by the Exchange Factor as of the date of acceleration and (y) accrued but unpaid interest to but excluding the date of such acceleration.
	
	 	 	 
	Treatment of HITS for 

	    United States Federal

	    Income
	      Tax Purposes

	 		

	  

	  The Issuer, by its sale of this HITS, and the holder of this HITS (and any successor holder of, or holder of a beneficial interest in, this HITS), by its respective purchase hereof, agree (in the
absence of an administrative determination or judicial ruling to the contrary) to characterize each Stated Principal Amount of this HITS for all tax purposes as a unit consisting of (i) an option (the “Option”) granted by the holder to
enter into a forward contract (the “Forward Contract”), pursuant to which Forward Contract the holder of this HITS will be required to purchase from us the Underlying Stock, for an amount equal to the Stated Principal Amount (the
“Forward Price”) at maturity or, alternatively, upon an earlier redemption of this HITS and (ii) a deposit with the Issuer of a fixed amount of cash, equal to the issue price per each Stated Principal Amount of this HITS, to secure the
holder’s obligation to purchase the Underlying Stock pursuant to the Forward Contract (the “Deposit”). The Issuer has determined that the Deposit bears a quarterly compounded yield of  •% per annum, and the remainder of the interest payments on this HITS (•% per annum) is attributable to premiums on the Option.
	

19

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

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

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

20

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

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

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

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

21

date from three recognized foreign exchange dealers (one of which may be the Exchange Rate Agent unless such Exchange Rate Agent is an affiliate of the Issuer) for the purchase by the quoting dealer of the Specified Currency for
U.S. dollars for settlement on such payment date in the amount of the Specified Currency payable in the absence of such an election to such holder and at which the applicable dealer commits to execute a contract. If such bid quotations are not
available, such payment will be made in the Specified Currency. All currency exchange costs will be borne by the holder of this Note by deductions from such payments.

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

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

22

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

	DATED: 	MORGAN STANLEY 
	 	 	 	 
	 	By:	 	 
	 	 	

	 	 	Name:	 
	 	 	Title:	 

TRUSTEE’S CERTIFICATE 

    OF AUTHENTICATION

This is one of the Notes referred 

    to in the within-mentioned 

    Senior Indenture.

THE BANK OF NEW YORK, as

    Trustee

 

	By:	 
	 	

	 	Authorized Signatory

23

FORM OF REVERSE OF SECURITY

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

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

     If so indicated on the face hereof, this Note may be redeemed in whole or in part at the option of the Issuer on or after the Initial Redemption Date specified on the face hereof on the terms set
forth on the face hereof, together with interest accrued and unpaid hereon to the date of redemption. If this Note is subject to “Annual Redemption Percentage Reduction,” the Initial Redemption Percentage indicated on the face hereof will
be reduced on each anniversary of the Initial Redemption Date by the Annual Redemption Percentage Reduction specified on the face hereof until the redemption price of this Note is 100% of the principal amount hereof, together with interest accrued
and unpaid hereon to the date of redemption. If the face hereof indicates that this Note is subject to “Modified Payment upon Acceleration or Redemption”, the amount of principal payable upon redemption will be limited to the aggregate
principal amount hereof multiplied by the sum of the Issue Price specified on the face hereof (expressed as a percentage of the aggregate principal amount) plus the original issue discount accrued from the Interest Accrual Date to the date of
redemption (expressed as a percentage of the aggregate principal amount), with the amount of original issue discount accrued being calculated using a constant yield method (as described below).  Notice of redemption shall be mailed to the registered
holders of the Notes designated for redemption at their addresses as the same shall appear on the Note register not less than 30 nor more than 60 calendar days prior to the date fixed for redemption or within the Redemption Notice Period specified
on the face hereof, subject to all the conditions and provisions of the Senior Indenture. In the event of redemption of this Note in

24

part only, a new Note or Notes for the amount of the unredeemed portion hereof shall be issued in the name of the holder hereof upon the cancellation hereof.

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

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

     In the case where the Interest Payment Date or the Maturity Date (or any redemption or repayment date) does not fall on a Business Day, payment of interest, premium, if any, or

25

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

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

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

     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

26

to cover any tax or other governmental charge in connection therewith. All Notes surrendered for exchange shall be accompanied by a written instrument of transfer in form satisfactory to the Issuer and the Trustee and executed by
the registered holder in person or by the holder’s attorney duly authorized in writing. The date of registration of any Note delivered upon any exchange or transfer of Notes shall be such that no gain or loss of interest results from such
exchange or transfer.

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

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

27

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

     The constant yield shall be calculated using a 30-day month, 360-day year convention, a compounding period that, except for the initial period (as defined below), corresponds to the shortest period
between Interest Payment Dates (with ratable accruals within a compounding period), and an assumption that the maturity will not be accelerated. If the period from the Original Issue Date to the first Interest Payment Date (the “initial
period”) is shorter than the compounding period for this Note, a proportionate amount of the yield for an entire compounding period will be accrued. If the initial period is longer than the compounding period, then the period will be divided
into a regular compounding period and a short period with the short period being treated as provided in the preceding sentence.

     If the face hereof indicates that this Note is subject to “Tax Redemption and Payment of Additional Amounts,” this Note may be redeemed, as a whole, at the option of the Issuer at any time
prior to maturity, upon the giving of a notice of redemption as described below, at a redemption price equal to 100% of the principal amount hereof, together with accrued interest to the date fixed for redemption (except that if this Note is subject
to “Modified Payment upon Acceleration or Redemption,” the amount of principal so payable will be limited to the aggregate principal amount hereof multiplied by the sum of the Issue Price specified on the face hereof (expressed as a
percentage of the aggregate principal amount) plus the original issue discount accrued from the Interest Accrual Date to the date of redemption (expressed as a percentage of the aggregate principal amount), with the amount of original issue discount
accrued being calculated using a constant yield method (as described above)), if the Issuer determines that, as a result of any change in or amendment to the laws (including a holding, judgment or as ordered by a court of competent jurisdiction), or
any regulations or rulings promulgated thereunder, of the United States or of any political subdivision or taxing authority thereof or therein affecting taxation, or any change in official position regarding the application or interpretation of such
laws, regulations or rulings, which change or amendment occurs, becomes effective or, in the case of a change in official position, is announced on or after the Initial Offering Date hereof, the Issuer has or will become obligated to pay Additional
Amounts, as defined below, with respect 

28

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 U.S. Alien as may be necessary in order that every net payment of the principal of and
interest on this Note and any other amounts payable on this Note, after withholding or deduction for or on account of any present or future tax, assessment or governmental charge imposed upon or as a result of such payment by the United States, or
any political subdivision or taxing authority thereof or therein, will not be less than the amount provided for in this Note to be then due and payable. The Issuer will not, however, make any payment of Additional Amounts to any such holder who is a
U.S. Alien for or on account of:

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

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

     (c) any tax, assessment or other governmental charge imposed by reason of such holder’s past or present status as a controlled foreign corporation or passive foreign investment company with
respect to the United States or as a corporation which accumulates earnings to

29

avoid U.S. federal income tax or as a private foundation or other tax-exempt organization or a bank receiving interest under Section 881(c)(3)(A) of the Internal Revenue Code of 1986, as amended;

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

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

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

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

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

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

     The Senior Indenture permits the Issuer and the Trustee, with the consent of the holders of not less than a majority in aggregate principal amount of the debt securities of all series issued under the
Senior Indenture then outstanding and affected (voting as one class), to execute supplemental indentures adding any provisions to or changing in any manner the rights of the holders of each series so affected; provided that the Issuer and the Trustee may not, without the

30

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

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

31

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

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

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

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

     Prior to due presentment of this Note for registration of transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the holder in whose name this Note is 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

32

incorporator, shareholder, officer or director, as such, past, present or future, of the Issuer or of any successor corporation, either directly or through the Issuer or any successor corporation, whether by virtue of any
constitution, statute or rule of law or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released.

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

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

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

33

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.

	 	 	 	 
	 	 	 
	 
				

34

      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.

35

OPTION TO ELECT REPAYMENT

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

 

	 

	 
	 

	 
	 

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

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

Dated:
________________________

	 	 	 
	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.

36

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