Document:

Exhibit
                4.1 

        

    

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

 

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

MORGAN STANLEY

SENIOR
GLOBAL MEDIUM-TERM NOTE, SERIES F

(Fixed Rate) 

HIGH INCOME TRIGGER SECURITIES 

% HITS DUE DECEMBER 20, 2007

MANDATORILY EXCHANGEABLE

FOR SHARES OF
COMMON STOCK OF

SCHLUMBERGER LIMITED (the “HITS”) 

	 ORIGINAL
        ISSUE DATE: 	 INITIAL
        REDEMPTION

   DATE: N/A 	 INTEREST
        RATE:       % per annum  	 MATURITY
        DATE: See

   “Maturity Date” below. 
	 INTEREST
        ACCRUAL

   DATE: 	 INITIAL
        REDEMPTION

   PERCENTAGE: N/A 	 INTEREST
        PAYMENT

   DATE(S): See “Interest Payment    Dates” below.	 OPTIONAL

   REPAYMENT

   DATE(S): N/A 
	 SPECIFIED
        CURRENCY:

   U.S. dollars 	 ANNUAL REDEMPTION

   PERCENTAGE

   REDUCTION: N/A 	 INTEREST
        PAYMENT

   PERIOD: Quarterly 	 APPLICABILITY
        OF

   MODIFIED

   PAYMENT UPON

   ACCELERATION OR

   REDEMPTION: See

   “Alternate Exchange

   Calculation in Case of an

   Event of Default” below. 
	 IF SPECIFIED

   CURRENCY OTHER

   THAN U.S. DOLLARS,

   OPTION TO ELECT

   PAYMENT IN U.S.

   DOLLARS: N/A 	 REDEMPTION
        NOTICE

   PERIOD: N/A 	 APPLICABILITY
        OF

   ANNUAL INTEREST

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

   N/A 
	 EXCHANGE
        RATE

   AGENT: N/A 	 TAX REDEMPTION

   AND PAYMENT OF

   ADDITIONAL

   AMOUNTS: NO 	 PRICE APPLICABLE

   UPON OPTIONAL

   REPAYMENT: N/A 	 ORIGINAL
        YIELD TO

   MATURITY: N/A 
	 OTHER PROVISIONS:

   See below 	 IF YES,
        STATE INITIAL

   OFFERING DATE: N/A 	  	  

 

	Stated Principal Amount

Underlying Company 

Underlying Stock 

Pricing Date
	 
		$           per HITS

Schlumberger Limited (“Schlumberger”)
    

The common stock of Schlumberger

	 	 	 
	Denominations	 	$           and integral multiples thereof

2 

	Initial Share Price

Trigger Level

Trigger Price

Acceleration Trigger Price

Exchange Ratio

		 
		$

       % of the Initial Share Price

$

$

       , which is equal to the Stated Principal Amount divided by the Initial Share Price

	
	 	 	 
	Exchange Factor

		 
		       , subject to adjustment upon the occurrence of certain extraordinary dividends and corporate events affecting the Underlying Stock through and including the Determination Date, as described under
“Antidilution Adjustments” below.

	
	 	 	 
	Interest Payment Dates

		 
		March 20, 2007, June 20, 2007, September 20, 2007 and the Maturity Date.

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

	
	 	 	 
	Maturity Date

		 
		December 20, 2007, subject to acceleration as described below in “Price Event Acceleration” and “Alternate Exchange Calculation in Case of an Event of Default” and subject to
extension if the Determination Date is postponed in accordance with the following paragraph.

If the Determination Date is postponed due to a Market Disruption Event or otherwise, the Maturity Date shall be postponed so that the Maturity Date shall be the second Trading Day following the Determination Date.

	
	 	 	 
	Determination Date

		 
		December 18, 2007; provided that if such date is not a Trading Day or if a Market Disruption Event occurs on such day, the Determination Date
shall be the immediately succeeding Trading Day on which no Market Disruption Event occurs.

	

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		In the event that the Determination Date and Maturity Date are postponed as described in the two immediately preceding paragraphs, the Issuer shall, or shall cause the Calculation Agent to, give notice
of such postponement and, once it has been determined, of the date to which the Maturity Date has been rescheduled, as promptly as possible, and in no case later than 10:30 a.m. on the Trading Day immediately prior to the Maturity Date (but if such
Trading Day is not a Business Day, prior to the close of business on the Business Day preceding the Maturity Date) (i) to the holder of this HITS by mailing notice of such postponement by first class mail, postage prepaid, to the holder’s last
address as it shall appear upon the registry books, (ii) to the Trustee by telephone or facsimile confirmed by mailing such notice to the Trustee by first class mail, postage prepaid, at its New York office and (iii) to the Depositary by telephone
or facsimile confirmed by mailing such notice to the Depositary by first class mail, postage prepaid. Any notice that is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the holder of this
HITS receives the notice.

	
	 	 	 
	Record Date

		 
		Notwithstanding the definition of “Record Date” on page 20 hereof, the Record Date for each Interest Payment Date, including the Interest Payment Date scheduled to occur on the Maturity Date,
shall be the date 5 calendar days prior to such scheduled Interest Payment Date, whether or not that date is a Business Day.

	
	 	 	 
	Payment at Maturity

		 
		Unless the maturity of the HITS has been accelerated, on the Maturity Date, upon delivery of this HITS to the Trustee, each Stated Principal Amount of this HITS shall be applied by the Issuer as payment
for, and the Issuer shall deliver, either:

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

	

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

The number of any shares of the Underlying Stock to be delivered at maturity shall be subject to any applicable adjustments (i) to the Exchange Factor and (ii) in the Exchange Property, as defined in paragraph 5 under
“Antidilution Adjustments” below, to be delivered instead of, or in addition to, such Underlying Stock as a result of any corporate event described under “Antidilution Adjustments” below, in each case, required to be made up to
the close of business on the Determination Date.

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

	

5 

	
		 
		Property) payable in connection therewith as promptly as possible and in no event later than (A) in the case of an Event of Default Acceleration, two Trading Days after the date of such acceleration
(but if such second Trading Day is not a Business Day, prior to the close of business on the Business Day preceding such second Trading Day) and (B) in the case of a Price Event Acceleration, 10:30 a.m. on the Trading Day immediately prior to the
date of acceleration (but if such Trading Day is not a Business Day, prior to the close of business on the Business Day preceding the date of acceleration), (i) to the holder of this HITS by mailing notice of such acceleration by first class mail,
postage prepaid, to the holder’s last address as it shall appear upon the registry books, and (ii) to the Trustee by telephone or facsimile confirmed by mailing such notice to the Trustee by first class mail, postage prepaid, at its New York
office and (iii) to the Depositary by telephone or facsimile confirmed by mailing such notice to the Depositary by first class mail, postage prepaid. Any notice that is mailed in the manner herein provided shall be conclusively presumed to have been
duly given, whether or not the holder of this HITS receives the notice. If the maturity of this HITS is accelerated in the manner described above, no interest on the amounts payable with respect to this HITS shall accrue for the period from and
after such accelerated maturity date; provided that the Issuer has deposited with the Trustee the Underlying Stock, the Exchange Property or any cash due with respect to such acceleration by
such accelerated maturity date.

The Issuer shall, or shall cause the Calculation Agent to, deliver any such cash or shares of Underlying Stock (or any Exchange Property), as applicable, and cash in respect of interest and any fractional shares of Underlying
Stock (or any Exchange Property) and cash otherwise due upon any acceleration described above to the Trustee for delivery to the holder of this HITS. The Calculation Agent shall determine the Exchange Factor applicable at the maturity of this
HITS.

	

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

References to payment “per HITS” refer to each Stated Principal Amount of this HITS.

	
	 	 	 
	Price Event Acceleration

		 
		If on any two consecutive
	      Trading Days during the period prior to and ending on the third Business
	      Day immediately preceding the Maturity Date, the product of the Closing
	      Price per share of Underlying  Stock, as determined by the Calculation
	      Agent, and the Exchange Factor is less than the Acceleration Trigger Price,
	      the Maturity Date of this HITS shall be deemed to be accelerated to the
	      third Business Day immediately following such second Trading  Day (the “date
	      of acceleration”). Upon such acceleration, the holder of this HITS
	      shall receive per Stated Principal Amount of this HITS on the date of
	      acceleration:

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

        (ii) accrued but unpaid interest to but
            excluding the date of acceleration plus an amount of cash, as determined
            by the Calculation Agent, equal to the sum of the present values
            of the remaining scheduled payments of interest on this HITS (excluding
            any portion of such payments of interest accrued to the date of acceleration)
            discounted to the date of acceleration based on the comparable yield
            that the Issuer would pay on a non-interest bearing, senior unsecured
            debt obligation of the Issuer having a maturity equal to the term
            of each such remaining scheduled payment, as determined by the Calculation
            Agent.

7 

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

	
	 	 	 
	No Fractional Shares

		 
		Upon delivery of this HITS to the Trustee at maturity (including as a result of acceleration other than an acceleration resulting from an Event of Default), and if applicable, the Issuer shall deliver
the aggregate number of shares of Underlying Stock due with respect to this HITS, as described above, but the Issuer shall pay cash in lieu of delivering any fractional share of Underlying Stock in an amount equal to the corresponding fractional
Closing Price of such fraction of a share of Underlying Stock as determined by the Calculation Agent as of the Determination Date.

	
	 	 	 
	Closing Price

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

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

        

8 

	 	 	 	of the principal trading session on the OTC
    Bulletin Board on such day.
	 
	  	 	 

    

	
		 
		If the Underlying Stock
	      (or any such other security) is listed or admitted to trading on any
	      national securities exchange or is a security of the NASDAQ  but the
	      last reported sale price or  official closing price published by NASDAQ,
	       as applicable, is not available pursuant to the preceding sentence,
	      then the Closing Price for one share of the Underlying Stock (or one
	      unit of any such other security) on any Trading Day will mean the last
	      reported sale price of the principal trading session on the over-the-counter
	      market as reported on the NASDAQ  or the OTC Bulletin
	      Board on such day. If, because of a Market Disruption Event (as defined
	      below) or otherwise, the last reported sale price or the official
	      closing price published by NASDAQ,
	       as applicable, for the Underlying Stock (or any such
	      other security) is not available pursuant to either of the two preceding
	      sentences, then the Closing Price for any Trading Day  will be the
	      mean, as determined by the Calculation Agent, of the bid prices for
	      the Underlying Stock (or any such other security) for such Trading
	      Day obtained from as many recognized dealers in such security, but
	      not exceeding three, as shall make such bid prices available to the
	      Calculation Agent. Bids of MS & Co.
	      or any of its affiliates may be included in the calculation of such
	      mean, but only to the extent that any such bid is the highest of the
	      bids obtained. The term  “OTC Bulletin Board Service” shall
	      include any successor service thereto.

	
	 	 	 
	Intraday Price

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

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

9 

	 	 	 	principal United States securities exchange
        registered under the Exchange Act on which the Underlying Stock (or any
    such other security) is listed or admitted to trading,
	 	 	 	 
	 
	  	 	(ii) if the Underlying Stock (or
          any such other security) is a security of  NASDAQ, the most recently
          reported sale price at such time quoted by  NASDAQ  on such day, or

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

	
		 
		 

	Trading Price

		 
		Trading Price means the product of (i) the Intraday Price of one share of the Underlying Stock and (ii) the Exchange Factor, each as determined by the Calculation Agent at any time on any Trading
Day.

	
	 	 	 
	Trading Day

		 
		A day, as determined by
	      the Calculation Agent, on which trading is generally conducted on the
	      New York Stock Exchange LLC. (“NYSE”), the American Stock Exchange
	      LLC, the NASDAQ, the Chicago Mercantile Exchange,
	      the Chicago Board of Options Exchange and in the over-the-counter market
	      for equity securities in the United States and, if the principal trading
	      market for the Underlying Stock is outside the United States, in such
	      principal trading market.

	
	 	 	 
	Calculation Agent

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

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

	

10 

	
		 
		conclusive for all purposes and binding on the holder of this HITS, the Trustee and the Issuer.

All calculations with respect to the Exchange Ratio and the Exchange Factor for this HITS shall be made by the Calculation Agent and shall be rounded to the nearest one hundred-thousandth, with five one- millionths rounded
upward (e.g., .876545 would be rounded to .87655), and all dollar amounts paid to the holder of this HITS in the aggregate related to interest payments or the payment at maturity resulting
from such calculations shall be rounded to the nearest cent with one-half cent rounded upward.

	
	 	 	 
	Antidilution Adjustments

		 
		The Exchange Factor shall be adjusted as follows:

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

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

3. If the Underlying Company issues rights or warrants to all holders of the Underlying Stock to subscribe for or purchase the Underlying Stock at an exercise price per share less than the Closing Price of the Underlying Stock
on both (i) the date the exercise price of such rights or warrants is determined and (ii) the expiration date of such rights or warrants, and if the

	

11 

	
		 
		expiration date of such rights or warrants precedes the maturity of this HITS, then the Exchange Factor shall be adjusted to equal the product of the prior Exchange Factor and a fraction, the numerator
of which shall be the number of shares of the Underlying Stock outstanding immediately prior to the issuance of such rights or warrants plus the number of additional shares of the Underlying Stock offered for subscription or purchase pursuant to
such rights or warrants and the denominator of which shall be the number of shares of the Underlying Stock outstanding immediately prior to the issuance of such rights or warrants plus the number of additional shares of the Underlying Stock which
the aggregate offering price of the total number of shares of the Underlying Stock so offered for subscription or purchase pursuant to such rights or warrants would purchase at the Closing Price on the expiration date of such rights or warrants,
which shall be determined by multiplying such total number of shares offered by the exercise price of such rights or warrants and dividing the product so obtained by such Closing Price.

4. There shall be no adjustments to the Exchange Factor to reflect cash dividends or other distributions paid with respect to the Underlying Stock other than distributions described in paragraph 2, paragraph 3 and clauses (i),
(iv) and (v) of paragraph 5 below and Extraordinary Dividends as described below. A cash dividend or other distribution with respect to the Underlying Stock shall be deemed to be an “Extraordinary Dividend” if such cash dividend or
distribution (a) is defined by the Underlying Company as an extraordinary or special dividend or distribution, or (b) exceeds the immediately preceding non- Extraordinary Dividend for the Underlying Stock by an amount equal to at least 5% of the
Closing Price of the Underlying Stock (as adjusted for any subsequent corporate event requiring an adjustment hereunder, such as a stock split or reverse stock split) on the Trading Day preceding the ex-dividend date (that is, the day on and after
which transactions in the Underlying Stock on the primary U.S. organized securities exchange or trading system on which the Underlying Stock is traded or trading system no longer

	

12 

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

5. If (i) there occurs any reclassification or change of the Underlying Stock, including, without limitation, as a result of the issuance of any tracking stock by the Underlying Company, (ii) the Underlying Company or any
surviving entity or subsequent surviving entity of the Underlying Company (an “Underlying Company Successor”) has been subject to a merger, combination or consolidation and is not the surviving entity, (iii) any statutory exchange of
securities of the Underlying

	

13 

	
		 
		Company or any Underlying
	      Company Successor with another corporation occurs (other than pursuant
	      to clause (ii) above), (iv) the Underlying Company is liquidated, (v)
	      the Underlying Company issues to  all of its shareholders equity securities
	      of an issuer other than the Underlying Company (other than in a transaction
	      described in clause (ii), (iii) or (iv) above) (a “Spin-off Event”)
	      or (vi) a tender or exchange offer or going- private  transaction is consummated
	      for all the outstanding shares of the Underlying Stock (any such event
	      in clauses (i) through (vi), a “Reorganization Event”), the
	      method of determining the amount payable upon exchange at maturity for
	      each HITS  shall be adjusted to provide that holders shall be entitled
	      to receive at maturity, in respect of the stated principal amount of each
	      HITS either:

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

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

	 	 	 	 

14 

	 
	  	 	and (C) in the case of any other
          Reorganization Event where the Underlying Stock continues to be held
          by the holders receiving such distribution, the Underlying Stock (collectively,
          the “Exchange Property”), in an amount equal to the amount
          of Exchange Property delivered with respect to a number of shares of
          the Underlying Stock equal to the Exchange Ratio times the Exchange
          Factor each determined at the time of the Reorganization Event.
        
	 	 	 	 

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

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

	

15 

	
		 
		each share of the Underlying Stock, as adjusted by the Exchange Factor at the time of such Reorganization Event.

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

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

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

	

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

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

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

	
		 	 
	Market Disruption Event

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

	 
	  	 	 

	 	 	 	(i) a suspension, absence or material limitation
        of trading of the Underlying Stock on the primary market for the Underlying
        Stock for more than two hours of trading or during the one-half hour
        period preceding the close of the principal trading session in such market;
        or a breakdown or failure in the price and trade reporting systems of
        the primary market for the Underlying Stock as a result of which the
        reported trading prices for the Underlying Stock during the last one-half
        hour preceding the close of the principal trading session in such market
        are materially inaccurate; or the suspension, absence or material limitation
        of trading on the primary market for trading in options contracts related
        to the Underlying Stock, if available, during the one-half hour period
        preceding the close of the principal trading session in the applicable
        market, in each case as determined by the Calculation Agent in its sole
    discretion; and

17 

	 	 	 	(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 HITS.

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

	 	 	 
	Alternate Exchange Calculation

   in Case of an Event of Default	

 

		 
		

	  In case an Event of Default with respect to the HITS shall have occurred
	        and be continuing, the amount declared due and payable per each Stated
	        Principal Amount of this HITS upon any acceleration of  this

	

18 

	 
		 
		HITS (an “Event of Default Acceleration”) shall be determined by the Calculation Agent and shall be an amount in cash equal to either (i) the Stated Principal Amount of this HITS plus accrued
but unpaid interest to but excluding the date of such acceleration or (ii) if the Trading Price of the Underlying Stock has decreased to or below the Trigger Price at any time on any Trading Day from and including the Pricing Date to and including
the date of such acceleration, (x) the value, as determined based on the Closing Price of the Underlying Stock on the date of such acceleration, of a number of shares of the Underlying Stock at the Exchange Ratio multiplied by the Exchange Factor as
of the date of acceleration and (y) accrued but unpaid interest to but excluding the date of such acceleration.

	
	 	 	 
	Treatment of HITS for 

	     United States Federal

    Income Tax Purposes

	 
		

	  

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

	

19 

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

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

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

20 

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

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

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

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

21 

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

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

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

22 

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

 DATED:

  	MORGAN STANLEY 
	 	 	 
	By:	 
	 	

	 	Name:	 
	 	Title:	 

	TRUSTEE'S CERTIFICATE
          

           OF AUTHENTICATION 

	 
	This is one of the
        Notes referred 

           to in the within-mentioned 

   Senior Indenture. 

	 
	THE BANK OF NEW
        YORK, as Trustee 

	 	 
	By: 	 
	 
	

	 
	Authorized Signatory 

 

	 By: 	  
	 	
      

    
	  	 Authorized Officer 

    23

 

FORM OF REVERSE OF SECURITY 

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

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

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

24 

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

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

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

     In the case where the Interest Payment Date or the Maturity Date (or any redemption or repayment date) does not fall on a Business Day, payment of interest, premium, if any, or principal otherwise
payable on such date need not be made on such date, but may be made on the 

25 

next succeeding Business Day with the same force and effect as if made on the Interest Payment Date or on the Maturity Date (or any redemption or repayment date), and no interest on such payment shall accrue for the period from
and after the Interest Payment Date or the Maturity Date (or any redemption or repayment date) to such next succeeding Business Day. 

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

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

     The Trustee has been appointed registrar for the Notes, and the Trustee will maintain at its office in The City of New York a register for the registration and transfer of Notes. This Note may be
transferred at the aforesaid office of the Trustee by surrendering this Note for cancellation, accompanied by a written instrument of transfer in form satisfactory to the Issuer and the Trustee and duly executed by the registered holder hereof in
person or by the holder’s attorney duly authorized in writing, and thereupon the Trustee shall issue in the name of the transferee or transferees, in exchange herefor, a new Note or Notes having identical terms and provisions and having a like
aggregate principal amount in authorized denominations, subject to the terms and conditions set forth herein; provided, however, that the Trustee will not be required (i) to register the
transfer of or exchange any Note that has been called for redemption in whole or in part, except the unredeemed portion of Notes being redeemed in part, (ii) to register the transfer of or exchange any Note if the holder thereof has exercised his
right, if any, to require the Issuer to repurchase such Note in whole or in part, except the portion of such Note not required to be repurchased, or (iii) to register the transfer of or exchange Notes to the extent and during the period so provided
in the Senior Indenture with respect to the redemption of Notes. Notes are exchangeable at said office for other Notes of other authorized denominations of equal aggregate principal amount having identical terms and provisions.  All such exchanges
and transfers of Notes will be free of charge, but the Issuer may require payment of a sum sufficient 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 

26 

Issuer and the Trustee and executed by the registered holder in person or by the holder’s attorney duly authorized in writing. The date of registration of any Note delivered upon any exchange or transfer of Notes shall be
such that no gain or loss of interest results from such exchange or transfer. 

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

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

      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 

27 

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

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

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

28 

independent legal counsel satisfactory to the Trustee to such effect based on such statement of facts; provided that no such notice of redemption shall be given earlier
than 60 calendar days prior to the earliest date on which the Issuer would be obligated to pay such Additional Amounts if a payment in respect of this Note were then due. 

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

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

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

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

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

29 

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

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

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

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

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

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

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

30 

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. 

31 

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

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

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

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

     No recourse shall be had for the payment of the principal of, premium, if any, or the interest on this Note, for any claim based hereon, or otherwise in respect hereof, or based on or in respect of
the Senior Indenture or any indenture supplemental thereto, against any incorporator, shareholder, officer or director, as such, past, present or future, of the Issuer or of any successor corporation, either directly or through the Issuer or any
successor corporation, 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. 

32 

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

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

33 

 ABBREVIATIONS

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

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

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

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

 ______________________________

 34

 

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

 ____________________________________________

  [PLEASE INSERT SOCIAL SECURITY OR OTHER

   IDENTIFYING NUMBER OF ASSIGNEE]

_______________________________________________________________________________

_______________________________________________________________________________

_______________________________________________________________________________

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

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

 Dated:_______________________

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

 35

 

 OPTION TO ELECT
      REPAYMENT

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

	 

	 
	 

	 
	 

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

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

  .

	 Dated:________________________ 	  	  
	 	 	
      

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

 36-- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC
Filing

 

Exhibit 4.1 

 

FORM OF FIXED RATE SENIOR NOTE

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

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

	MORGAN STANLEY
	SENIOR GLOBAL MEDIUM-TERM
          NOTE, SERIES F
	 
	BEAR MARKET PLUS
          DUE FEBRUARY 20, 2008
	MANDATORILY EXCHANGEABLE
	FOR AN AMOUNT PAYABLE
          IN U.S. DOLLARS
	BASED INVERSELY
          ON THE VALUE OF THE PHLX HOUSING SECTORSM INDEX

	ORIGINAL ISSUE DATE:	INITIAL REDEMPTION

       DATE: N/A	INTEREST RATE: None	MATURITY DATE: See

       “Maturity
    Date” below.
	INTEREST
        ACCRUAL

       DATE:
    N/A	INITIAL REDEMPTION

       PERCENTAGE:
    N/A	INTEREST
        PAYMENT

       DATE(S):
    N/A	OPTIONAL

       REPAYMENT

       DATE(S):
    N/A
	SPECIFIED
        CURRENCY:

       U.S.
    dollars	ANNUAL REDEMPTION

       PERCENTAGE

       REDUCTION:
    N/A	INTEREST
        PAYMENT

       PERIOD:
    N/A	APPLICABILITY
        OF

       MODIFIED

       PAYMENT
        UPON

       ACCELERATION
        OR

       REDEMPTION:
        See

       “Alternate
        Exchange

       Calculation
        in Case of an

       Event
    of Default” below.
	IF SPECIFIED

       CURRENCY
        OTHER

       THAN
        U.S. DOLLARS,

       OPTION
        TO ELECT

       PAYMENT
        IN U.S.

       DOLLARS:
    N/A	REDEMPTION
        NOTICE

       PERIOD:
    N/A	APPLICABILITY
        OF

       ANNUAL
        INTEREST

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

       N/A
	EXCHANGE
        RATE

       AGENT:
    N/A	TAX REDEMPTION

       AND
        PAYMENT OF

       ADDITIONAL

       AMOUNTS:
    NO	PRICE APPLICABLE

       UPON
        OPTIONAL

       REPAYMENT:
    N/A	ORIGINAL
        YIELD TO

       MATURITY:
    N/A
	OTHER PROVISIONS:

       See
    below	IF YES, STATE
        INITIAL

       OFFERING
    DATE: N/A	 	 

	Stated Principal Amount

      Underlying Index

      Underlying Index Publisher

      Initial Index Value
        

      Pricing Date
      	 	$10 per PLUS

      PHLX Housing SectorSM Index

      Philadelphia Stock Exchange, Inc.
      
	 	 	 
	Denominations
	 	$10 and integral multiples
    thereof

	 	 	 
	Bull Market or Bear Market PLUS 
	 	Bear Market PLUS
	 	 	 
	Maximum Payment at Maturity	 	$

 2

	Minimum Payment at Maturity 	 	 
	   if Bear Market PLUS 	 	$ 
	 
	Leverage Factor
	 	 
	 	 	 
	Index Valuation Date
	 	February 15, 2008; provided that
          if there is a Market Disruption Event on the scheduled Index Valuation
          Date or if the scheduled Index Valuation Date is not otherwise an Index
          Business Day, the Index Valuation Date shall be the immediately succeeding
          Index Business Day during which no Market Disruption Event shall have
          occurred. See “Maturity Date.”

	 
	Maturity Date
	 	February 20, 2008, subject
          to extension if the scheduled Index Valuation Date is postponed in
          accordance with the definition thereof. If the Index Valuation Date
          is postponed so that it falls less than two scheduled Index Business
          Days prior to the scheduled Maturity Date, the Maturity Date shall
          be the second scheduled Index Business Day following the Index Valuation
          Date as postponed. See “Index Valuation Date.”

      In the event that the Maturity Date of this
          PLUS is postponed due to postponement of the Index Valuation Date as
          described in the immediately preceding paragraph, the Issuer shall
          give notice of such postponement and, once it has been determined,
          of the date to which the Maturity Date has been rescheduled (i) to
          the holder of this PLUS 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 PLUS receives the notice.
          The Issuer shall give such notice as promptly as possible, and in no
          case later than (i) with respect to notice of postponement of the Maturity
          Date, the Business Day immediately following the scheduled Index Valuation
          Date, and (ii) with respect to notice of the date to which the Maturity
          Date has been rescheduled, the

 3

	 	 	Business Day immediately
          following the actual Index Valuation Date for determining the Final
          Index Value (as defined below).

	 
	Payment at Maturity
	 	At maturity, upon delivery
          of this PLUS to the Trustee, the Issuer shall pay with respect to each
          Stated Principal Amount of this PLUS an amount in cash, as determined
          by the Calculation Agent, equal to:

      1. For
            a Bull Market PLUS, (i) if the
            Final Index Value is greater than the Initial Index Value, the lesser
            of (a) the Stated Principal Amount plus the Leveraged Upside Payment
            and (b) the Maximum Payment at Maturity or (ii) if the Final Index
            Value is less than or equal to the Initial Index Value, the Stated
            Principal Amount times the Index Performance Factor, subject to the
            Minimum Payment at Maturity.

      2. For
            a Bear Market PLUS, (i) if the
            Final Index Value is less than or equal to the Initial Index Value,
            the lesser of (a) the Stated Principal Amount plus the Enhanced Downside
            Payment and (b) the Maximum Payment at Maturity or (ii) if the Final
            Index Value is greater than the Initial Index Value, the Stated Principal
            Amount minus the Upside Reduction Amount, subject to the Minimum
            Payment at Maturity.

      The Issuer shall, or shall cause the Calculation
          Agent to, (i) provide written notice to the Trustee and to the Depositary
          of the amount of cash to be delivered with respect to each Stated Principal
          Amount of this PLUS, on or prior to 10:30 a.m. on the Trading Day preceding
          the Maturity Date (but if such Trading Day is not a Business Day, prior
          to the close of business on the Business Day preceding the Maturity
          Date), and (ii) deliver the aggregate cash amount due with respect
          to this PLUS to the Trustee for delivery to the holder of this PLUS
          on the Maturity Date.

	 
	Applicable
          only for BULL MARKET PLUS 
	 
	         Leveraged Upside Payment
	 	The product of (i) the
          Stated Principal Amount and (ii) the Leverage Factor and (iii) the
          Index Percent Increase.

	 
	         Index Performance Factor
	 	A fraction, the numerator
          of which shall be the Final Index Value and the denominator of which
          shall be the Initial Index Value.

 4

	Applicable
          only for BEAR MARKET PLUS 
	 
	         Enhanced Downside Payment
	 	The product of (i) the
          Stated Principal Amount and (ii) the Leverage Factor and (iii) the
          Index Percent Decrease.

	 
	         Upside Reduction Amount
	 	The product of (i) the
          Stated Principal Amount and (ii) the Index Percent Increase.

	 
	         Index Percent Decrease
	 	A fraction, the numerator
          of which shall be the Initial Index Value minus the Final Index Value
          and the denominator of which shall be the Initial Index Value.

	 
	Applicable for all PLUS
	 	 
	 	 	 
	Index Percent Increase
	 	A fraction, the numerator
          of which shall be the Final Index Value minus the Initial Index Value
          and the denominator of which shall be the Initial Index Value.

	 
	Final Index Value
	 	The Index Closing Value
          of the Underlying Index on the Index Valuation Date.

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

	 	 	 
	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 (“AMEX”), the Nasdaq National Market,
          the Chicago Mercantile Exchange, the Chicago Board of Options Exchange
          and in the over- the-counter market for equity securities in the United
          States.

	 	 	 
	Index Business Day
	 	A day, as determined
          by the Calculation Agent, on which trading is generally conducted on
          the Relevant Exchange and on any exchange on which futures or options
          contracts related to the Underlying Index (or Successor Index) are
          traded, other than a day on which trading on such exchange is scheduled
          to close prior to its regular final weekday closing price.

 5

	Relevant Exchange
	 	Relevant Exchange means
          the primary exchange(s) or market(s) of trading for (i) any security
          (or any combination thereof) then included in the Underlying Index
          or any Successor Index and (ii) any futures or options contracts related
          to such Underlying Index or to any security then included in the Underlying
          Index.

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

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

      All calculations with respect to the Payment
          at Maturity shall be rounded to the nearest one hundred- thousandth,
          with five one-millionths rounded upward (e.g.,
          .876545 would be rounded to .87655); all dollar amounts related to
          determination of the amount of cash payable for each Stated Principal
          Amount of this PLUS shall be rounded to the nearest ten-thousandth,
          with five one hundred-thousandths rounded upward (e.g.,
          .76545 would be rounded up to .7655); and all dollar amounts paid on
          the aggregate number of PLUS shall be rounded to the nearest cent,
          with one-half cent rounded upward.

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

      (i) the occurrence or existence of a suspension,
          absence or material limitation of trading of stocks then constituting
          20 percent or more of the level of the Underlying Index (or the Successor
          Index) on the Relevant Exchanges for such securities for more than
          two hours of trading or during the one-half hour period preceding the
          close of the principal trading session on such Relevant Exchange; or
          a breakdown or failure in the price and trade reporting systems of
          any Relevant Exchange as a result of which the reported trading prices
          for stocks then constituting 20 percent or more of the level of the
          Underlying Index (or the Successor Index) during the last one-half
          hour preceding the close of the principal trading session on such Relevant
          Exchange are materially inaccurate; or the suspension,

 6

		 	material limitation
          or absence of trading on any major U.S. securities market for trading
          in futures or options contracts or exchange traded funds related to
          the Underlying Index (or the Successor Index) for more than two hours
          of trading or during the one-half hour period preceding the close of
          the principal trading session on such market, in each case as determined
          by the Calculation Agent in its sole discretion; and

      (ii) a determination by the Calculation Agent
          in its sole discretion that any event described in clause (i) above
          materially interfered with the ability of the Issuer or any of its
          affiliates to unwind or adjust all or a material portion of the hedge
          position with respect to this issuance of PLUS.

      For the purpose of determining whether a Market
          Disruption Event exists at any time, if trading in a security included
          in the Underlying Index is materially suspended or materially limited
          at that time, then the relevant percentage contribution of that security
          to the level of the Underlying Index shall be based on a comparison
          of (x) the portion of the value of the Underlying Index attributable
          to that security relative to (y) the overall value of the Underlying
          Index, in each case immediately before that suspension or limitation.

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

 7

	 	 	trading in such contracts
          by reason of (a) a price change exceeding limits set by such securities
          exchange or market, (b) an imbalance of orders relating to such contracts
          or (c) a disparity in bid and ask quotes relating to such contracts
          shall constitute a suspension, absence or material limitation of trading
          in futures or options contracts related to the Underlying Index and
          (5) a “suspension, absence or material limitation of trading” on
          any Relevant Exchange or on the primary market on which futures or
          options contracts related to the Underlying Index 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 this PLUS shall have occurred and be continuing,
          the amount declared due and payable for each Stated Principal Amount
          of this PLUS upon any acceleration of this PLUS shall be determined
          by the Calculation Agent and shall be an amount in cash equal to the
          Payment at Maturity calculated using the Index Closing Value as of
          the date of such acceleration as the Final Index Value plus, if applicable,
          any accrued but unpaid interest as of the date of such acceleration.

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

	 
	Discontinuance of the	 	 
	   Underlying Index;	 	 
	    Alteration of Method of
	 	 
	   Calculation
	 	If the Underlying Index
          Publisher discontinues publication of the Underlying Index and the
          Underlying Index Publisher or another entity (including MS & Co.)
          publishes a successor or substitute index that the Calculation Agent
          determines, in its sole discretion, to be comparable to the discontinued
          Underlying Index (such index being

 8

		 	referred to herein as
          a “Successor Index”), then any subsequent Index Closing Value
          shall be determined by reference to the published value of such Successor
          Index at the regular weekday close of trading on the Index Business
          Day that any Index Closing Value is to be determined.

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

      If the Underlying Index Publisher discontinues
          publication of the Underlying Index prior to, and such discontinuance
          is continuing on, the Index Valuation Date or the date of acceleration
          and the Calculation Agent determines, in its sole discretion, that
          no Successor Index is available at such time, then the Calculation
          Agent shall determine the Index Closing Value for such date. The Index
          Closing Value shall be computed by the Calculation Agent in accordance
          with the formula for and method of calculating the Underlying Index
          last in effect prior to such discontinuance, using the closing price
          (or, if trading in the relevant securities has been materially suspended
          or materially limited, its good faith estimate of the closing price
          that would have prevailed but for such suspension or limitation) at
          the close of the principal trading session of the Relevant Exchange
          on such date of each security most recently constituting the Underlying
          Index without any rebalancing or substitution of such securities following
          such discontinuance.

      If at any time the method of calculating the
          Underlying Index or a Successor Index, or the value thereof, is changed
          in a material respect, or if the Underlying Index or a Successor Index
          is in any other way modified so that such index does not, in the opinion
          of the Calculation Agent, fairly represent the value of the Underlying
          Index or such Successor Index had such changes or modifications not
          been made, then, from and after such time, the Calculation Agent shall,
          at the close of business in New York City on each date on which the
          Index Closing Value is to be determined, make such calculations and
          adjustments

 9

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

	 
	Treatment of PLUS for	 	 
	    United States Federal
	 	 
	   Income Tax Purposes
	 	The Issuer, by its sale
          of this PLUS, and the holder of this PLUS (and any successor holder
          of, or holder of a beneficial interest in, this PLUS), by its respective
          purchase hereof, agree (in the absence of an administrative determination
          or judicial ruling to the contrary) to characterize each $10 principal
          amount of this PLUS for all tax purposes as a single financial contract
          that is an “open transaction” for U.S. federal income tax
          purposes with respect to the Underlying Index that (i) requires the
          holder of this PLUS to pay to the Issuer at inception an amount equal
          to $10 and (ii) entitles the holder to receive at maturity an amount
          in cash based upon the performance of the Underlying Index.

 10

      Morgan
    Stanley, a Delaware corporation (together with its successors and assigns,
    the “Issuer”),
    for value received, hereby promises to pay to CEDE & Co., or registered
    assignees, the amount of cash, as determined in accordance with the provisions
    set forth under “Payment at Maturity” above, due with respect to
    the principal sum of U.S.$                      (UNITED STATES DOLLARS                      ), on the Maturity
    Date specified above (except to the extent redeemed or repaid prior to 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 person entitled
    thereto as such address shall appear in the Note register. A holder of U.S. 

 11

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

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

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

      If the
    holder elects to receive all or a portion of payments of principal of, premium,
    if any, and interest on this Note, if denominated in a Specified Currency
    other than U.S. dollars, in U.S. dollars, the Exchange Rate Agent (as defined
    on the reverse hereof) will convert such payments into U.S. dollars. In the
    event of such an election, payment in respect of this Note will be based
    upon the exchange rate as determined by the Exchange Rate Agent based on
    the highest bid quotation in The City of New York received by such Exchange
    Rate Agent at approximately 11:00 a.m., New York City time, on the second
    Business Day preceding the applicable payment date from three recognized
    foreign exchange dealers (one of which may be the Exchange Rate Agent unless
    such Exchange Rate Agent is an affiliate of the Issuer) for the purchase
    by the quoting dealer of the Specified Currency for U.S. dollars for settlement
    on such payment date in the amount of the Specified Currency payable in the
    absence of such an election to such holder and at which the applicable dealer
    commits to execute a contract. If such bid quotations are not 

 12

 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.

 13

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

  	 DATED:
	MORGAN STANLEY 
	 	 	 	 
	 	By:	 	 
	 	 	

	 	 	Name:	 
	 	 	Title:	 

 TRUSTEE’S CERTIFICATE 

   OF AUTHENTICATION

  

  This is one of the Notes referred 

   to in the within-mentioned 

   Senior Indenture.

  

  THE BANK OF NEW YORK as 

   Trustee

	 By: 	  
	 	 
 
	  	  Authorized Signatory 
	 	 
	 	 
	 	 
	 	 

 

 14

 FORM OF REVERSE OF SECURITY

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

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

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

 15

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

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

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

 16

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

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

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

 17

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

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

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

 18

 the purpose of any vote of securityholders
    taken pursuant to the Senior Indenture following the acceleration of payment
    of this Note, the principal amount hereof shall equal the amount of principal
    due and payable with respect to this Note, calculated as set forth in clause
    (i) above.

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

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

 19

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

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

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

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

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

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

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

 20

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

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

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

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

      Except
    as set forth below, if the principal of, premium, if any, or interest on
    this Note is payable in a Specified Currency other than U.S. dollars and
    such Specified Currency is not available to the Issuer for making payments
    hereon due to the imposition of exchange controls or other circumstances
    beyond the control of the Issuer or is no longer used by the government of
    the country issuing such currency or for the settlement of transactions by
    public institutions within the international banking community, then the
    Issuer will be entitled to satisfy its obligations to the holder of this
    Note by making such payments in U.S. dollars on the basis of the Market Exchange
    Rate on the date of such payment or, if the Market Exchange Rate is not available
    on such date, as of the most recent practicable date; provided, however, that if the euro 

 21

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

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

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

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

      With
    respect to moneys paid by the Issuer and held by the Trustee or any Paying
    Agent for payment of the principal of or interest or premium, if any, on
    any Notes that remain unclaimed at the end of two years after such principal,
    interest or premium shall have become due and payable (whether at maturity
    or upon call for redemption or otherwise), (i) the Trustee or such Paying
    Agent shall notify the holders of such Notes that such moneys shall be repaid
    to the Issuer and any person claiming such moneys shall thereafter look only
    to the Issuer for payment thereof and (ii) such moneys shall be so repaid
    to the Issuer. Upon such repayment all liability 

 22

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

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

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

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

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

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

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

 

 23

 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.

 ______________________________

  

 24

 

 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.

 25

 

 OPTION TO ELECT REPAYMENT

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

______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

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

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

  .

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

 26

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