Document:

FORM OF FIXED RATE SENIOR NOTE

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

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

<PAGE>

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

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

                         8% SPARQS(R) DUE MARCH 1, 2006
                            MANDATORILY EXCHANGEABLE
                         FOR SHARES OF COMMON STOCK OF
                                  XILINX, INC.

--------------------------------------------------------------------------------
ORIGINAL ISSUE DATE: INITIAL REDEMPTION  INTEREST RATE:     MATURITY DATE: See
                       DATE: See           per annum          "Maturity Date"
                       "Morgan Stanley     (equivalent to     below.
                       Call Right"         $  per annum
                       below.              per SPARQS)

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

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

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

                                      A-2
<PAGE>

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

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

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

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

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

                                      A-3
<PAGE>

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

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

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

Morgan Stanley Call Right.......  On any scheduled Trading Day on or after
                                  September 1, 2005 or on the Maturity Date
                                  (including the Maturity Date as it may be
                                  extended and regardless of whether the
                                  Maturity Date is a Trading Day), the Issuer
                                  may call the SPARQS, in whole but not in part,
                                  for mandatory exchange for the Call Price paid
                                  in cash (together with accrued but unpaid
                                  interest) on the Call Date.

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

                                      A-4
<PAGE>

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

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

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

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

                                      A-5
<PAGE>

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

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

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

Final Call Notice Date..........  February 17, 2006; provided that if February
                                  17, 2006 is not a Trading Day or if a Market
                                  Disruption Event occurs on such day, the Final
                                  Call Notice Date will be the immediately
                                  succeeding Trading Day on which no Market
                                  Disruption Event occurs.

Call Date.......................  The day specified in the Issuer's notice of
                                  mandatory exchange, on which the Issuer shall
                                  deliver cash to the holder of this SPARQS, for
                                  mandatory exchange, which day may be any
                                  scheduled Trading Day on or after September 1,
                                  2005 or the Maturity Date (including the
                                  Maturity Date as it may be extended and
                                  regardless of whether the Maturity Date is a
                                  scheduled Trading Day). See "Maturity Date"
                                  above.

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

                                      A-6
<PAGE>

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

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

                                  The Issuer shall, or shall cause the
                                  Calculation Agent to, provide written notice
                                  to the Trustee at its New York Office and to
                                  the Depositary, on which notice the Trustee
                                  and Depositary may conclusively rely, on or
                                  prior to 10:30 a.m. on the Trading Day
                                  immediately prior to maturity of this SPARQS
                                  (but if such Trading Day is not a Business
                                  Day, prior to the close of business on the
                                  Business Day preceding the maturity of this
                                  SPARQS), of the amount of Xilinx Stock (or the
                                  amount of Exchange Property) or cash to be
                                  delivered with respect to each $ principal
                                  amount of this SPARQS and of the amount of any
                                  cash to be paid in lieu of any fractional
                                  share of Xilinx 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"

                                      A-7
<PAGE>

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

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

                                      A-8
<PAGE>

                                  as described in the preceding paragraph under
                                  this heading.

Price Event Acceleration........  If on any two consecutive Trading Days during
                                  the period prior to and ending on the third
                                  Business Day immediately preceding the
                                  Maturity Date, the product of the Closing
                                  Price per share of Xilinx Stock and the
                                  Exchange Ratio is less than $2.00, the
                                  Maturity Date of this SPARQS shall be deemed
                                  to be accelerated to the third Business Day
                                  immediately following such second Trading Day
                                  (the "date of acceleration"). Upon such
                                  acceleration, the holder of each $ principal
                                  amount of this SPARQS shall receive per SPARQS
                                  on the date of acceleration:

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

                                     (ii) accrued but unpaid interest on each $
                                     principal amount of this SPARQS to but
                                     excluding the date of acceleration; and

                                     (iii) an amount of cash as determined by
                                     the Calculation Agent equal to the sum of
                                     the present values of the remaining
                                     scheduled payments of interest on each
                                     $      principal amount of this SPARQS
                                     (excluding the amounts included in clause
                                     (ii) above) discounted to the date of
                                     acceleration. The present value of each
                                     remaining scheduled payment will be based
                                     on the comparable yield that the Issuer
                                     would pay on a non-interest bearing, senior
                                     unsecured debt obligation of the Issuer
                                     having a maturity equal to the term of each
                                     such remaining scheduled payment, as
                                     determined by the Calculation Agent.

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

                                      A-9
<PAGE>

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

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

                                  o  if Xilinx 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 Xilinx Stock (or
                                     any such other security) is listed or
                                     admitted to trading,

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

                                  o  if Xilinx 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 Xilinx 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 Xilinx 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

                                      A-10
<PAGE>

                                  Market Disruption Event (as defined below) or
                                  otherwise, the last reported sale price or
                                  Nasdaq official closing price, as applicable,
                                  for Xilinx 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 Xilinx Stock (or any such other
                                  security) obtained from as many recognized
                                  dealers in such security, but not exceeding
                                  three, as will make such bid prices available
                                  to the Calculation Agent. Bids of MS & Co. or
                                  any of its affiliates may be included in the
                                  calculation of such mean, but only to the
                                  extent that any such bid is the highest of the
                                  bids obtained. The term "security of the
                                  Nasdaq National Market" will include a
                                  security included in any successor to such
                                  system, and the term OTC Bulletin Board
                                  Service will include any successor service
                                  thereto.

Trading Day.....................  A day, as determined by the Calculation Agent,
                                  on which trading is generally conducted on the
                                  New York Stock Exchange, Inc. ("NYSE"), the
                                  American Stock Exchange LLC, the Nasdaq
                                  National Market, the Chicago Mercantile
                                  Exchange and the Chicago Board of Options
                                  Exchange and in the over-the-counter market
                                  for equity securities in the United States.

Calculation Agent...............  MS & Co. and its successors.

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

                                  All determinations made by the Calculation
                                  Agent shall be at the sole discretion of the
                                  Calculation Agent and shall, in the absence of
                                  manifest error, be

                                      A-11
<PAGE>

                                  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 Xilinx 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 Xilinx Stock.

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

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

                                      A-12
<PAGE>

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

                                      A-13
<PAGE>

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

                                      A-14
<PAGE>

                                  distribution of such spinoff stock) shall be
                                  determined in accordance with the following:

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

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

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

                                      A-15
<PAGE>

                                        Exchange Property Value multiplied by
                                        the Exchange Ratio in effect for Xilinx
                                        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 Xilinx
                                        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 Xilinx Stock on the
                                        Trading Day immediately prior to the
                                        effective date relating to such
                                        Reorganization Event or, if Xilinx 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 Xilinx
                                        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 Xilinx; 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

                                      A-16
<PAGE>

                                        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
                                        Xilinx. Each Reference Basket Stock
                                        shall be assigned a Basket Stock
                                        Exchange Ratio equal to the number of
                                        shares of such Reference Basket Stock
                                        with a Closing Price on the effective
                                        date of such Reorganization Event equal
                                        to the product of (a) the Non-Stock
                                        Exchange Property Value, (b) the
                                        Exchange Ratio in effect for Xilinx
                                        Stock on the Trading Day immediately
                                        prior to the effective date of such
                                        Reorganization Event and (c) 0.3333333.

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

                                     (x) if applicable, Xilinx 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.

                                      A-17
<PAGE>

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

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

                                      A-18
<PAGE>

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

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

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

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

                                      A-19
<PAGE>

                                     prices for Xilinx Stock during the last
                                     one-half hour preceding the close of the
                                     principal trading session in such market
                                     are materially inaccurate; or the
                                     suspension, absence or material limitation
                                     of trading on the primary market for
                                     trading in options contracts related to
                                     Xilinx Stock, if available, during the
                                     one-half hour period preceding the close of
                                     the principal trading session in the
                                     applicable market, in each case as
                                     determined by the Calculation Agent in its
                                     sole discretion; and

                                     (ii) a determination by the Calculation
                                     Agent in its sole discretion that any event
                                     described in clause (i) above materially
                                     interfered with the ability of the Issuer
                                     or any of its affiliates to unwind or
                                     adjust all or a material portion of the
                                     hedge with respect to the SPARQS due March
                                     1, 2006, Mandatorily Exchangeable for
                                     Shares of Common Stock of Xilinx, Inc.

                                  For purposes of determining whether a Market
                                  Disruption Event has occurred: (1) a
                                  limitation on the hours or number of days of
                                  trading shall not constitute a Market
                                  Disruption Event if it results from an
                                  announced change in the regular business hours
                                  of the relevant exchange, (2) a decision to
                                  permanently discontinue trading in the
                                  relevant options contract shall not constitute
                                  a Market Disruption Event, (3) limitations
                                  pursuant to NYSE Rule 80A (or any applicable
                                  rule or regulation enacted or promulgated by
                                  the NYSE, any other self-regulatory
                                  organization or the Securities and Exchange
                                  Commission of scope similar to NYSE Rule 80A
                                  as determined by the Calculation Agent) on
                                  trading during significant market fluctuations
                                  shall constitute a suspension, absence or
                                  material limitation of trading, (4) a
                                  suspension of trading in options contracts on
                                  Xilinx 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 Xilinx Stock and (5) a suspension,

                                      A-20
<PAGE>

                                  absence or material limitation of trading on
                                  the primary securities market on which options
                                  contracts related to Xilinx Stock are traded
                                  shall not include any time when such
                                  securities market is itself closed for trading
                                  under ordinary circumstances.

Alternate Exchange Calculation
 in Case of an Event of Default.  In case an event of default with respect to
                                  the SPARQS shall have occurred and be
                                  continuing, the amount declared due and
                                  payable per each $        principal amount of
                                  this SPARQS upon any acceleration of this
                                  SPARQS (an "Event of Default Acceleration")
                                  shall be determined by the Calculation Agent
                                  and shall be an amount in cash equal to the
                                  lesser of (i) the product of (x) the Closing
                                  Price of Xilinx Stock (and/or the value of any
                                  Exchange Property) as of the date of such
                                  acceleration and (y) the then current Exchange
                                  Ratio and (ii) the Call Price calculated as
                                  though the date of acceleration were the Call
                                  Date (but in no event less than the Call Price
                                  for the first Call Date), in each case plus
                                  accrued but unpaid interest to but excluding
                                  the date of acceleration; provided that if the
                                  Issuer has called the SPARQS in accordance
                                  with the Morgan Stanley Call Right, the amount
                                  declared due and payable upon any such
                                  acceleration shall be an amount in cash for
                                  each $ principal amount of this SPARQS equal
                                  to the Call Price for the Call Date specified
                                  in the Issuer's notice of mandatory exchange,
                                  plus accrued but unpaid interest to but
                                  excluding the date of acceleration.

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

                                      A-21
<PAGE>

                                  exercise of the Morgan Stanley Call Right, to
                                  terminate the Terminable Forward Contract by
                                  returning to such holder the Deposit (as
                                  defined below) and paying to such holder an
                                  amount of cash equal to the difference between
                                  the Deposit and the Call Price and (B) a
                                  deposit with the Issuer of a fixed amount of
                                  cash, equal to the Issue Price per each $
                                  principal amount of this SPARQS, to secure the
                                  holder's obligation to purchase Xilinx Stock
                                  pursuant to the Terminable Forward Contract
                                  (the "Deposit"), which Deposit bears a
                                  quarterly compounded yield of % per annum.

                                      A-22
<PAGE>

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

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

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

                                      A-23
<PAGE>

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

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

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

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

                                      A-24
<PAGE>

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

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

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

                                      A-25
<PAGE>

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

DATED:                               MORGAN STANLEY

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

TRUSTEE'S CERTIFICATE
  OF AUTHENTICATION

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

JPMORGAN CHASE BANK, N.A.,
  as Trustee

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

                                      A-26
<PAGE>

                              REVERSE OF SECURITY

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

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

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

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

                                      A-27
<PAGE>

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

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

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

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

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

                                      A-28
<PAGE>

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

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

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

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

                                      A-29
<PAGE>

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

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

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

                                      A-30
<PAGE>

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

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

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

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

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

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

                                      A-31
<PAGE>

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

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

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

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

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

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

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

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

                                      A-32
<PAGE>

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

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

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

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

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

                                      A-33
<PAGE>

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

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

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

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

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

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

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

                                      A-34
<PAGE>

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

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

                                      A-35
<PAGE>

                                 ABBREVIATIONS

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

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

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

     Under Uniform Gifts to Minors Act __________________________
                                               (State)

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

                           _________________________

                                      A-36
<PAGE>

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

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

________________________________________________________________________________

________________________________________________________________________________

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

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

Dated: ____________________________

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

                                      A-37
<PAGE>

                           OPTION TO ELECT REPAYMENT

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

________________________________________________________________________________

________________________________________________________________________________

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

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

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

                                      A-38FORM OF FIXED RATE SENIOR NOTE

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

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

<PAGE>

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

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

                         8% SPARQS(R) DUE MARCH 1, 2006
                            MANDATORILY EXCHANGEABLE
                         FOR SHARES OF COMMON STOCK OF
                               CONSOL ENERGY INC.

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

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

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

                                      A-2
<PAGE>

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

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

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

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

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

                                      A-3
<PAGE>

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

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

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

Morgan Stanley Call Right.......  On any scheduled Trading Day on or after
                                  September 1, 2005 or on the Maturity Date
                                  (including the Maturity Date as it may be
                                  extended and regardless of whether the
                                  Maturity Date is a Trading Day), the Issuer
                                  may call the SPARQS, in whole but not in part,
                                  for mandatory exchange for the Call Price paid
                                  in cash (together with accrued but unpaid
                                  interest) on the Call Date.

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

                                      A-4
<PAGE>

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

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

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

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

                                      A-5
<PAGE>

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

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

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

Final Call Notice Date..........  February 17, 2006; provided that if February
                                  17, 2006 is not a Trading Day or if a Market
                                  Disruption Event occurs on such day, the Final
                                  Call Notice Date will be the immediately
                                  succeeding Trading Day on which no Market
                                  Disruption Event occurs.

Call Date.......................  The day specified in the Issuer's notice of
                                  mandatory exchange, on which the Issuer shall
                                  deliver cash to the holder of this SPARQS, for
                                  mandatory exchange, which day may be any
                                  scheduled Trading Day on or after September 1,
                                  2005 or the Maturity Date (including the
                                  Maturity Date as it may be extended and
                                  regardless of whether the Maturity Date is a
                                  scheduled Trading Day). See "Maturity Date"
                                  above.

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

                                      A-6
<PAGE>

Exchange at Maturity............  At maturity, subject to a prior call of this
                                  SPARQS for cash in an amount equal to the Call
                                  Price by the Issuer as described under "Morgan
                                  Stanley Call Right" above or any acceleration
                                  of the SPARQS, upon delivery of this SPARQS to
                                  the Trustee, each $        principal amount
                                  of this SPARQS shall be applied by the Issuer
                                  as payment for a number of shares of the
                                  common stock of CONSOL Energy Inc. ("CONSOL
                                  Stock") at the Exchange Ratio, and the Issuer
                                  shall deliver with respect to each $
                                  principal amount of this SPARQS an amount of
                                  CONSOL Stock equal to the Exchange Ratio.

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

                                  The Issuer shall, or shall cause the
                                  Calculation Agent to, provide written notice
                                  to the Trustee at its New York Office and to
                                  the Depositary, on which notice the Trustee
                                  and Depositary may conclusively rely, on or
                                  prior to 10:30 a.m. on the Trading Day
                                  immediately prior to maturity of this SPARQS
                                  (but if such Trading Day is not a Business
                                  Day, prior to the close of business on the
                                  Business Day preceding the maturity of this
                                  SPARQS), of the amount of CONSOL Stock (or the
                                  amount of Exchange Property) or cash to be
                                  delivered with respect to each $
                                  principal amount of this SPARQS and of the
                                  amount of any cash to be paid in lieu of any
                                  fractional share of CONSOL 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

                                      A-7
<PAGE>

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

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

                                      A-8
<PAGE>

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

Price Event Acceleration........  If on any two consecutive Trading Days during
                                  the period prior to and ending on the third
                                  Business Day immediately preceding the
                                  Maturity Date, the product of the Closing
                                  Price per share of CONSOL Stock and the
                                  Exchange Ratio is less than $2.00, the
                                  Maturity Date of this SPARQS shall be deemed
                                  to be accelerated to the third Business Day
                                  immediately following such second Trading Day
                                  (the "date of acceleration"). Upon such
                                  acceleration, the holder of each $
                                  principal amount of this SPARQS shall receive
                                  per SPARQS on the date of acceleration:

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

                                     (ii) accrued but unpaid interest on each
                                     $        principal amount of this SPARQS
                                     to but excluding the date of acceleration;
                                     and

                                     (iii) an amount of cash as determined by
                                     the Calculation Agent equal to the sum of
                                     the present values of the remaining
                                     scheduled payments of interest on each

                                     $        principal amount of this SPARQS
                                     (excluding the amounts included in clause
                                     (ii) above) discounted to the date of
                                     acceleration. The present value of each
                                     remaining scheduled payment will be based
                                     on the comparable yield that the Issuer
                                     would pay on a non-interest bearing, senior
                                     unsecured debt obligation of the Issuer
                                     having a maturity equal to the term of each
                                     such remaining scheduled payment, as
                                     determined by the Calculation Agent.

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

                                      A-9
<PAGE>

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

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

                                  o  if CONSOL 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 CONSOL Stock (or
                                     any such other security) is listed or
                                     admitted to trading,

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

                                  o  if CONSOL 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 CONSOL 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 CONSOL 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

                                      A-10
<PAGE>

                                  Board on such day. If, because of a Market
                                  Disruption Event (as defined below) or
                                  otherwise, the last reported sale price or
                                  Nasdaq official closing price, as applicable,
                                  for CONSOL 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 CONSOL Stock (or any such other
                                  security) obtained from as many recognized
                                  dealers in such security, but not exceeding
                                  three, as will make such bid prices available
                                  to the Calculation Agent. Bids of MS & Co. or
                                  any of its affiliates may be included in the
                                  calculation of such mean, but only to the
                                  extent that any such bid is the highest of the
                                  bids obtained. The term "security of the
                                  Nasdaq National Market" will include a
                                  security included in any successor to such
                                  system, and the term OTC Bulletin Board
                                  Service will include any successor service
                                  thereto.

Trading Day.....................  A day, as determined by the Calculation Agent,
                                  on which trading is generally conducted on the
                                  New York Stock Exchange, Inc. ("NYSE"), the
                                  American Stock Exchange LLC, the Nasdaq
                                  National Market, the Chicago Mercantile
                                  Exchange and the Chicago Board of Options
                                  Exchange and in the over-the-counter market
                                  for equity securities in the United States.

Calculation Agent...............  MS & Co. and its successors.

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

                                  All determinations made by the Calculation
                                  Agent shall be at the sole discretion of the
                                  Calculation Agent and shall, in the absence of
                                  manifest error, be

                                      A-11
<PAGE>

                                  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 CONSOL 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 CONSOL Stock.

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

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

                                      A-12
<PAGE>

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

                                      A-13
<PAGE>

                                  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 CONSOL 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) CONSOL Stock is
                                  reclassified or changed, including, without
                                  limitation, as a result of the issuance of any
                                  tracking stock by CONSOL, (ii) CONSOL has been
                                  subject to any merger, combination or
                                  consolidation and is not the surviving entity,
                                  (iii) CONSOL completes a statutory exchange of
                                  securities with another corporation (other
                                  than pursuant to clause (ii) above), (iv)
                                  CONSOL is liquidated, (v) CONSOL issues to all
                                  of its shareholders equity securities of an
                                  issuer other than CONSOL (other than in a
                                  transaction described in clause (ii), (iii) or
                                  (iv) above) (a "spinoff stock") or (vi) CONSOL
                                  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 CONSOL Stock receive any
                                  equity security listed on a national
                                  securities exchange or traded on The Nasdaq
                                  National Market (a "Marketable Security"),
                                  other securities or other property, assets or
                                  cash (collectively "Exchange Property"), the
                                  amount payable upon exchange at maturity with
                                  respect to each $   principal

                                      A-14
<PAGE>

                                  amount of this SPARQS following the effective
                                  date for such Reorganization Event (or, if
                                  applicable, in the case of spinoff stock, the
                                  ex-dividend date for the distribution of such
                                  spinoff stock) shall be determined in
                                  accordance with the following:

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

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

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

                                      A-15
<PAGE>

                                        proportion to the relative Closing
                                        Prices of CONSOL 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 CONSOL 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 CONSOL
                                        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 CONSOL Stock on the
                                        Trading Day immediately prior to the
                                        effective date relating to such
                                        Reorganization Event or, if CONSOL 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 CONSOL
                                        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 CONSOL; 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

                                      A-16
<PAGE>

                                        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 CONSOL. Each Reference
                                        Basket Stock shall be assigned a Basket
                                        Stock Exchange Ratio equal to the number
                                        of shares of such Reference Basket Stock
                                        with a Closing Price on the effective
                                        date of such Reorganization Event equal
                                        to the product of (a) the Non-Stock
                                        Exchange Property Value, (b) the
                                        Exchange Ratio in effect for CONSOL
                                        Stock on the Trading Day immediately
                                        prior to the effective date of such
                                        Reorganization Event and (c) 0.3333333.

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

                                     (x) if applicable, CONSOL 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

                                      A-17
<PAGE>

                                  Basket Stock Exchange Ratio) shall be
                                  determined by the Calculation Agent on the
                                  third Trading Day prior to the scheduled
                                  Maturity Date.

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

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

                                      A-18
<PAGE>

                                  promptly as possible and in no event later
                                  than five Business Days after the date of the
                                  Reference Basket Event.

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

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

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

                                     (i) a suspension, absence or material
                                     limitation of trading of CONSOL Stock on
                                     the primary market for CONSOL Stock for
                                     more than two hours of trading or during
                                     the one-half hour period

                                      A-19
<PAGE>

                                     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
                                     CONSOL Stock as a result of which the
                                     reported trading prices for CONSOL Stock
                                     during the last one-half hour preceding the
                                     close of the principal trading session in
                                     such market are materially inaccurate; or
                                     the suspension, absence or material
                                     limitation of trading on the primary market
                                     for trading in options contracts related to
                                     CONSOL Stock, if available, during the
                                     one-half hour period preceding the close of
                                     the principal trading session in the
                                     applicable market, in each case as
                                     determined by the Calculation Agent in its
                                     sole discretion; and

                                     (ii) a determination by the Calculation
                                     Agent in its sole discretion that any event
                                     described in clause (i) above materially
                                     interfered with the ability of the Issuer
                                     or any of its affiliates to unwind or
                                     adjust all or a material portion of the
                                     hedge with respect to the SPARQS due March
                                     1, 2006, Mandatorily Exchangeable for
                                     Shares of Common Stock of CONSOL Energy
                                     Inc.

                                  For purposes of determining whether a Market
                                  Disruption Event has occurred: (1) a
                                  limitation on the hours or number of days of
                                  trading shall not constitute a Market
                                  Disruption Event if it results from an
                                  announced change in the regular business hours
                                  of the relevant exchange, (2) a decision to
                                  permanently discontinue trading in the
                                  relevant options contract shall not constitute
                                  a Market Disruption Event, (3) limitations
                                  pursuant to NYSE Rule 80A (or any applicable
                                  rule or regulation enacted or promulgated by
                                  the NYSE, any other self-regulatory
                                  organization or the Securities and Exchange
                                  Commission of scope similar to NYSE Rule 80A
                                  as determined by the Calculation Agent) on
                                  trading during significant market fluctuations
                                  shall constitute a suspension, absence or
                                  material limitation of trading, (4) a
                                  suspension of trading in options contracts on
                                  CONSOL 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

                                      A-20
<PAGE>

                                  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 CONSOL Stock and (5) a suspension,
                                  absence or material limitation of trading on
                                  the primary securities market on which options
                                  contracts related to CONSOL Stock are traded
                                  shall not include any time when such
                                  securities market is itself closed for trading
                                  under ordinary circumstances.

Alternate Exchange Calculation
 in Case of an Event
 of Default...................    In case an event of default with respect to
                                  the SPARQS shall have occurred and be
                                  continuing, the amount declared due and
                                  payable per each $         principal amount
                                  of this SPARQS upon any acceleration of this
                                  SPARQS (an "Event of Default Acceleration")
                                  shall be determined by the Calculation Agent
                                  and shall be an amount in cash equal to the
                                  lesser of (i) the product of (x) the Closing
                                  Price of CONSOL Stock (and/or the value of
                                  any Exchange Property) as of the date of such
                                  acceleration and (y) the then current
                                  Exchange Ratio and (ii) the Call Price
                                  calculated as though the date of acceleration
                                  were the Call Date (but in no event less than
                                  the Call Price for the first Call Date), in
                                  each case plus accrued but unpaid interest to
                                  but excluding the date of acceleration;
                                  provided that if the Issuer has called the
                                  SPARQS in accordance with the Morgan Stanley
                                  Call Right, the amount declared due and
                                  payable upon any such acceleration shall be
                                  an amount in cash for each $        principal
                                  amount of this SPARQS equal to the Call Price
                                  for the Call Date specified in the Issuer's
                                  notice of mandatory exchange, plus accrued
                                  but unpaid interest to but excluding the date
                                  of acceleration.

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

                                      A-21
<PAGE>

                                  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"), CONSOL
                                  Stock at maturity and (ii) allows the Issuer,
                                  upon exercise of the Morgan Stanley Call
                                  Right, to terminate the Terminable Forward
                                  Contract by returning to such holder the
                                  Deposit (as defined below) and paying to such
                                  holder an amount of cash equal to the
                                  difference between the Deposit and the Call
                                  Price and (B) a deposit with the Issuer of a
                                  fixed amount of cash, equal to the Issue
                                  Price per each $         principal amount of
                                  this SPARQS, to secure the holder's
                                  obligation to purchase CONSOL Stock pursuant
                                  to the Terminable Forward Contract (the
                                  "Deposit"), which Deposit bears a quarterly
                                  compounded yield of % per annum.

                                      A-22
<PAGE>

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

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

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

                                      A-23
<PAGE>

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

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

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

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

                                      A-24
<PAGE>

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

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

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

                                      A-25
<PAGE>

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

DATED:                               MORGAN STANLEY

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

TRUSTEE'S CERTIFICATE
  OF AUTHENTICATION

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

JPMORGAN CHASE BANK, N.A.,
  as Trustee

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

                                      A-26
<PAGE>

                               REVERSE OF SECURITY

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

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

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

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

                                      A-27
<PAGE>

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

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

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

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

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

                                      A-28
<PAGE>

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

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

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

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

                                      A-29
<PAGE>

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

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

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

                                      A-30
<PAGE>

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

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

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

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

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

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

                                      A-31
<PAGE>

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

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

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

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

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

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

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

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

                                      A-32
<PAGE>

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

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

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

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

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

                                      A-33
<PAGE>

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

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

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

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

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

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

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

                                      A-34
<PAGE>

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

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

                                      A-35
<PAGE>

                                 ABBREVIATIONS

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

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

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

     Under Uniform Gifts to Minors Act __________________________
                                               (State)

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

                           _________________________

                                      A-36
<PAGE>

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

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

________________________________________________________________________________

________________________________________________________________________________

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

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

Dated: ____________________________

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

                                      A-37
<PAGE>

                           OPTION TO ELECT REPAYMENT

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

________________________________________________________________________________

________________________________________________________________________________

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

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

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

                                      A-38

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00078-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00078-of-00352.parquet"}]]