Document:

COLONIAL BANKSHARES, INC.

                         2006 STOCK-BASED INCENTIVE PLAN

                           RESTRICTED STOCK AGREEMENT
                                   (EMPLOYEES)

     A. An AWARD for a total of ____________  shares of common stock,  par value
$0.10 per share, of Colonial Bankshares,  Inc. (the "Company") is hereby granted
to ___________________  (the "Recipient"),  subject in all respects to the terms
and provisions of the Colonial Bankshares,  Inc. 2006 Stock-Based Incentive Plan
(the  "Plan"),  which has been approved by the board of directors of the Company
and the stockholders of the Company,  which is incorporated herein by reference.
The  terms of this  Restricted  Stock  Agreement  are  subject  to the terms and
conditions of the Plan,  except where otherwise  indicated.  The Recipient is an
employee of the Company,  Colonial Bank, FSB (the "Bank") or an affiliate of the
Company or the Bank.

     B. The shares of common stock  awarded  hereunder  may be  certificated  or
issued  in  electronic  form,  in  the  sole  discretion  of  the  Company.   If
certificated,  the shares shall bear a legend restricting the transferability of
such common  stock  (hereinafter  referred to as the  "Restricted  Stock").  The
Restricted  Stock  awarded  to  the  Recipient  shall  not  be  sold,  assigned,
transferred,  pledged,  or  otherwise  encumbered  by the  Recipient,  except as
hereinafter  provided,  until such Restricted  Stock has vested (the "Restricted
Period").   Restricted   Stock  shall  vest  in   ______________   equal  annual
installments,  with the first installment  vesting on _______________  __, 2007,
and succeeding installments on each anniversary thereafter through _________ __,
20__.

     C.  If  the  shares  are  certificated,   the  Recipient  shall  receive  a
certificate or  certificates  representing  the shares of Restricted  Stock that
have been awarded to him.  Upon  receipt of the  Restricted  Stock  certificates
representing  the shares  awarded  hereunder,  the  Recipient  shall execute and
return to the Company a stock power or powers  endorsed  in blank  covering  all
such shares of Restricted Stock.  Pursuant to the terms of the Plan, the Company
shall deposit the  certificate  or  certificates  representing  the  Recipient's
Restricted Stock Award,  together with the stock power(s),  with an escrow agent
specified  by the Company  (the  "Escrow  Agent").  Restricted  Stock  issued in
electronic  form  shall be held by the  transfer  agent  until any  restrictions
appurtenant thereto have lapsed and the shares are fully vested.

     D. The Recipient shall have the right to vote the shares awarded hereunder.
The Recipient will also receive dividends declared with respect to the shares.

     E. If the Recipient  ceases to be an employee of the Company,  the Bank and
any affiliate  thereof for any reason other than  Disability  (as defined in the
Plan),  death,  Retirement  (as defined in the Plan),  or  following a Change in
Control (as defined in the Plan), all shares of Restricted Stock awarded to such
Recipient  which have not  vested  shall be  forfeited  by such  Recipient.  The
provisions  of the  preceding  sentence  shall apply  regardless  of whether the
Participant  is also a director of the  Company,  the Bank or an  affiliate  and
continues as a director  following  termination of employment.  In the event the
Recipient's  employment with the Company,  the Bank and an affiliate  terminates
due to  Disability,  death,  Retirement  or  following a Change in Control,  the
Restricted Stock allocated to the Recipient which, as of the date of termination
has not yet vested,  shall be deemed to vest as of the  Recipient's  last day of
employment with the Company, the Bank or an affiliate;  provided that Restricted
Stock  awarded to an employee who also serves as a director  shall not be deemed
to vest due to retirement  until both  employment and service as a director have
been terminated.
<PAGE>
     F. At the time the Restricted Stock vests under the Plan, the Company shall
deliver to the  Recipient (or if the  Restricted  Stock is deemed to vest due to
the Recipient's death, to the Recipient's beneficiary) shares of common stock of
the Company  representing the amount earned,  absent any  restrictions  that may
have been imposed  under the Plan.  Delivery of such shares upon vesting will be
made in  certificate or electronic  form at the election of the Recipient.  Upon
delivery of the shares of common  stock to the  Recipient or  beneficiary,  such
person shall execute and return to the Company an  Acknowledgment  of Receipt of
Earned Shares, in the form attached hereto.

     G. A copy of the Plan  governing  this  Restricted  Stock Award is attached
hereto.  The  Recipient  is  invited to review  all the  provisions  of the Plan
governing this Award.

     H. The  Recipient  acknowledges  receipt  of a copy of the Plan,  a copy of
which is annexed  hereto,  and represents that he is familiar with the terms and
provisions thereof.  The Recipient hereby accepts this Award, subject to all the
terms and  provisions  of the Plan.  The  Recipient  hereby  agrees to accept as
binding,  conclusive,  and  final,  all  decisions  and  interpretations  of the
Committee  upon any  questions  arising  under the Plan.  As a condition  to the
issuance  of  shares  of common  stock of the  Company  under  this  Award,  the
Recipient  authorizes  the Company to deduct from the settlement of an Award any
taxes required to be withheld by the Company under federal,  state, or local law
as a result of his receipt of this Award.

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

ATTEST:                                     COLONIAL BANKSHARES, INC.

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

WITNESS:                                    PARTICIPANT

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

          This Restricted Stock Agreement must be executed in duplicate
          originals, with one original retained by the Company and one
                      original retained by the Recipient.

<PAGE>
                   ACKNOWLEDGMENT OF RECEIPT OF EARNED SHARES

     I hereby acknowledge the delivery to me by Colonial  Bankshares,  Inc. (the
"Company")    on    _____________________,    of    stock    certificates    for
____________shares  of common stock of the Company  earned by me pursuant to the
terms  and  conditions  of  the  Colonial  Bankshares,   Inc.  Restricted  Stock
Agreement,  and the Colonial Bankshares,  Inc. 2006 Stock-Based  Incentive Plan,
which  shares were  transferred  to me on the  Company's  stock  record books on
_______________________.

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

                                           -------------------------------------
                                           Recipient's name (Print)

                                           -------------------------------------
                                           Recipient's signatureExhibit 4.1
	FORM OF
          FIXED RATE SENIOR NOTE
	 	 	 
	REGISTERED 	 	REGISTERED 
	No. FXR-1 	 	U.S. $ 
	 	 	CUSIP: 

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

MORGAN STANLEY

SENIOR GLOBAL MEDIUM-TERM NOTE, SERIES F

(Fixed Rate)

     STOCK PARTICIPATION ACCRETING

REDEMPTION
QUARTERLY-PAY SECURITIESSM (“SPARQS”)

% SPARQS® DUE
NOVEMBER 20, 2007

MANDATORILY EXCHANGEABLE

FOR SHARES OF COMMON STOCK OF

DELL INC.

	
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 	 		 	

2

	
Stated Principal Amount		
$
     per SPARQS
	
Underlying Company		
Dell Inc. (“Dell”)			
	
Underlying Stock		
The common stock of Dell	
	
Pricing Date		 					
	
Issue Price		
$
     per each Stated Principal Amount of this SPARQS 
	
Denominations		
$	     and integral multiples thereof	
	
Acceleration Trigger Price		
The product of $
     and the Exchange Ratio	
	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

May 20, 2007

November 20, 2007, 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 or otherwise and the Issuer exercises the Morgan Stanley Call Right,
the scheduled Maturity Date shall be postponed so that the Maturity Date will be the tenth calendar day following the Final Call Notice Date. See “Final Call Notice Date” below.

In the event that the Final Call Notice Date is postponed because it is not a Trading Day or due to a Market Disruption Event or otherwise, the Issuer shall give notice of such postponement as promptly as possible, and in no
case later than two Business Days following the scheduled Final Call Notice Date, (i) to the holder of this SPARQS by mailing notice of such
	

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	 		postponement by first class mail, postage prepaid, to the holder’s last address as it shall appear upon the registry books, (ii) to the Trustee by telephone or facsimile confirmed by mailing such
notice to the Trustee by first class mail, postage prepaid, at its New York office and (iii) to The Depository Trust Company (the “Depositary”) by telephone or facsimile confirmed by mailing such notice to the Depositary by first class
mail, postage prepaid. Any notice that is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the holder of this SPARQS receives the notice. Notice of the date to which the Maturity Date has
been rescheduled as a result of postponement of the Final Call Notice Date, if applicable, shall be included in the Issuer’s notice of exercise of the Morgan Stanley Call Right.
	
	 	 
	Interest Payment Dates
		February 20, 2007, May 20, 2007, August 20, 2007 and the Maturity Date.

If the scheduled Maturity Date is postponed due to a Market Disruption Event or otherwise, the Issuer shall pay interest on the Maturity Date as postponed rather than on the scheduled Maturity Date, but no interest will accrue
on this SPARQS or on such payment during the period from or after the scheduled Maturity Date.
	
	 	 
	Record Date
		Notwithstanding the definition of “Record Date” on page 24 hereof, the Record Date for each Interest Payment Date, including the Interest Payment Date scheduled to occur on the Maturity Date,
shall be the date 5 calendar days prior to such scheduled Interest Payment Date, whether or not that date is a Business Day; provided, however, that in the event that the Issuer exercises
the Morgan Stanley Call Right, no Interest Payment Date shall occur after the Morgan Stanley Notice Date, except for any Interest Payment Date for which the Morgan Stanley Notice Date falls on or after the “ex-interest” date for the
related interest payment, in which case the related interest payment shall be made on such Interest Payment Date; and provided, further, that accrued but unpaid interest
	

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			payable on the Call Date, if any, shall be payable to the person to whom the Call Price is payable. The “ex- interest” date for any interest payment is the date on which purchase transactions
in the SPARQS no longer carry the right to receive such interest payment.

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

5

			whether or not the holder of this SPARQS receives the notice. Failure to give notice by mail or any defect in the notice to the holder of any SPARQS shall not affect the validity of the proceedings for
the exercise of the Morgan Stanley Call Right with respect to any other SPARQS.

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

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

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

If this SPARQS is not surrendered for exchange on the Call Date, it shall be deemed to be no longer Outstanding under, and as defined in, the Senior Indenture after the Call Date, except with respect to the

	

6

	 		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
		November 10, 2007; provided that if such date is not a Trading Day or if a Market Disruption Event occurs on such day, the Final Call Notice
Date will be the immediately succeeding Trading Day on which no Market Disruption Event occurs.
	
	 	 
	Call Date
		The day specified in the Issuer’s notice of mandatory exchange, on which the Issuer shall deliver cash to the holder of this SPARQS, for mandatory exchange, which day may be any scheduled Trading
Day on or after the First Call Date or the Maturity Date (including the Maturity Date as it may be extended and regardless of whether the Maturity Date is a scheduled Trading Day). See “Maturity Date” above.
	
	 	 
	Call Price
		The Call Price with respect to any Call Date is an amount of cash per each Stated Principal Amount of this SPARQS, as calculated by the Calculation Agent, such that the sum of the present values of all
cash flows on each Stated Principal Amount of this SPARQS to and including the Call Date (i.e., the Call Price and all of the interest payments, including accrued and unpaid interest payable
on the Call Date), discounted to the Original Issue Date from the applicable payment date at the Yield to Call rate computed on the basis of a 360-day year of twelve 30- day months, equals the Issue Price, as determined by the Calculation
Agent.
	
	 	 
	Exchange at Maturity
		At maturity, subject to
	      a prior call of this SPARQS for cash in an amount equal to the Call Price
	      by the Issuer as described under “Morgan Stanley Call Right” above
	      or any acceleration of the  SPARQS, upon delivery of this SPARQS to the
	      Trustee, each Stated Principal Amount
	      of this SPARQS shall be applied by the Issuer as payment for a number
    of shares of the Underlying 
	

7

			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 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 

	

8

			(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 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.

	

9

	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 will be based on the comparable yield that the Issuer would pay on a non-interest bearing, senior unsecured debt obligation
of the Issuer having a maturity equal to the term of each such remaining scheduled payment, as determined by the Calculation Agent.

	

	No Fractional Shares

		Upon delivery of this SPARQS to
	      the Trustee at maturity, the Issuer shall deliver the aggregate number
	      of shares of 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.

	

10

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

	 		
if the Underlying Stock (or any such other security) is listed or admitted to trading on a national securities exchange, the last reported sale price, regular way, of the principal trading session on such day on the principal United States securities exchange registered under the Securities Exchange Act of
1934, as amended (the “Exchange Act”), on which the Underlying Stock (or any such other security) is listed or admitted to trading,

	
if the Underlying Stock (or any such other security) is a security of the Nasdaq National Market (and provided that the Nasdaq National Market is
not then a national securities exchange), the Nasdaq official closing price published by The Nasdaq Stock Market, Inc. on such day, or

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

	 		If the Underlying Stock
	      (or any such other security) is listed or admitted to trading on any national
	      securities exchange or is a security of the Nasdaq National Market but
	      the last reported sale price  or Nasdaq official closing price, as applicable,
	      is not available pursuant to the preceding sentence, then the Closing
	      Price for one share of the Underlying Stock (or one unit of any such other
	      security) on any Trading Day will mean the last  reported sale price of
	      the principal trading session on the
	      over-the-counter market as reported on the Nasdaq National Market or the
	      OTC Bulletin Board on such day. If, because of a Market 

	

11

	 		Disruption Event (as defined
	      below) or otherwise, the last reported sale price or Nasdaq official closing
	      price, 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 will be the mean, as determined
	      by the Calculation Agent, of the bid prices for the Underlying Stock (or
	      any such other security) obtained from as many recognized dealers in such
	      security, but not exceeding three, as will make such bid prices available
	      to the Calculation Agent. Bids of MS & Co. or any of its affiliates may be included in the calculation of such mean, but only to the extent that any such bid is the highest of the bids obtained. The term “security of the Nasdaq National
Market” will include a security included in any successor to such system, and the term OTC Bulletin Board Service will include any successor service thereto.
	
	 	 
	Trading Day
		A day, as determined by the Calculation Agent, on which trading is generally conducted on the New York Stock Exchange, Inc. (“NYSE”), the American Stock Exchange LLC, the Nasdaq National
Market, the Chicago Mercantile Exchange, the Chicago Board of Options Exchange and in the over-the-counter market for equity securities in the United States.
	
	 	 
	Calculation Agent
		Morgan Stanley & Co. Incorporated (“MS & Co.”) and its successors.

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

12

			
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
	      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
	

13

			 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. “Extraordinary
    Dividend” means each of (a) the full amount per share of Underlying
    Stock of any cash dividend or special dividend or distribution that is identified
    by the Underlying Company as an extraordinary or special dividend or distribution,
    (b) the excess of any cash dividend or other cash distribution (that is not
    otherwise identified by the Underlying Company as an extraordinary or special
    dividend or distribution) distributed per share of Underlying Stock over
    the immediately preceding cash dividend or other cash distribution, if any,
    per share of Underlying Stock that did not include an Extraordinary Dividend
    (as adjusted for any subsequent corporate event requiring an adjustment hereunder,
    such as a stock split or reverse stock split) if such excess portion of the
    dividend or distribution is more than 5% of the Closing Price of the Underlying
    Stock on the Trading Day preceding the “ex-dividend date”
(that is, the day on and after which transactions in
the Underlying Stock on an organized securities exchange or trading system no
longer carry the right to receive that cash
	

14

			 dividend or other cash distribution)
	      for the payment of such cash dividend or other cash distribution (such
	      Closing Price, the “Base Closing Price”) and (c) the full cash value of any non-cash dividend or distribution per share of Underlying Stock (excluding Marketable Securities, as
defined in paragraph 5 below). Subject to the following sentence, if any cash dividend or distribution of such other property with respect to the Underlying Stock includes an Extraordinary Dividend, the Exchange Ratio with respect to the Underlying
Stock shall be adjusted on the ex-dividend date so that the new Exchange Ratio shall equal the product of (i) the prior Exchange Ratio and (ii) a fraction, the numerator of which is the Base Closing Price, and the denominator of which is the amount
by which the Base Closing Price exceeds the Extraordinary Dividend. If any Extraordinary Dividend is at least 35% of the Base Closing Price, then, instead of adjusting the Exchange Ratio, the amount payable upon exchange at maturity shall be
determined as described in paragraph 5 below, and the Extraordinary Dividend shall be allocated to Reference Basket Stocks in accordance with the procedures for a Reference Basket Event as described in clause (c)(ii) of paragraph 5 below. The value
of the non-cash component of an Extraordinary Dividend shall be determined on the ex-dividend date for such distribution by the Calculation Agent, whose determination shall be conclusive in the absence of manifest error. A distribution on 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 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

	

15

	 		 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 The Nasdaq National Market (a “Marketable Security”), other securities or other property, assets or cash (collectively “Exchange Property”), the amount payable upon exchange at maturity with
respect to each 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 Day prior to the scheduled
    Maturity Date (taking 

	

16

			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
	

17

	 		 to such Reorganization
	      Event or, if the Underlying Stock is surrendered exclusively for Non-Stock
	      Exchange  Property (in each case, a “Reference Basket Event”),
	      an initially equal- dollar weighted basket of three Reference Basket Stocks
	      (as defined below) with an aggregate value on the effective date of such
	      Reorganization Event equal to the  Non-Stock Exchange Property Value multiplied
	      by the Exchange Ratio in effect for the Underlying Stock on the Trading
	      Day immediately prior to the effective date of such Reorganization Event.
	      The “Reference Basket Stocks” shall be the three
stocks with the largest market capitalization among the stocks that then comprise
	      the S&P 500 Index (or, if publication of such index is discontinued,
	      any successor or substitute index selected by the Calculation Agent in
	      its sole discretion)  with the same primary Standard Industrial Classification
	      Code (“SIC Code”) as 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

	

18

	 		 equal to the product of (a) the
	      Non-Stock Exchange Property Value, (b) the Exchange Ratio in effect for
	      the Underlying Stock on the Trading Day immediately prior to the effective
	      date of such Reorganization Event and (c) 0.3333333.

	

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

	

	 	
(x)	
if applicable, the Underlying Stock at the Exchange Ratio then in effect; and	
	 	 	 
	 	
(y)	
if applicable, for each New Stock, such New Stock at the New Stock Exchange Ratio then in effect for such New Stock; and	
	 	 	 
	 	
(z)	
if applicable, for each Reference Basket Stock, such Reference Basket Stock at the Basket Stock Exchange Ratio then in effect for such Reference Basket Stock.	
	 	 	 

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

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

	

19

			 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 “Underlying Stock” under “No Fractional Shares,” “Closing Price” and “Market
Disruption Event” shall be deemed to also refer to any New Stock or Reference Basket Stock, and (ii) all other references in this SPARQS to “Underlying Stock” shall be deemed to refer to the Exchange Property into which this SPARQS is
thereafter exchangeable and references to a “share” or “shares” of Underlying Stock shall be deemed to refer to the applicable unit or units of such Exchange Property, including any New Stock or Reference Basket Stock, unless the
context otherwise requires. The New Stock Exchange Ratio(s) or Basket Stock Exchange Ratios resulting from any Reorganization Event described in paragraph 5 above or similar adjustment under paragraph 4 above shall be subject to the adjustments set
forth in paragraphs 1 through 5 hereof.

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

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

	

20

			 to the close of business
	      on the third Trading Day prior to the scheduled Maturity Date.

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

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

	

21

			 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.

	

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

	

22

	 		 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 case plus accrued but unpaid interest to but excluding the date of acceleration; provided that if the Issuer has called the SPARQS in accordance with the Morgan Stanley Call
Right, the amount declared due and payable upon any such acceleration shall be an amount in cash for each Stated Principal Amount of this SPARQS equal to the Call Price for the Call Date specified in the Issuer’s notice of mandatory exchange,
plus accrued but unpaid interest to but excluding the date of acceleration.
	
	 	 
	Treatment of SPARQS for United States	 
	    Federal Income
	      Tax Purposes
	The Issuer, by its sale of this
	      SPARQS, and the holder of this SPARQS (and any successor holder of,
	      or holder of a beneficial interest in, this SPARQS), by its respective
	      purchase hereof, agree (in the absence of an administrative determination
	      or judicial ruling to the contrary) to characterize each Stated Principal
	      Amount of this SPARQS for all tax purposes as a unit consisting of
	      (A) a terminable contract (the “Terminable Forward
Contract”) that (i) requires the holder of this SPARQS (subject to the Morgan
Stanley Call Right) to purchase, and the Issuer to sell, for an amount
equal to $           (the “Forward Price”), the Underlying
Stock at maturity and (ii) allows the Issuer, 
	

23

	 
		upon exercise of the Morgan Stanley
	      Call Right, to terminate the Terminable Forward Contract by returning
	      to such holder the Deposit (as defined below) and paying to such holder
	      an amount of cash equal to the difference between the Deposit and the
	      Call  Price and (B) a deposit with the Issuer of a fixed amount of cash,
	      equal to the Issue Price per each Stated Principal Amount of this SPARQS,
	      to secure the holder’s obligation to purchase the Underlying Stock
	      pursuant to the Terminable Forward  Contract (the “Deposit”),
	      which Deposit bears a quarterly compounded yield of      % per annum, provided,
	      however, that any interest payments on this SPARQS made to non-U.S. investors
	      will generally be withheld upon at a rate of 30%.

	

24

     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,

25

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

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

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

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

26

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.

27

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

	Date:	 	MORGAN STANLEY
	 	 	 	 	 
	 	 	By:	 
	 	 	 	

	 	 	 	Name:	 
	 	 	 	Title:	 

TRUSTEE’S CERTIFICATE 

   OF AUTHENTICATION

This is one of the Notes referred 

   to in the within-mentioned 

   Senior Indenture.

THE BANK OF NEW YORK

   (as successor Trustee

   to JP MORGAN CHASE

   BANK, N.A.), as Trustee 

	
By:		 	
			

	
	 		
Authorized Officer

28

FORM OF REVERSE OF SECURITY

     This Note is one of a
duly authorized issue of Senior Global Medium-Term Notes, Series F, having maturities
more than nine months from the date of issue (the “Notes”) of the Issuer.
The Notes are issuable under a Senior Indenture, dated as of November 1, 2004,
between the Issuer and The Bank of New York (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

29

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

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

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

30

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

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

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

     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 

31

aggregate principal amount having identical terms and provisions.
All such exchanges and transfers of Notes will be free of charge, but the Issuer
may require payment of a sum sufficient to cover any tax or other governmental
charge in connection therewith. All Notes surrendered for exchange shall be accompanied
by a written instrument of transfer in form satisfactory to the Issuer and the
Trustee and executed by  the registered holder in person or by the holder’s
attorney duly authorized in writing. The date of registration of any Note delivered
upon any exchange or transfer of Notes shall be such that no gain or loss of
interest results from such  exchange or transfer.

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

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

32

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

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

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

33

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

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

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

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

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

34

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

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

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

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

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

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

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

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

35

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

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

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

36

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

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

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

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

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

     No recourse shall be had for the payment of the principal of, premium, if any, or the interest on this Note, for any claim based hereon, or otherwise in respect hereof, or based on or in respect of
the Senior Indenture or any indenture supplemental thereto, against any 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,

37

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.

38

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.

______________________________

39

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. 

40

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.	

41

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