Document:

FORM OF FIXED RATE SENIOR NOTE

	
      REGISTERED          	    	
      REGISTERED          
	
      No. FXR-1   	    	
      U.S. $          
	  	    	
      CUSIP: 61750V329    

       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”)

  % SPARQS® DUE MAY 20, 2008

  MANDATORILY EXCHANGEABLE

  FOR SHARES OF COMMON STOCK OF

DEERE & COMPANY

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

	INTEREST
    ACCRUAL DATE:
	INITIAL REDEMPTION
        PERCENTAGE: See “Morgan Stanley Call Right” and “Call
    Price” below.
	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: At least 10 days but no more than 30 days. See “Morgan
    Stanley 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 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

Underlying Company 
   	      	$

Deere & Company (“DE”) 
 
	 	 	 
	Underlying Stock	 	The common stock of DE

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	Pricing Date	 	 
	 	 	 
	Issue Price	 	$          per
    SPARQS
	 	 	 
	Denominations	 	$          and
    integral multiples thereof
	 	 	 
	Acceleration Trigger Price
      	      	The product of $2.00
              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

          November 20, 2007

May 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 is the tenth calendar day following the Final Call Notice Date. See “Final Call Notice Date” below.

In the event that the Final Call Notice Date is
    postponed because it is not a Trading Day or due to a Market Disruption Event
    or otherwise, the Issuer shall give notice of such postponement as promptly
    as possible, and in no case later than two Business Days following the scheduled
    Final Call Notice Date, (i) to the holder of this SPARQS by mailing notice
    of such postponement by first class mail, postage prepaid, to the holder’s last address as it shall appear upon
the registry books, (ii) to the Trustee by telephone or facsimile confirmed by mailing such notice to the Trustee by first class mail, postage prepaid, at its New York office and (iii) to The Depository Trust Company (the “Depositary”)
by telephone or facsimile confirmed by mailing such notice to the Depositary
by first class mail, postage prepaid. Any notice that is mailed in the manner
herein provided shall be conclusively
        

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	     	      	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
  	      	August 20, 2007, November 20, 2007, February 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 shall 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 23 hereof, the Record Date for each
              Interest Payment Date, including the Interest Payment Date scheduled to
              occur on the Maturity Date, shall be the date 5 calendar days prior to
              such scheduled Interest Payment Date, whether or not that date is a Business
              Day; provided, however,
              that in the event that the Issuer exercises the Morgan Stanley Call Right,
              no Interest Payment Date shall occur after the Morgan Stanley Notice Date,
              except for any Interest Payment Date for which the Morgan Stanley Notice
              Date falls on or after the “ex-interest” date for the
related interest payment, in which case the related interest payment shall be
              made on such Interest Payment Date; and provided, further, that
              accrued but unpaid interest payable on the Call Date, if any, shall be
              payable to the person to whom the Call Price is payable. The “ex- interest” date
              for any interest payment is the date on which purchase transactions in
              the SPARQS no longer carry the right to receive such interest payment.

In the event that the Issuer exercises the Morgan
    Stanley Call Right and the Morgan Stanley Notice Date falls before the “ex-interest” date
    for an interest payment, so that as a result a scheduled Interest Payment
    Date does not occur, the Issuer shall cause the Calculation Agent to give
    notice to the Trustee and to the Depositary, in each case in the manner and
    at the time described in the second and third paragraphs
 

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	     	      	under “Morgan Stanley Call Right” below,
              that no Interest Payment Date shall 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 of such Call Price, (vi) that such delivery shall be made upon
    presentation and surrender of this SPARQS, (vii) that such exchange is pursuant
    to the Morgan Stanley
    

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	  	      	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
  	      	May 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
shall 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 (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.
    

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	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 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

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	  	      	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.

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
 

  8

	  	      	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 acceleration. The present value of each remaining scheduled
      payment shall be based on the comparable yield that the Issuer would
      pay on a

  

  9

		 	
    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 Event Acceleration.

	     
	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 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 not listed or admitted
        to trading on any national securities
        exchange but is included in the OTCBulletin
        Board Service (the “OTC Bulletin Board”)operated
          by the National Association of SecuritiesDealers, Inc., the last reported
          sale price of the
    

  10

		 	
    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 but the last reported sale price or the 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 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 and, if the principal trading market of 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 calculations with respect to the Exchange Ratio and Call Price for the SPARQS shall be made by the
        

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	  	      	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.
     
	     
	     	      	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
       

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	  	      	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 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
  

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	  	      	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 shall 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.

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
   

  14

	  	      	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
      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

  

  15

		 	
    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

          

        

		 	 
	  	      	
          
            (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

          

        

  16

	     	      	
          
            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 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

          

        

  17

		 	
    
      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 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
        

  18

	  	      	“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 shall be rounded to the nearest one hundred- thousandth, with five one-millionths rounded upward. Adjustments to the Exchange Ratios shall be made up to
the close of business on the third Trading Day prior to the scheduled Maturity Date.

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

The Calculation Agent shall be solely responsible for the determination and calculation of any adjustments to the Exchange Ratio, any New Stock Exchange Ratio or
     

  19

	  	      	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

          (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.

    

  20

	     	      	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 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
    

  21

	     	      	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.
   

  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 FLOATING RATE SENIOR NOTE 

	REGISTERED 

    No. FLR-1
     	      	REGISTERED

          U.S. $ 

          CUSIP:
        61750V337
 

       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 NOTES, SERIES F

  (Floating Rate)

  PROTECTED ABSOLUTE RETURN BARRIER NOTE DUE OCTOBER 20, 2008

  BASED ON THE VALUE OF THE PHLX HOUSING SECTORSM INDEX 

	BASE RATE: None 	ORIGINAL ISSUE DATE: 	MATURITY
          DATE: See “Maturity Date”
    below. 

	INDEX MATURITY: N/A	INTEREST ACCRUAL DATE:
    N/A 	INTEREST PAYMENT DATE(S):
    N/A 
	SPREAD (PLUS OR MINUS):
    N/A 	INITIAL INTEREST RATE:
    N/A 	INTEREST PAYMENT PERIOD:
    N/A 
	SPREAD MULTIPLIER:
    N/A	INITIAL INTEREST RESET
    DATE: N/A	INTEREST RESET PERIOD:
    N/A 
	REPORTING SERVICE:
    N/A 	MAXIMUM INTEREST RATE:
    N/A 	INTEREST RESET DATE(S):
    N/A
	INDEX CURRENCY: N/A	MINIMUM INTEREST RATE:
    N/A 	CALCULATION
    AGENT: See “Calculation Agent” below. 

	EXCHANGE RATE AGENT:
    N/A
	INITIAL REDEMPTION
    DATE: N/A
	SPECIFIED CURRENCY:
    U.S. dollars 
	APPLICABILITY OF MODIFIED
        PAYMENT UPON ACCELERATION: See “Alternate Exchange Calculation in Case
    of an Event of Default” below. 
	INITIAL REDEMPTION
    PERCENTAGE: N/A 
	IF SPECIFIED CURRENCY
        OTHER THAN U.S. DOLLARS, OPTION TO ELECT
    PAYMENT IN U.S. DOLLARS: N/A 

	 	ANNUAL REDEMPTION PERCENTAGE
    REDUCTION: N/A
	DESIGNATED CMT TELERATE
    PAGE: N/A 
	 	OPTIONAL REPAYMENT
    DATE(S): N/A 	DESIGNATED CMT MATURITY
    INDEX: N/A 
	 	REDEMPTION NOTICE PERIOD: N/A	 
	 	TAX REDEMPTION AND PAYMENT OF
    ADDITIONAL AMOUNTS: No
	 
	 	IF YES, STATE INITIAL OFFERING
    DATE: N/A 	OTHER PROVISIONS: See below. 

	Maturity Date
   	      	October 20, 2008, subject to extension if the Index Valuation Date is postponed in accordance with the definition thereof. If the Index Valuation Date is postponed so that it falls less than two
scheduled Business Days prior to the scheduled Maturity Date,
        

  2 

	  	      	the Maturity Date shall
              be the second scheduled Business Day following the Index Valuation Date
              postponed.

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

	     
	Observation Period
      	      	The period of regular trading hours on each Business Day on which there is no Market Disruption Event with respect to the Index, beginning on, including, the Index Business Day following Pricing Date
and ending on, and including, the Valuation Date.
    
	     
	Pricing Date	 	 
	 	 	 
	Authorized Denominations

Stated Principal Amount

Index
 	      	$10 and integral
              multiples thereof.

$10

PHLX Housing SectorSM Index
      

  3

	Payment at Maturity
     	      	At maturity, upon delivery
              of this Note to the Trustee, the Issuer shall pay with respect to the
              Stated Principal Amount an amount in cash equal to $10 plus the Supplemental
              Redemption Amount, if any, as determined by the Calculation Agent.

The Payment at Maturity per Stated Principal Amount
    shall not be less than the Stated Principal Amount of $10.

The Issuer shall, or shall cause the Calculation Agent to, (i) provide written notice to the Trustee and to the Depositary, on which notice the Trustee and the Depositary may conclusively rely, of the amount of cash to be
delivered with respect to the Stated Principal Amount, on or prior to 10:30 a.m. on the Business Day preceding the Maturity Date, and (ii) deliver the aggregate cash amount due with respect to this Note to the Trustee for delivery to the holder of
this Note, on the Maturity Date.
     
	     
	Supplemental Redemption Amount
  	      	The Supplemental Redemption Amount with respect to the Stated Principal Amount shall equal:
   

		 	
        
        if at
            all times during the Observation Period
            the Index Value is within the Index Range, $10 times the Absolute
    Index Return; or

		 	 
		 	
        
        if at
            any time on any day during the Observation
    Period the Index Value is outside the Index Range, $0.

		 	 
		 	
        
        The Supplemental Redemption
          Amount shall not be less than $0.
        

	 	 	The Calculation Agent shall calculate
    the Supplemental Redemption Amount on the Index Valuation Date.
	 	 	 
	Index Value
     	      	The Index Value at any time on
              any day during the Observation Period shall equal the value of the Index
              published at such time on such day on Bloomberg page “HGX” or
              any successor page, or in the case of any Successor Index (as defined
    below), the Bloomberg page or successor page for any such Successor Index.
       

  4

	Index Range	 	The Index Range includes any
        value of the Index that is: (i) greater than or equal to the Initial
    Index Value times and
	 	 	 
	 	 	(ii) less than or equal to the
    Initial Index Value times
	 	 	 	 
	 	 	The Index Range can also be expressed
    as follows: 
	 	 	 	 
	 	 	Index Range =
	 	 	 	 
	 	 	≥ 	(Initial Index Value x          );
          and 
	 	 	 	 
	 	 	≥ 	(Initial Index Value x          )

	 	 	 
	Absolute Index Return	 	The Absolute Index Return is the
    absolute value of the following formula:
	 	 	 
	 	 	Final Index Value Initial Index Value

    Initial Index Value

	 	 	 
	Initial Index Value

Index Closing Value
   	      	 

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

	     
	Final Index Value
       	      	The Index Closing Value on the Index Valuation Date as determined by the Calculation Agent.
   
	     
	Index Valuation Date
    	      	The Index Valuation Date shall be October 16, 2008, subject to adjustment for Market Disruption Events as described in the following paragraph.

If a Market Disruption Event with respect to the Index occurs on the scheduled Index Valuation Date, or if such Index Valuation Date is not an Index Business Day, the Index Closing Level on such date shall be
      

5

	     	      	determined on the immediately succeeding Index Business Day on which no Market Disruption Event shall have occurred; provided that the Final
Index Value shall not be determined on a date later than the fifth scheduled Index Business Day after the scheduled Index Valuation Date, and if such date is not an Index Business Day or if there is a Market Disruption Event on such date, the
Calculation Agent shall determine the Final Index Value on such date in accordance with the formula for calculating the Index last in effect prior to the commencement of the Market Disruption Event (or prior to the non-Index Business Day), without
rebalancing or substitution, using the closing price (or, if trading in the relevant securities has been materially suspended or materially limited, its good faith estimate of the closing price that would have prevailed but for such suspension,
limitation or non-Index Business Day) on such date of each security most recently constituting the Index.
     
	     
	Index Business Day
      	      	Index Business Day means a day, for the Index, as determined by the Calculation Agent, on which trading is generally conducted on each of the Relevant Exchange(s) for the Index, and on each exchange on
which futures or options contracts related to the Index (or Successor Index) are traded, other than a day on which trading on such exchange(s) is scheduled to close prior to the time of the posting of its regular final weekday closing
price.
       
	     
	Calculation Agent
       	      	Morgan Stanley & Co.
              Incorporated and its successors (“MS & Co.”)

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

All calculations with respect to the Payment at Maturity shall be rounded to the nearest one hundred- thousandth, with five one-millionths rounded upward (e.g., .876545
would be rounded to .87655); all dollar amounts related to determination of the amount of cash payable per Stated Principal Amount shall be rounded to the nearest ten-thousandth, with five one hundred-
     

  6

	 	 	thousandths rounded
          upward (e.g.,
          .76545 would be rounded up to .7655); and all dollar amounts paid on
          the aggregate principal amount of this Note shall be rounded to the
          nearest cent, with one-half cent rounded upward.

	 
	Market Disruption Event
	 	Market Disruption
          Event means, with respect to the Index:

        (i) the occurrence or existence of a suspension,
            absence or material limitation of trading of stocks then constituting
            20 percent or more of the level of the Index (or the Successor Index)
            on the Relevant Exchanges for such securities for more than two hours
            of trading or during the one-half hour period preceding the close
            of the principal trading session on such Relevant Exchange; or a
            breakdown or failure in the price and trade reporting systems of
            any Relevant Exchange as a result of which the reported trading prices
            for stocks then constituting 20 percent or more of the level of the
            Index (or the Successor Index) during the last one-half hour preceding
            the close of the principal trading session on such Relevant Exchange
            are materially inaccurate; or the suspension, material limitation
            or absence of trading on any major U.S. securities market for trading
            in futures or options contracts or exchange traded funds related
            to the Index (or the Successor Index) for more than two hours of
            trading or during the one-half hour period preceding the close of
            the principal trading session on such market, in each case as determined
            by the Calculation Agent in its sole discretion; and

      (ii) a determination by the Calculation
          Agent in its sole discretion that any event described in clause (i)
          above materially interfered with the Issuer s ability or the ability
          of any of the Issuer s affiliates to unwind or adjust all or a material
          portion of the hedge position with respect to the Protected Absolute
          Return Barrier Note Due October 20, 2008 Based on the Value of the
          PHLX Housing SectorSM Index.

      For the purpose of determining whether a
          Market Disruption Event exists at any time, if trading in a security
          included in the Index is materially suspended or materially limited
          at that time, then the relevant

 7

  

		 	percentage contribution
          of that security to the level of the Index shall be based on a comparison
          of (x) the portion of the value of the Index attributable to that security
          relative to (y) the overall value of the Index, in each case immediately
          before that suspension or limitation.

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

	 
	Relevant Exchange
	 	Relevant Exchange
          means, with respect to the Index or any Successor Index (as defined
          below), the primary exchange or market of trading for (i) any security
          then

 8

	 	 	included in the Index,
          or any Successor Index, and (ii) any futures or options contracts related
          to the Index, or any Successor Index, or to any security then included
          in the Index, or any Successor Index.

	 
	Alternate Exchange Calculation	 	 
	   in Case of
          an Event of Default
	 	In case an event of
          default with respect to this Note shall have occurred and be continuing,
          the amount declared due and payable per Stated Principal Amount upon
          any acceleration of this Note (the
      “Acceleration Amount”) shall be equal to $10 plus the Supplemental
      Redemption Amount, if any, determined as though the Observation Period
      ended at 4:00 p.m. on the date of acceleration and using the Index Closing
      Value on the date of such acceleration as the Final Index Value.

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

	 
	Discontinuance of the Index;	 	 
	   Alteration
          of Method of Calculation
	 	If Philadelphia Stock
          Exchange, Inc. (“PHLX”) discontinues publication of the Index
          and PHLX or another entity (including MS & Co.) publishes a successor
          or substitute index that MS &
      Co., as the Calculation Agent, determines, in its sole discretion, to be
      comparable to the discontinued Index (such index being referred to herein
      as a “Successor Index”), then any subsequent Index Closing Value
      shall be determined by reference to the published value of such Successor
      Index at the regular weekday close of trading on the Index Business Day
      that any Index Closing Value is to be determined.

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

 9

		 	If PHLX discontinues
          publication of the Index prior to, and such discontinuance is continuing
          on, the Index Valuation Date, any Index Business Day (on which determination
          need be made as to whether the Index Value is outside of the Index
          Range) or the date of acceleration and MS & Co., as the Calculation
          Agent, determines, in its sole discretion, that no Successor Index
          is available at such time, then the Calculation Agent shall determine
          the Index Closing Value for such date. Following any such determination,
          the Calculation Agent shall not compute the Index Value on any Index
          Business Day and shall instead rely on the Index Closing Value as computed
          by the Calculation Agent for the purpose of determining whether the
          Index Value is outside the Index Range. The Index Closing Value shall
          be computed by the Calculation Agent in accordance with the formula
          for calculating the Index last in effect prior to such discontinuance,
          using the closing price (or, if trading in the relevant securities
          has been materially suspended or materially limited, its good faith
          estimate of the closing price that would have prevailed but for such
          suspension or limitation) at the close of the principal trading session
          of the Relevant Exchange on such date of each security most recently
          constituting the Index without any rebalancing or substitution of such
          securities following such discontinuance.

        If at any time the method of calculating
            the Index or a Successor Index, or the value thereof, is changed
            in a material respect, or if the Index or a Successor Index is in
            any other way modified so that such index does not, in the opinion
            of MS & Co., as the Calculation Agent, fairly represent the value
            of the Index or such Successor Index had such changes or modifications
            not been made, then, from and after such time, the Calculation Agent
            shall, at the close of business in New York City on each date or
            during such day on which the Index Closing Value or Index Value,
            respectively, is to be determined, make such calculations and adjustments
            as, in the good faith judgment of the Calculation Agent, may be necessary
            in order to arrive at a value of a stock index comparable to the
            Index or such Successor Index, as the case may be, as if such changes
            or modifications

 10

	 	 	had not been made,
          and the Calculation Agent shall calculate the Final Index Value or
          Index Values with reference to the Index or such Successor Index, as
          adjusted. Accordingly, if the method of calculating the Index or a
          Successor Index is modified so that the value of such index is a fraction
          of what it would have been if it had not been modified (e.g.,
          due to a split in the index), then the Calculation Agent shall adjust
          such index in order to arrive at a value of the Index or such Successor
          Index as if it had not been modified (e.g., as if such split
          had not occurred).

 11

      Morgan
      Stanley, a Delaware corporation (together with its successors and assigns,
      the “Issuer”), for value received, hereby promises to
      pay to CEDE & CO., or registered assignees, the amount of cash, as
      determined in accordance with the provisions set forth under “Payment
      at Maturity” above, due with respect to the principal sum of U.S. $           (UNITED
      STATES DOLLARS                )
      on the Maturity Date specified above (except to the extent redeemed or
      repaid prior to the maturity) and to pay interest thereon from and including
      the Interest Accrual Date specified above at a rate per annum equal to
      the Initial Interest Rate specified above or determined in accordance with
      the provisions specified on the reverse hereof until the Initial Interest
      Reset Date specified above, and thereafter at a rate per annum determined
      in accordance with the provisions specified on the reverse hereof until
      the principal hereof is paid or duly made available for payment. Unless
      such rate is otherwise specified on the face hereof, the Calculation Agent
      shall determine the Initial Interest Rate for this Note in accordance with
      the provisions specified on the reverse hereof. The Issuer will pay interest
      in arrears weekly, monthly, quarterly, semiannually or annually as specified
      above as the Interest Payment Period on each Interest Payment Date (as
      specified above), commencing with the first Interest Payment Date next
      succeeding the Interest Accrual Date specified above, and on the Maturity
      Date (or 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 an Interest Payment Date (other than the Maturity Date or redemption
      or repayment date) would fall on a day that is not a Business Day, as defined
      on the reverse hereof, such Interest Payment Date shall be the following
      day that is a Business Day, except that if the Base Rate specified above
      is LIBOR or EURIBOR and such next Business Day falls in the next calendar
      month, such Interest Payment Date shall be the immediately preceding day
      that is a Business Day; and provided, further, that if the
      Maturity Date or redemption or repayment date would fall on a day that
      is not a Business Day, such payment shall be made on the following day
      that is a Business Day and no interest shall accrue for the period from
      and after such Maturity Date or redemption or repayment date.

      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) (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.

      Payment
      of the principal of and premium, if any, and interest on this Note 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 

 12

 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 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
      principal, premium, if any, and interest 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 

 13

 11:00 a.m., New York City time,
    on the second Business Day preceding the applicable payment date from three
    recognized foreign exchange dealers (one of which may be the Exchange Rate
    Agent unless such Exchange Rate Agent is an affiliate of the Issuer) for
    the purchase by the quoting dealer of the Specified Currency for U.S. dollars
    for settlement on such payment date in the amount of the Specified Currency
    payable in the absence of such an election to such holder and at which the
    applicable dealer commits to execute a contract. If such bid quotations are
    not available, such payment will be made in the Specified Currency. All currency
    exchange costs will be borne by the holder of this Note by deductions from
    such payments.

      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.

 14

      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 

 

  15

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
      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, at its corporate trust office in The City of New York as
  the paying agent (the
  “Paying Agent,” which term includes any additional or successor
  Paying Agent appointed by the Issuer) with respect to the Notes. The terms
  of individual Notes may vary with respect to interest rates, interest rate
  formulas, issue dates, maturity dates, or otherwise, all as provided in the
  Senior Indenture. To the extent not inconsistent herewith, the terms of the
  Senior Indenture are hereby incorporated by reference herein.

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

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

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

 16

 together with interest accrued and
    unpaid hereon to the date of repayment. 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.

      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, 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.

 17

      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;

 18

      (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.

      This
      Note will bear interest at the rate determined in accordance with the applicable
      provisions below by reference to the Base Rate shown on the face hereof
      based on the Index Maturity, if any, shown on the face hereof (i) plus
      or minus the Spread, if any, and/or (ii) multiplied by the Spread Multiplier,
      if any, specified on the face hereof. Commencing with the Initial Interest
      Reset Date specified on the face hereof, the rate at which interest on
      this Note is payable shall be reset as of each Interest Reset Date specified
      on the face hereof (as used herein, the term “Interest Reset Date” shall
      include the Initial Interest Reset Date). For the purpose of determining
      the Initial Interest Rate, references in this paragraph, the next succeeding
      paragraph and, if applicable, clauses (i) and (ii) under “Determination
      of EURIBOR” below to Interest Reset Date shall be deemed to mean the
      Original Issue Date. The determination of the rate of interest at which
      this Note will be reset on any Interest Reset Date shall be made on the
      Interest Determination Date (as defined below) pertaining to such Interest
      Reset Dates. The Interest Reset Dates will be the Interest Reset Dates
      specified on the face hereof; provided, however, that (a)
      the interest rate in effect for the period from the Interest Accrual Date
      to the Initial Interest Reset Date will be the Initial Interest Rate and
      (b) unless otherwise specified on the face hereof, the interest rate in
      effect for the ten calendar days immediately prior to maturity, redemption
      or repayment will be that in effect on the tenth calendar day preceding
      such maturity, redemption or repayment date. If any Interest Reset Date
      would otherwise be a day that is not a Business Day, such Interest Reset
      Date shall be postponed to the next succeeding day that is a Business Day,
      except that if the Base Rate specified on the face hereof is LIBOR or EURIBOR
      and such Business Day is in the next succeeding calendar month, such Interest
      Reset Date shall be the immediately preceding Business Day. 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 

 19

 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”).

      The
      Interest Determination Date pertaining to an Interest Reset Date for Notes
      bearing interest calculated by reference to the Federal Funds Rate, Federal
      Funds (Open) Rate and Prime Rate shall be on the Business Day prior to
      the Interest Reset Date. The Interest Determination Date pertaining to
      an Interest Reset Date for Notes bearing interest calculated by reference
      to the CD Rate, Commercial Paper Rate and CMT Rate will be the second Business
      Day prior to such Interest Reset Date. The Interest Determination Date
      pertaining to an Interest Reset Date for Notes bearing interest calculated
      by reference to EURIBOR (or to LIBOR when the Index Currency is euros)
      shall be the second TARGET Settlement Day prior such Interest Reset Date.
      The Interest Determination Date pertaining to an Interest Reset Date for
      Notes bearing interest calculated by reference to LIBOR (other than for
      LIBOR Notes for which the Index Currency is euros) shall be the second
      London Banking Day prior such Interest Reset Date, except that the Interest
      Determination Date pertaining to an Interest Reset Date for a LIBOR Note
      for which the Index Currency is pounds sterling will be such Interest Reset
      Date. As used herein, “London Banking Day” means any day
      on which dealings in deposits in the Index Currency (as defined herein)
      are transacted in the London interbank market. The Interest Determination
      Date pertaining to an Interest Reset Date for Notes bearing interest calculated
      by reference to the Treasury Rate shall be the day of the week in which
      such Interest Reset Date falls on which Treasury bills normally would be
      auctioned. Treasury Bills are normally sold at auction on Monday of each
      week, unless that day is a legal holiday, in which case the auction is
      normally held on the following Tuesday, except that the auction may be
      held on the preceding Friday; provided, however, that if
      an auction is held on the Friday of the week preceding such Interest Reset
      Date, the Interest Determination Date shall be such preceding Friday; and provided, further,
      that if an auction shall fall on any Interest Reset Date, then the Interest
      Reset Date shall instead be the first Business Day following the date of
      such auction. The Interest Determination Date pertaining to an Interest
      Reset Date for Notes bearing interest calculated by reference to two or
      more base rates will be the latest Business Day that is at least two Business
      Days before the Interest Reset Date for the applicable Note on which each
      base rate is determinable.

      Unless
      otherwise specified on the face hereof, the “Calculation Date” pertaining
      to an Interest Determination Date, including the Interest Determination
      Date as of which the Initial Interest Rate is determined, will be the earlier
      of (i) the tenth calendar day after such Interest Determination Date or,
      if such day is not a Business Day, the next succeeding Business Day, or
      (ii) the Business Day immediately preceding the applicable Interest Payment
      Date or Maturity Date (or, with respect to any principal amount to be redeemed
      or repaid, any redemption or repayment date), as the case may be.

      Determination
        of CD Rate. If the Base Rate specified
        on the face hereof is the “CD Rate,” for any Interest
        Determination Date, the CD Rate with respect to this Note shall be the
        rate on 

 20

 that date for negotiable U.S. dollar
    certificates of deposit having the Index Maturity specified on the face hereof
    as published by the Board of Governors of the Federal Reserve System in “Statistical
    Release H.15(519), Selected Interest Rates,” or any successor publication
    of the Board of Governors of the Federal Reserve System (“H.15(519)”)
    under the heading “CDs (Secondary Market).”

       The following procedures
  shall be followed if the CD Rate cannot be determined as described above:
  

      (i) If the above rate is not
      published in H.15(519) by 3:00 p.m., New York City time, on the Calculation
      Date, the CD Rate shall be the rate on that Interest Determination Date
      set forth in the daily update of H.15(519), available through the world
      wide website of the Board of Governors of the Federal Reserve System at
      http://www.federalreserve.gov/releases/h15/update, or any successor site
      or publication (“H.15 Daily Update”) for the Interest
  Determination Date for certificates of deposit having the Index Maturity
  specified on the face hereof, under the caption “CDs (Secondary Market).”

       (ii)
  If the above rate is not yet published in either H.15(519) or the H.15 Daily
  Update by 3:00 p.m., New York City time, on the Calculation Date, the Calculation
  Agent shall determine the CD Rate to be the arithmetic mean of the secondary
  market offered rates as of 10:00 a.m., New York City time, on that Interest
  Determination Date of three leading nonbank dealers in negotiable U.S. dollar
  certificates of deposit in The City of New York, which may include the initial
  dealer and its affiliates, selected by the Calculation Agent (after consultation
  with the Issuer), for negotiable U.S. dollar certificates of deposit of major
  U.S. money center banks of the highest credit standing in the market for
  negotiable certificates of deposit with a remaining maturity closest to the
  Index Maturity specified on the face hereof in an amount that is representative
  for a single transaction in that market at that time.

      “Initial
      dealer” with respect to this Note means either Morgan Stanley & Co.
      Incorporated or Morgan Stanley DW Inc., as applicable.

      (iii)
      If the dealers selected by the Calculation Agent are not quoting as set
      forth above, the CD Rate for that Interest Determination Date shall remain
      the CD Rate for the immediately preceding Interest Reset Period, or, if
      there was no Interest Reset Period, the rate of interest payable shall
      be the Initial Interest Rate.

      Determination
        of Commercial Paper Rate. If the Base Rate
        specified on the face hereof is the “Commercial Paper Rate,” for
        any Interest Determination Date, the Commercial Paper Rate with respect
        to this Note shall be the Money Market Yield (as defined herein), calculated
        as described below, of the rate on that date for U.S. dollar commercial
        paper having the Index Maturity specified on the face hereof, as that
        rate is published in H.15(519), under the heading “Commercial Paper — Nonfinancial.” 

The
          following procedures shall be followed if the Commercial Paper Rate
    cannot be determined as described above:

 21

      (i)
      If the above rate is not published by 3:00 p.m., New York City time, on
      the Calculation Date, then the Commercial Paper Rate shall be the Money
      Market Yield of the rate on that Interest Determination Date for commercial
      paper of the Index Maturity specified on the face hereof as published in
      the H.15 Daily Update, or other recognized electronic source used for the
      purpose of displaying the applicable rate, under the heading
  “Commercial Paper —Nonfinancial.”

       (ii)
  If by 3:00 p.m., New York City time, on that Calculation Date the rate is not
  yet published in either H.15(519) or the H.15 Daily Update, or other recognized
  electronic source used for the purpose of displaying the applicable rate, then
  the Calculation Agent shall determine the Commercial Paper Rate to be the Money
  Market Yield of the arithmetic mean of the offered rates as of 11:00 a.m.,
  New York City time, on that Interest Determination Date of three leading dealers
  of U.S. dollar commercial paper in The City of New York, which may include
  the initial dealer and its affiliates, selected by the Calculation Agent (after
  consultation with the Issuer), for commercial paper of the Index Maturity specified
  on the face hereof, placed for an industrial issuer whose bond rating is “Aa,” or
  the equivalent, from a nationally recognized statistical rating agency.

      (iii)
      If the dealers selected by the Calculation Agent are not quoting as set
      forth in (ii) above, the Commercial Paper Rate for that Interest Determination
      Date shall remain the Commercial Paper Rate for the immediately preceding
      Interest Reset Period, or, if there was no Interest Reset Period, the rate
      of interest payable shall be the Initial Interest Rate.

      The “Money
        Market Yield” shall be a yield calculated in accordance with
        the following formula:

  	Money Market Yield   	 = 	D x 360 	 x 100
	
    
	360 – (D x M)

 where “D” refers to the
    applicable per year rate for commercial paper quoted on a bank discount basis
    and expressed as a decimal and “M” refers to the actual number
    of days in the interest period for which interest is being calculated.

      Determination
        of EURIBOR. If the Base Rate specified
        on the face hereof is “EURIBOR,” for any Interest Determination
        Date, EURIBOR with respect to this Note shall be the rate for deposits
        in euros as sponsored, calculated and published jointly by the European
        Banking Federation and ACI - The Financial Market Association, or any
        company established by the joint sponsors for purposes of compiling and
        publishing those rates, for the Index Maturity specified on the face
        hereof as that rate appears on the display on Moneyline Telerate, or
        any successor service, on page 248 or any other page as may replace page
        248 on that service (“Telerate Page 248”) as of 11:00
        a.m., Brussels time.

      The
      following procedures shall be followed if the rate cannot be determined
      as described above:

 22

      (i)
      If the above rate does not appear, the Calculation Agent shall request
      the principal Euro-zone office of each of four major banks in the Euro-zone
      interbank market, as selected by the Calculation Agent (after consultation
      with the Issuer), to provide the Calculation Agent with its offered rate
      for deposits in euros, at approximately 11:00 a.m., Brussels time, on the
      Interest Determination Date, to prime banks in the Euro-zone interbank
      market for the Index Maturity specified on the face hereof commencing on
      the applicable Interest Reset Date, and in a principal amount not less
      than the equivalent of U.S.$1 million in euro that is representative
      of a single transaction in euro, in that market at that time. If at least
      two quotations are provided, EURIBOR shall be the arithmetic mean of those
      quotations.

      (ii)
      If fewer than two quotations are provided, EURIBOR shall be the arithmetic
      mean of the rates quoted by four major banks in the Euro-zone interbank
      market, as selected by the Calculation Agent (after consultation with the
      Issuer), at approximately 11:00 a.m., Brussels time, on the applicable
      Interest Reset Date for loans in euro to leading European banks for a period
      of time equivalent to the Index Maturity specified on the face hereof commencing
      on that Interest Reset Date in a principal amount not less than the equivalent
      of U.S.$1 million in euro.

      (iii)
      If the banks so selected by the Calculation Agent are not quoting as set
      forth above, the EURIBOR rate for that Interest Determination Date shall
      remain the EURIBOR for the immediately preceding Interest Reset Period,
      or, if there was no Interest Reset Period, the rate of interest payable
      shall be the Initial Interest Rate.

      “Euro-zone” means
      the region comprised of member states of the European Union that adopt
      the single currency in accordance with the relevant treaty of the European
      Union, as amended.

      Determination
        of the Federal Funds Rate. If the Base
        Rate specified on the face hereof is the “Federal Funds Rate,” for
        any Interest Determination Date, the Federal Funds Rate with respect
        to this Note shall be the rate on that date for U.S. dollar federal funds
        as published in H.15(519) under the heading “Federal Funds (Effective)”
  as displayed on Moneyline Telerate, or any successor service, on page 120 or
  any other page as may replace page 120 on that service (“Telerate Page
  120”).

      The
      following procedures shall be followed if the Federal Funds Rate cannot
  be determined as described above: 

     (i) If the above rate is not
      published by 3:00 p.m., New York City time, on the Calculation Date, the
      Federal Funds Rate shall be the rate on that Interest Determination Date
      as published in the H.15 Daily Update, or other recognized electronic source
    used for the purpose of displaying the applicable rate, under the heading “Federal Funds (Effective).”

      (ii) If the above rate is
      not yet published in either H.15(519) or the H.15 Daily Update, or other
      recognized electronic source used for the purpose of displaying the applicable
      rate, by 3:00 p.m., New York City time, on the Calculation Date, the Calculation
      Agent shall determine the Federal Funds Rate to be the arithmetic mean
      of the rates for the last transaction in overnight U.S. dollar federal
      funds prior to 9:00 a.m., New York City time, on that Interest Determination
      Date, by each of three leading brokers of U.S. dollar federal funds transactions
      in The City of 

 23

 New York, which may include the
    initial dealer and its affiliates, selected by the Calculation Agent (after
    consultation with the Issuer).

      (iii)
      If the brokers selected by the Calculation Agent are not quoting as set
      forth in (ii) above, the Federal Funds Rate for that Interest Determination
      Date shall remain the Federal Funds Rate for the immediately preceding
      Interest Reset Period, or, if there was no Interest Reset Period, the rate
      of interest payable shall be the Initial Interest Rate.

      Determination
        of Federal Funds (Open) Rate. If the Base
        Rate specified on the face hereof is the “Federal Funds (Open)
        Rate”, for any Interest Determination Date, the Federal Funds
        (Open) Rate with respect to this Note shall be the rate on that date
        for U.S. dollar federal funds as published in H.15(519) under the heading
  “Federal Funds (Open)” as displayed on Moneyline Telerate, or any
  successor service, on page 5 or any other page as may replace page 5 on that
  service, (“Telerate Page 5”).

      The
      following procedures shall be followed if the Federal Funds (Open) Rate
      cannot be determined as described above:

	 If the above rate is not published by 3:00
      p.m., New York City time, on the Calculation
      Date, the Federal Funds (Open) Rate will be the rate on that Interest Determination
      Date as published in the H.15 Daily Update, or other recognized electronic
      source used for the purpose of displaying the applicable rate, under the heading “Federal
      Funds (Open).”

	 If the above rate is not yet published in
      either H.15(519) or the H.15 Daily Update, or other
      recognized electronic source used for the purpose of displaying the applicable rate,
      by 3:00 p.m., New York City time, on the Calculation Date, the Calculation Agent
      will determine the Federal Funds (Open) Rate to be the arithmetic mean
      of the rates for the last transaction
      in overnight U.S. dollar federal funds (based on the Federal
      Funds (Open) Rate) prior to 9:00 a.m., New York City time, on that Interest Determination
      Date, by each of three leading brokers of U.S. dollar federal funds transactions
      in the City of New York, which may include the agent and its affiliates, selected
      by the Calculation Agent, after consultation with the Issuer.

	 If the brokers selected by the Calculation
      Agent are not quoting as set forth above, the Federal
      Funds (Open) Rate for that Interest Determination Date shall remain the Federal
      Funds (Open) Rate for the immediately preceding Interest Reset Period,
      or, if there was no Interest Reset Period,
      the rate of interest payable will be the Initial Interest
      Rate.

      Determination
        of LIBOR. If the Base Rate specified on
        the face hereof is “LIBOR,” LIBOR with respect to this
        Note shall be based on London Interbank Offered Rate. The Calculation
  Agent shall determine LIBOR for each Interest Determination Date as follows:

      (i) As of the Interest Determination
      Date, LIBOR shall be either (a) if “LIBOR Reuters” is specified as the Reporting Service on the
    face hereof, the arithmetic mean of the offered rates for deposits in the Index
    Currency having the Index Maturity designated on the face hereof, 

 24

 commencing on the second London
    Banking Day immediately following that Interest Determination Date, that
    appear on the Designated LIBOR Page, as defined below, as of 11:00 a.m.,
    London time, on that Interest Determination Date, if at least two offered
    rates appear on the Designated LIBOR Page; except that if the specified Designated
    LIBOR Page, by its terms provides only for a single rate, that single rate
    shall be used; or (b) if “LIBOR
    Telerate” is specified as the Reporting
    Service on the face hereof, the rate for deposits in the Index Currency having
    the Index Maturity designated on the face hereof, commencing on the second
    London Banking Day immediately following that Interest Determination Date
    or, if pounds sterling is the Index Currency, commencing on that Interest
    Determination Date, that appears on the Designated LIBOR Page at approximately
    11:00 a.m., London time, on that Interest Determination Date. 

      (ii)
      If (a) fewer than two offered rates appear and LIBOR Reuters is specified
      on the face hereof, or (b) no rate appears and the face hereof specifies
      either (x) LIBOR Telerate or (y) LIBOR Reuters and the Designated LIBOR
      Page by its terms provides only for a single rate, then the Calculation
      Agent shall request the principal London offices of each of four major
      reference banks in the London interbank market, as selected by the Calculation
      Agent (after consultation with the Issuer), to provide the Calculation
      Agent with its offered quotation for deposits in the Index Currency for
      the period of the Index Maturity specified on the face hereof commencing
      on the second London Banking Day immediately following the Interest Determination
      Date or, if pounds sterling is the Index Currency, commencing on that Interest
      Determination Date, to prime banks in the London interbank market at approximately
      11:00 a.m., London time, on that Interest Determination Date and in a principal
      amount that is representative of a single transaction in that Index Currency
      in that market at that time.

      (iii)
      If at least two quotations are provided, LIBOR determined on that Interest
      Determination Date shall be the arithmetic mean of those quotations. If
      fewer than two quotations are provided, LIBOR shall be determined for the
      applicable Interest Reset Date as the arithmetic mean of the rates quoted
      at approximately 11:00 a.m., London time, or some other time specified
      on the face hereof, in the applicable principal financial center for the
      country of the Index Currency on that Interest Reset Date, by three major
      banks in that principal financial center selected by the Calculation Agent
      (after consultation with the Issuer) for loans in the Index Currency to
      leading European banks, having the Index Maturity specified on the face
      hereof and in a principal amount that is representative of a single transaction
      in that Index Currency in that market at that time. 

      (iv)
      If the banks so selected by the Calculation Agent are not quoting as set
      forth above, the LIBOR rate for that Interest Determination Date shall
      remain the LIBOR for the immediately preceding Interest Reset Period, or,
      if there was no Interest Reset Period, the rate of interest payable shall
      be the Initial Interest Rate.

      The “Index
        Currency” means the currency specified on the face hereof as
        the currency for which LIBOR shall be calculated, or, if the euro is
        substituted for that currency, the Index Currency shall be the euro.
        If that currency is not specified on the face hereof, the Index Currency
        shall be U.S. dollars.

 25

      “Designated
        LIBOR Page” means either: (a) if LIBOR Reuters is designated
        as the Reporting Service on the face hereof, the display on the Reuters
        Money 3000 Service for the purpose of displaying the London interbank
        rates of major banks for the applicable Index Currency or its designated
        successor, or (b) if LIBOR Telerate is designated as the Reporting Service
        on the face hereof, the display on Moneyline Telerate, or any successor
        service, on the page specified on the face hereof, or any other page
        as may replace that page on that service, for the purpose of displaying
        the London interbank rates of major banks for the applicable Index Currency.

      If
      neither LIBOR Reuters nor LIBOR Telerate is specified on the face hereof,
      LIBOR for the applicable Index Currency shall be determined as if LIBOR
      Telerate were specified, and, if the U.S. dollar is the Index Currency,
      as if Page 3750 had been specified.

      Determination
        of Prime Rate. If the Base Rate specified
        on the face hereof is “Prime Rate,” for any Interest
        Determination Date, the Prime Rate with respect to this Note shall be
        the rate on that date as published in H.15(519) under the heading “Bank
        Prime Loan.”

      The following procedures shall
      be followed if the Prime Rate cannot be determined as described above:

      (i) If the above rate is not
      published prior to 3:00 p.m., New York City time, on the Calculation Date,
      then the Prime Rate shall be the rate on that Interest Determination Date
      as published in the H.15 Daily Update under the heading “Bank
            Prime Loan.” 

     (ii) If the above rate is not
      published in either H.15(519) or the H.15 Daily Update by 3:00 p.m., New
      York City time, on the Calculation Date, then the Calculation Agent shall
      determine the Prime Rate to be the arithmetic mean of the rates of interest
      publicly announced by each bank that appears on the Reuters Screen USPRIME
      1 Page, as defined below, as that bank’s Prime Rate or base lending rate as in effect for
              that Interest Determination Date.

      (iii)
      If fewer than four rates for that Interest Determination Date appear on
      the Reuters Screen USPRIME 1 Page by 3:00 p.m., New York City time, on
      the Calculation Date, the Calculation Agent shall determine the Prime Rate
      to be the arithmetic mean of the Prime Rates quoted on the basis of the
      actual number of days in the year divided by 360 as of the close of business
      on that Interest Determination Date by at least three major banks in The
      City of New York, which may include affiliates of the initial dealer, selected
      by the Calculation Agent (after consultation with the Issuer).

      (iv)
      If the banks selected by the Calculation Agent are not quoting as set forth
      above, the Prime Rate for that Interest Determination Date shall remain
      the Prime Rate for the immediately preceding Interest Reset Period, or,
      if there was no Interest Reset Period, the rate of interest payable shall
      be the Initial Interest Rate.

      “Reuters
        Screen USPRIME 1 Page” means the display designated as page “USPRIME
        1” on the Reuters Money 3000 Service, or any successor service,
        or any other page as may replace the USPRIME 1 Page on that service for
        the purpose of displaying prime rates or base lending rates of major
        U.S. banks.

 26

      Determination
        of Treasury Rate. If the Base Rate specified
        on the face hereof is “Treasury Rate,”
  the Treasury Rate with respect to this Note shall be

      (i) the rate from the
  Auction held on the applicable Interest Determination Date (the “Auction”)
  of direct obligations of the United States (“Treasury Bills”)
  having the Index Maturity specified on the face hereof as that rate appears
  under the caption “INVESTMENT RATE” on the display on Moneyline Telerate,
  or any successor service, on page 56 or any other page as may replace page
  56 on that service (“Telerate Page 56”) or page 57 or any
  other page as may replace page 57 on that service (“Telerate Page 57”);
  or

       (ii) if the rate described
      in (i) above is not published by 3:00 p.m., New York City time, on the
      Calculation Date, the Bond Equivalent Yield of the rate for the applicable
      Treasury Bills as published in the H.15 Daily Update, or other recognized
      electronic source used for the purpose of displaying the applicable rate,
      under the caption “U.S. Government Securities/Treasury Bills/Auction
  High”; or

       (iii) if the rate described
      in (ii) above is not published by 3:00 p.m., New York City time, on the
      related Calculation Date, the Bond Equivalent Yield of the Auction rate
      of the applicable Treasury Bills, announced by the United States Department
      of the Treasury; or

       (iv)
      if the rate described in (iii) above is not announced by the United States
      Department of the Treasury, or if the Auction is not held, the Bond Equivalent
      Yield of the rate on the applicable Interest Determination Date of Treasury
      Bills having the Index Maturity specified on the face hereof published
      in H.15(519) under the caption “U.S.
  Government Securities/Treasury Bills/Secondary Market”; or

      (v) if the
  rate described in (iv) above is not so published by 3:00 p.m., New York City
  time, on the related Calculation Date, the rate on the applicable Interest
  Determination Date of the applicable Treasury Bills as published in the H.15
  Daily Update, or other recognized electronic source used for the purpose of
  displaying the applicable rate, under the caption “U.S. Government Securities/Treasury
  Bills/Secondary Market”; or

       (vi) if the rate described
      in (v) above is not so published by 3:00 p.m., New York City time, on the
      related Calculation Date, the rate on the applicable Interest Determination
      Date calculated by the Calculation Agent as the Bond Equivalent Yield of
      the arithmetic mean of the secondary market bid rates, as of approximately
      3:30 p.m., New York City time, on the applicable Interest Determination
      Date, of three primary U.S. government securities dealers, which may include
      the initial dealer and its affiliates, selected by the Calculation Agent,
      for the issue of Treasury Bills with a remaining maturity closest to the
      Index Maturity specified on the face hereof; or

       (vii) if the dealers selected
  by the Calculation Agent are not quoting as described in (vi), the Treasury
  Rate for the immediately preceding Interest Reset Period, or, if there
  was no Interest Reset Period, the rate of interest payable shall be the
  Initial Interest Rate.

      The “Bond
        Equivalent Yield” means a yield calculated in accordance with
        the following formula and expressed as a percentage:

 27

  	Bond
          Equivalent Yield   	 = 	D x N  	 x
          100
	
      
	360 – (D x M)

 where “D” refers to the
    applicable per annum rate for Treasury Bills quoted on a bank discount basis, “N” refers
    to 365 or 366, as the case may be, and “M” refers to the actual
    number of days in the interest period for which interest is being calculated.

      Determination
        of CMT Rate. If the Base Rate specified
        on the face hereof is the “CMT Rate,” for any Interest
        Determination Date, the CMT Rate with respect to this Note shall be the
        rate displayed on the Designated CMT Telerate Page (as defined below)
        under the caption “... Treasury Constant Maturities ... Federal
        Reserve Board Release H.15... Mondays Approximately 3:45 p.m.,” under
        the column for the Designated CMT Maturity Index, as defined below, for:

      (1) the rate on that Interest
      Determination Date, if the Designated CMT Telerate Page is 7051; and

     (2) the week or the month,
      as applicable, ended immediately preceding the week in which the related
      Interest Determination Date occurs, if the Designated CMT Telerate Page
      is 7052.

      The
      following procedures shall be followed if the CMT Rate cannot be determined
      as described above:

      (i) If the above rate is no
      longer displayed on the relevant page, or if not displayed by 3:00 p.m.,
      New York City time, on the related Calculation Date, then the CMT Rate
      shall be the Treasury Constant Maturity rate for the Designated CMT Maturity
      Index as published in the relevant H.15(519).

      (ii)
      If the above rate is no longer published, or if not published by 3:00 p.m.,
      New York City time, on the related Calculation Date, then the CMT Rate
      shall be the Treasury Constant Maturity Rate for the Designated CMT Maturity
      Index or other U.S. Treasury rate for the Designated CMT Maturity Index
      on the Interest Determination Date as may then be published by either the
      Board of Governors of the Federal Reserve System or the United States Department
      of the Treasury that the Calculation Agent determines to be comparable
      to the rate formerly displayed on the Designated CMT Telerate Page and
      published in the relevant H.15(519).

      (iii)
      If the information set forth above is not provided by 3:00 p.m., New York
      City time, on the related Calculation Date, then the Calculation Agent
      shall determine the CMT Rate to be a yield to maturity, based on the arithmetic
      mean of the secondary market closing offer side prices as of approximately
      3:30 p.m., New York City time, on the Interest Determination Date, reported,
      according to their written records, by three leading primary U.S. government
      securities dealers (“Reference Dealers”) in The City of
      New York, which may include the initial dealer or its affiliates, selected
      by the Calculation Agent as described in the following sentence. The Calculation
      Agent shall select five reference dealers (after consultation with the
      Issuer) and shall eliminate the highest quotation or, in the event of equality,
      one of the highest, and the lowest quotation or, in the event of equality,
      one of the lowest, for the most recently issued direct 

 28

 noncallable fixed rate obligations
    of the United States (“Treasury
    Notes”) with an original maturity of approximately
    the Designated CMT Maturity Index, a remaining term to maturity of no more
    than 1 year shorter than that Designated CMT Maturity Index and in a principal
    amount that is representative for a single transaction in the securities
    in that market at that time. If two Treasury Notes with an original maturity
    as described above have remaining terms to maturity equally close to the
    Designated CMT Maturity Index, the quotes for the Treasury Note with the
    shorter remaining term to maturity shall be used.

      (iv)
      If the Calculation Agent cannot obtain three Treasury Notes quotations
      as described in (iii) above, the Calculation Agent shall determine the
      CMT Rate to be a yield to maturity based on the arithmetic mean of the
      secondary market offer side prices as of approximately 3:30 p.m., New York
      City time, on the Interest Determination Date of three reference dealers
      in The City of New York, selected using the same method described in (iii)
      above, for Treasury Notes with an original maturity equal to the number
      of years closest to but not less than the Designated CMT Maturity Index
      and a remaining term to maturity closest to the Designated CMT Maturity
      Index and in a principal amount that is representative for a single transaction
      in the securities in that market at that time.

      (v)
      If three or four, and not five, of the reference dealers are quoting as
      described in (iv) above, then the CMT Rate for that Interest Determination
      Date shall be based on the arithmetic mean of the offer prices obtained
      and neither the highest nor the lowest of those quotes shall be eliminated.

      (vi)
      If fewer than three reference dealers selected by the Calculation Agent
      are quoting as described in (iv) above, the CMT Rate for that Interest
      Determination Date shall remain the CMT Rate for the immediately preceding
      Interest Reset Period, or, if there was no Interest Reset Period, the rate
      of interest payable shall be the Initial Interest Rate.

      “Designated
        CMT Telerate Page” means the display on Moneyline Telerate,
        or any successor service, on the page designated on the face hereof or
        any other page as may replace that page on that service for the purpose
        of displaying Treasury Constant Maturities as reported in H.15(519).
        If no page is specified on the face hereof, the Designated CMT Telerate
        Page shall be 7052, for the most recent week.

      “Designated
        CMT Maturity Index” means the original period to maturity of
        the U.S. Treasury securities, which is either 1, 2, 3, 5, 7, 10, 20 or
        30 years, as specified in the applicable pricing supplement for which
        the CMT Rate shall be calculated. If no maturity is specified on the
        face hereof, the Designated CMT Maturity Index shall be two years.

      Notwithstanding
      the foregoing, the interest rate hereon shall not be greater than the Maximum
      Interest Rate, if any, or less than the Minimum Interest Rate, if any,
      specified on the face hereof. The Calculation Agent shall calculate the
      interest rate hereon in accordance with the foregoing on or before each
      Calculation Date. The interest rate on this Note will in no event be higher
      than the maximum rate permitted by New York law, as the same may be modified
      by United States Federal law of general application.

 29

      At
      the request of the holder hereof, the Calculation Agent will provide to
      the holder hereof the interest rate hereon then in effect and, if determined,
      the interest rate that will become effective as of the next Interest Reset
      Date.

      Unless
      otherwise indicated on the face hereof, interest payments on this Note
      shall be the amount of interest accrued from and including the Interest
      Accrual Date or from and including the last date to which interest has
      been paid or duly provided for to but excluding the Interest Payment Dates
      or the Maturity Date (or any earlier redemption or repayment date), as
      the case may be. Accrued interest hereon shall be an amount calculated
      by multiplying the face amount hereof by an accrued interest factor. Such
      accrued interest factor shall be computed by adding the interest factor
      calculated for each day in the period for which interest is being paid.
      The interest factor for each such date shall be computed by dividing the
      interest rate applicable to such day (i) by 360 if the Base Rate is CD
      Rate, Commercial Paper Rate, EURIBOR, Federal Funds Rate, Federal Funds
      (Open) Rate, Prime Rate or LIBOR (except if the Index Currency is pounds
      sterling); (ii) by 365 if the Base Rate is LIBOR and the Index Currency
      is pounds sterling; or (iii) by the actual number of days in the year if
      the Base Rate is the Treasury Rate or the CMT Rate. All percentages resulting
      from any calculation of the rate of interest on this Note will be rounded,
      if necessary, to the nearest one hundred-thousandth of a percentage point
      with (.000005% being rounded up to .00001%) and all U.S. dollar amounts
      used in or resulting from such calculation on this Note will be rounded
      to the nearest cent, with one-half cent rounded upward. All Japanese Yen
      amounts used in or resulting from such calculations will be rounded downwards
      to the next lower whole Japanese Yen amount. All amounts denominated in
      any other currency used in or resulting from such calculations will be
      rounded to the nearest two decimal places in such currency, with .005 being
      rounded up to .01. The interest rate in effect on any Interest Reset Date
      will be the applicable rate as reset on such date. The interest rate applicable
      to any other day is the interest rate from the immediately preceding Interest
      Reset Date (or, if none, the Initial Interest Rate).

      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.

 30

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

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

      The
      Senior Indenture provides that (a) if an Event of Default (as defined in
      the Senior Indenture) due to the default in payment of principal of or
      premium, if any, or interest on, any series of debt securities issued under
      the Senior Indenture, including the series of 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 

 31

 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.

      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, (i) 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 (ii) 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 or 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 

 32

 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.

      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.

 33

      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 and 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 or 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 non-resident alien individual,
      (ii) a foreign corporation, (iii) a non-resident alien fiduciary or a foreign
      estate or trust or (iv) a foreign partnership one or more members of which
      is, for U.S. federal income tax purposes, a non-resident alien individual,
      a foreign corporation or a non-resident 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.

34

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.
	 
	

 

 

35

     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.

 36

  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 TYPE NAME
          AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE]

 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.
     

  37

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