Document:

FORM OF FLOATING RATE SENIOR NOTE

REGISTERED                                                      REGISTERED
No. FLR-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.

                                      A-1
<PAGE>

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

                                   CAPITAL PROTECTED NOTE DUE DECEMBER 30, 2008
                                 BASED ON THE VALUE OF THE MSCI(R) EAFE(R) INDEX

<TABLE>
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<S>                                  <C>                                     <C>
BASE RATE: None                      ORIGINAL ISSUE DATE:                    MATURITY DATE:
                                                                                See "Maturity Date" below.
--------------------------------------------------------------------------------------------------------------------
INDEX MATURITY: N/A                  INTEREST ACCRUAL DATE: N/A              INTEREST PAYMENT DATE(S): N/A
--------------------------------------------------------------------------------------------------------------------
SPREAD (PLUS OR MINUS): N/A          INITIAL INTEREST RATE: N/A              INTEREST PAYMENT PERIOD: N/A
--------------------------------------------------------------------------------------------------------------------
REPORTING SERVICE: N/A               MAXIMUM INTEREST RATE: N/A              INTEREST RESET DATE(S): N/A
--------------------------------------------------------------------------------------------------------------------
INDEX CURRENCY: N/A                  MINIMUM INTEREST RATE: N/A              CALCULATION AGENT: See "Calculation
                                                                                Agent" below.
--------------------------------------------------------------------------------------------------------------------
EXCHANGE RATE AGENT: N/A             INITIAL REDEMPTION DATE: N/A            SPECIFIED CURRENCY:
                                                                                U.S. dollars
--------------------------------------------------------------------------------------------------------------------
APPLICABILITY OF MODIFIED PAYMENT    INITIAL REDEMPTION PERCENTAGE: N/A      IF SPECIFIED CURRENCY OTHER THAN U.S.
   UPON ACCELERATION: See                                                       DOLLARS, OPTION TO ELECT PAYMENT
   "Alternate Exchange Calculation                                              IN U.S. DOLLARS: N/A
   in Case of an Event of Default"
   below.
--------------------------------------------------------------------------------------------------------------------
                                     ANNUAL REDEMPTION PERCENTAGE            DESIGNATED CMT TELERATE PAGE: N/A
                                        REDUCTION: N/A
--------------------------------------------------------------------------------------------------------------------
                                     OPTIONAL REPAYMENT DATE(S): N/A         DESIGNATED CMT MATURITY INDEX: N/A
--------------------------------------------------------------------------------------------------------------------
                                     REDEMPTION NOTICE PERIOD: N/A
--------------------------------------------------------------------------------------------------------------------
                                     TAX REDEMPTION AND PAYMENT OF
                                        ADDITIONAL AMOUNTS: N/A
--------------------------------------------------------------------------------------------------------------------
                                     IF YES, STATE INITIAL OFFERING DATE:    OTHER PROVISIONS: See below.
                                        N/A
--------------------------------------------------------------------------------------------------------------------
</TABLE>

Maturity Date................... December 30, 2008, subject to extension in
                                 accordance with the following paragraph in the
                                 event of a Market Disruption Event on the
                                 final Determination Date for calculating the
                                 Final Average Index Value.

                                 If, due to a Market Disruption Event or
                                 otherwise, the final Determination Date is
                                 postponed so that it falls

                                      A-2
<PAGE>

                                 less than two scheduled Trading Days prior to
                                 the scheduled Maturity Date, the Maturity Date
                                 shall be the second scheduled Trading Day
                                 following the final Determination Date as
                                 postponed. See "Determination Dates" below.

                                 In the event that the final Determination Date
                                 is postponed due to a Market Disruption Event
                                 or otherwise, the Issuer shall give notice of
                                 such postponement as promptly as possible, and
                                 in no case later than one Business Day
                                 following the scheduled final Determination
                                 Date, (i) to the holder of this Note 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 Note receives the
                                 notice.

Minimum Denominations........... $10

Issue Price..................... $10

Maturity Redemption Amount...... At maturity, upon delivery of this Note to the
                                 Trustee, the Issuer shall pay with respect to
                                 each $10 principal amount of this Note an
                                 amount in cash equal to the $10 principal
                                 amount of this Note plus the Supplemental
                                 Redemption Amount, if any.

                                 The Issuer shall, or shall cause the
                                 Calculation Agent to, (i) 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 Maturity
                                 Redemption Amount, 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 Note to the Trustee for
                                 delivery to the holder of this Note on

                                      A-3
<PAGE>

                                 the Maturity Date. See "Discontinuance of the
                                 MSCI EAFE Index; Alteration of Method of
                                 Calculation" below.

Supplemental Redemption
  Amount........................ The Supplemental Redemption Amount shall be
                                 equal to the product of $10 times the MSCI
                                 EAFE Index Percent Change; provided that the
                                 Supplemental Redemption Amount shall not be
                                 less than zero. The Calculation Agent shall
                                 calculate the Supplemental Redemption Amount
                                 on the final Determination Date.

MSCI EAFE Index Percent
  Change........................ The MSCI EAFE Index Percent Change is a
                                 fraction, the numerator of which shall be the
                                 Final Average Index Value minus the Initial
                                 Index Value and the denominator of which shall
                                 be the Initial Index Value. The MSCI EAFE
                                 Index Percent Change is described by the
                                 following formula:

                                 Final Average Index Value - Initial Index Value
                                 -----------------------------------------------
                                                Initial Index Value

Initial Index Value.............

Final Average Index Value....... The arithmetic average of the Index Closing
                                 Values on the four Determination Dates, as
                                 calculated by the Calculation Agent on the
                                 final Determination Date.

Index Closing Value............. The Index Closing Value on any Index Business
                                 Day shall equal the closing value of the MSCI
                                 EAFE Index or any Successor Index (as defined
                                 under "Discontinuance of the MSCI EAFE Index;
                                 Alteration of Method of Calculation" below) at
                                 the regular official weekday time of
                                 publication in London (or the relevant
                                 location of any Successor Index) on that Index
                                 Business Day. In certain circumstances, the
                                 Index Closing Value shall be based on the
                                 alternate calculation of the MSCI EAFE Index
                                 described under "Discontinuance of the MSCI
                                 EAFE Index; Alteration of Method of
                                 Calculation" below.

                                 In this Note, references to the MSCI EAFE
                                 Index shall include any Successor Index,
                                 unless the context requires otherwise.

                                      A-4
<PAGE>

Determination Dates............. The Determination Dates shall be December 30,
                                 2005, December 30, 2006, December 30, 2007,
                                 and December 26, 2008, in each case subject to
                                 adjustment for non-Index Business Days or
                                 Market Disruption Events as described in the
                                 four following paragraphs in this section.

                                 If any of the first three scheduled
                                 Determination Dates is not an Index Business
                                 Day or if a Market Disruption Event occurs on
                                 any such date, such Determination Date shall
                                 be the immediately succeeding Index Business
                                 Day during which no Market Disruption Event
                                 shall have occurred; provided that if a Market
                                 Disruption Event has occurred on each of the
                                 five Index Business Days immediately
                                 succeeding any of the first three scheduled
                                 Determination Dates, the Calculation Agent
                                 shall determine the applicable Index Closing
                                 Value on such fifth succeeding Index Business
                                 Day in accordance with the formula for
                                 calculating the value of the MSCI EAFE Index
                                 last in effect prior to the commencement of
                                 the Market Disruption Event, without
                                 rebalancing or substitution, using the closing
                                 price and number of shares in the MSCI EAFE
                                 Index (the "share amount") for each of the
                                 Component Securities (as defined under "The
                                 MSCI EAFE Index" below), determined as
                                 described in the following paragraph.

                                 The closing prices and share amounts for the
                                 Component Securities with respect to which a
                                 Market Disruption Event has not occurred
                                 (determined as described in the following
                                 paragraph) on such fifth Index Business Day
                                 shall be determined by the Calculation Agent
                                 on such fifth Index Business Day using the
                                 closing prices in the relevant markets for
                                 such Component Securities and share amounts
                                 for the Component Securities that, in each
                                 case, would have been used by the publisher of
                                 the MSCI EAFE Index at the regular official
                                 weekday time of publication of the MSCI EAFE
                                 Index in London (or the relevant location of
                                 any Successor Index) on such Index Business
                                 Day, as such closing prices would be converted
                                 into U.S. dollars using the relevant exchange
                                 rates reported by Bloomberg Financial Markets
                                 at the regular closing time of the Relevant
                                 Exchange for such Component Securities. The
                                 closing

                                      A-5
<PAGE>

                                 price and share amount for each Component
                                 Security with respect to which a Market
                                 Disruption Event has occurred on such fifth
                                 Index Business Day shall be determined by the
                                 Calculation Agent on such fifth Index Business
                                 Day using the closing price and share amount
                                 (or, if trading in the relevant securities has
                                 been materially suspended or materially
                                 limited, its good faith estimate of the
                                 closing price and share amount that would have
                                 prevailed but for such suspension or
                                 limitation) on such Index Business Day, as
                                 such closing price would be converted into
                                 U.S. dollars using the relevant exchange rates
                                 reported by Bloomberg Financial Markets at the
                                 regular closing time of the Relevant Exchange
                                 for such Component Securities.

                                 A Market Disruption Event will be deemed to
                                 have occurred with respect to a Component
                                 Security if it is included in the Component
                                 Country Index or the Component Region Index
                                 (each as defined below) that triggered the
                                 Market Disruption Event with respect to the
                                 MSCI EAFE Index.

                                 If the relevant exchange rates are not
                                 reported by Bloomberg Financial Markets (or
                                 any successor thereto), the applicable
                                 exchange rates shall be determined by the
                                 Calculation Agent at its sole discretion.

                                 If December 26, 2008 (the final scheduled
                                 Determination Date) is not an Index Business
                                 Day or if a Market Disruption Event occurs on
                                 such day, the final Determination Date shall
                                 be the immediately succeeding Index Business
                                 Day during which no Market Disruption Event
                                 shall have occurred.

The MSCI EAFE Index............. The MSCI EAFE Index published by Morgan
                                 Stanley Capital International ("MSCI") and
                                 consisting of the equity securities (the
                                 "Component Securities") constituting the
                                 indexes for 21 selected countries (each a
                                 "Component Country Index"). The MSCI Europe
                                 Index and the MSCI Far East Index (each a
                                 "Component Region Index") comprise the
                                 Component Securities in the Component Country
                                 Indices within such region.

                                      A-6
<PAGE>

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 and the Chicago Board of Options
                                 Exchange and in the over-the-counter market
                                 for equity securities in the United States.

Index Business Day.............. Any Trading Day other than a Saturday or
                                 Sunday on which the MSCI EAFE Index (or any
                                 Successor Index) is calculated.

Market Disruption Event......... Market Disruption Event means, with respect to
                                 the MSCI EAFE Index, the occurrence or
                                 existence of a suspension, absence or material
                                 limitation of trading of Component Securities
                                 then constituting 20 percent or more of the
                                 value of a Component Country Index or a
                                 Component Region Index (or the Successor
                                 Index) on the Relevant Exchanges for such
                                 Component 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 Exchanges; or a
                                 breakdown or failure in the reporting systems
                                 of MSCI or in the price and trade reporting
                                 systems of any Relevant Exchanges as a result
                                 of which the reported trading prices for
                                 Component Securities then constituting 20
                                 percent or more of the value of a Component
                                 Country Index or a Component Region Index (or
                                 the Successor Index) during the last one-half
                                 hour preceding the close of the principal
                                 trading session on such Relevant Exchanges are
                                 materially inaccurate; or the suspension,
                                 material limitation or absence of trading on
                                 any major U.S. securities market for trading
                                 in futures or options contracts or exchange
                                 traded funds related to the MSCI EAFE Index
                                 (or the Successor Index), any Component
                                 Country Index, any Component Region Index or
                                 Component Securities constituting 20 percent
                                 or more of the value of a Component Country
                                 Index or a Component Region 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.

                                      A-7
<PAGE>

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

                                 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 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 MSCI EAFE Index, any
                                 Component Country Index, any Component Region
                                 Index or Component Securities constituting 20
                                 percent or more of the value of a Component
                                 Country Index or a Component Region Index by
                                 the primary securities market trading in such
                                 contracts by reason of (a) a price change
                                 exceeding limits set by such 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 MSCI EAFE Index, any
                                 Component Country Index, any Component Region
                                 Index or Component Securities constituting 20
                                 percent

                                      A-8
<PAGE>

                                 or more of the value of a Component Country
                                 Index or a Component Region 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 MSCI EAFE Index, any
                                 Component Country Index, any Component Region
                                 Index or Component Securities constituting 20
                                 percent or more of the value of a Component
                                 Country Index or a Component Region Index are
                                 traded shall not include any time when such
                                 market is itself closed for trading under
                                 ordinary circumstances.

Relevant Exchange............... Relevant Exchange means the primary exchange
                                 or market of trading for any security then
                                 included in the MSCI EAFE Index or any
                                 Successor Index.

Alternate Exchange Calculation
 in Case of an Event of Default. In case an event of default with respect to
                                 this Note shall have occurred and be
                                 continuing, the amount declared due and
                                 payable for each $10 principal amount of this
                                 Note upon any acceleration of this Note (the
                                 "Acceleration Amount") shall be equal to such
                                 $10 principal amount plus the Supplemental
                                 Redemption Amount, if any, determined as
                                 though the Index Closing Value for any
                                 Determination Date scheduled to occur on or
                                 after such date of acceleration were the Index
                                 Closing Value on the date of acceleration.

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

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

                                      A-9
<PAGE>

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

                                 All calculations with respect to the Final
                                 Average Index Value and the Supplemental
                                 Redemption Amount, if any, shall be made by
                                 the Calculation Agent and shall be rounded to
                                 the nearest one hundred-thousandth, with five
                                 one-millionths rounded upward (e.g., .876545
                                 would be rounded to .87655); all dollar
                                 amounts related to determination of the amount
                                 of cash payable per Note 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 principal
                                 amount of this Note shall be rounded to the
                                 nearest cent, with one-half cent rounded
                                 upward.

Discontinuance of the MSCI EAFE
 Index; Alteration of Method of
 Calculation.................... If MSCI discontinues publication of the MSCI
                                 EAFE Index and any 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 MSCI EAFE Index (such index being
                                 referred to herein as a "Successor Index"),
                                 then the relevant Index Closing Value shall be
                                 determined by reference to the value of such
                                 Successor Index at the appropriate time of
                                 publication, as determined by the Calculation
                                 Agent on the applicable Determination Date.

                                 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 Note, within
                                 three business days of such selection.

                                 If MSCI discontinues publication of the MSCI
                                 EAFE Index prior to, and such discontinuance
                                 is continuing on, the date that any Index
                                 Closing Value is to be determined and MS &
                                 Co., as the Calculation Agent, determines, in
                                 its sole discretion, that no Successor Index
                                 is available at such time, then the
                                 Calculation Agent shall determine the Index
                                 Closing Value for such date. The Index Closing
                                 Value shall be computed by the Calculation
                                 Agent in accordance

                                     A-10
<PAGE>

                                 with the formula for calculating the MSCI EAFE
                                 Index last in effect prior to such
                                 discontinuance, using the closing price and
                                 share amount (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 comprising the MSCI
                                 EAFE Index without any rebalancing or
                                 substitution of such securities following such
                                 discontinuance.

                                 If at any time the method of calculating the
                                 MSCI EAFE Index or a Successor Index, or the
                                 value thereof, is changed in a material
                                 respect, or if the MSCI EAFE Index or a
                                 Successor Index is in any other way modified
                                 so that such index does not, in the opinion of
                                 MS & Co., as the Calculation Agent, fairly
                                 represent the value of the MSCI EAFE 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 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 MSCI EAFE 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 Index Closing Value and the
                                 Supplemental Redemption Amount with reference
                                 to the MSCI EAFE Index or such Successor
                                 Index, as adjusted. Accordingly, if the method
                                 of calculating the MSCI EAFE 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 MSCI EAFE Index), then
                                 the Calculation Agent shall adjust such index
                                 in order to arrive at a value of the MSCI EAFE
                                 Index or such Successor Index as if it had not
                                 been modified (e.g., as if such split had not
                                 occurred).

                                     A-11
<PAGE>

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

     Interest on this Note will accrue from and including the most recent date
to which interest has been paid or duly provided for, or, if no interest has
been paid or duly provided for, from and including the Interest Accrual Date,
until but excluding the date the principal hereof has been paid or duly made
available for payment. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, subject to certain exceptions
described herein, be paid to the person in whose name this Note (or one or more
predecessor Notes) is registered at the close of business on the date 15
calendar days prior to such Interest Payment Date (whether or not a Business
Day) (each such date, a "Record Date"); provided, however, that interest
payable at maturity (or any redemption or repayment date) will be payable to
the person to whom the principal hereof shall be payable.

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

                                     A-12
<PAGE>

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

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

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

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

                                     A-13
<PAGE>

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.

                                     A-14
<PAGE>

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

DATED:                                    MORGAN STANLEY

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

TRUSTEE'S CERTIFICATE
    OF AUTHENTICATION

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

JPMORGAN CHASE BANK, N.A.,
    as Trustee

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

                                     A-15
<PAGE>

                              REVERSE OF SECURITY

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

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

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

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

                                     A-16
<PAGE>

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

     If the face hereof indicates that this Note is subject to "Tax Redemption
and Payment of Additional Amounts," this Note may be redeemed, as a whole, at
the option of the Issuer at any time prior to maturity, upon the giving of a
notice of redemption as described below, at a redemption price equal to 100% of
the principal amount hereof, together with accrued interest to the date fixed
for redemption, if the Issuer determines that, as a result of any change in or
amendment to the laws, 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 becomes effective on or after the Initial Offering Date
hereof, the Issuer has or will become obligated to pay Additional Amounts, as
defined below, with respect to this Note as described below. Prior to the
giving of any notice of redemption pursuant to this paragraph, the Issuer shall
deliver to the Trustee (i) a certificate stating that the Issuer is entitled to
effect such redemption and setting forth a statement of facts showing that the
conditions precedent to the right of the Issuer to so redeem have occurred, and
(ii) an opinion of independent legal counsel satisfactory to the Trustee to
such effect based on such statement of facts; provided that no such notice of
redemption shall be given earlier than 60 calendar days prior to the earliest
date on which the Issuer would be obligated to pay such Additional Amounts if a
payment in respect of this Note were then due.

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

     If the face hereof indicates that this Note is subject to "Tax Redemption
and Payment of Additional Amounts," the Issuer will, subject to certain
exceptions and limitations set forth below, pay such additional amounts (the
"Additional Amounts") to the holder of this Note who is a United States Alien
as may be necessary in order that every net payment of the principal of and
interest on this Note and any other amounts payable on this Note, after
withholding or

                                     A-17
<PAGE>

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

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

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

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

                                     A-18
<PAGE>

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

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

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

     This Note will bear interest at the rate determined in accordance with the
applicable provisions below by reference to the Base Rate shown on the face
hereof based on the Index Maturity, if any, shown on the face hereof (i) plus
or minus the Spread, if any, and/or (ii) multiplied by the Spread Multiplier,
if any, specified on the face hereof. Commencing with the Initial Interest
Reset Date specified on the face hereof, the rate at which interest on this
Note is payable shall be reset as of each Interest Reset Date specified on the
face hereof (as used herein, the term "Interest Reset Date" shall include the
Initial Interest Reset Date). The determination of the rate of interest at
which this Note will be reset on any Interest Reset Date shall be made on the
Interest Determination Date (as defined below) pertaining to such Interest
Reset Dates. The Interest Reset Dates will be the Interest Reset Dates
specified on the face hereof; provided, however, that (a) the interest rate in
effect for the period from the Interest Accrual Date to the Initial Interest
Reset Date will be the Initial Interest Rate and (b) unless otherwise specified
on the face hereof, the interest rate in effect for the ten calendar days
immediately prior to maturity, redemption or repayment will be that in effect
on the tenth calendar day preceding such maturity, redemption or repayment
date. If any Interest Reset Date would otherwise be a day that is not a
Business Day, such Interest Reset Date shall be postponed to the next
succeeding day that is a Business Day, except that if the Base Rate specified
on the face hereof is LIBOR or EURIBOR and such Business Day is in the next
succeeding calendar month, such Interest Reset Date shall be the immediately
preceding Business Day. As used herein, "Business Day" means any day, other
than a Saturday or Sunday, (a) that is neither a legal holiday nor a day on
which banking institutions are authorized or required by law or regulation to
close (x) in The City of New York 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

                                     A-19
<PAGE>

Settlement Express Transfer System ("TARGET") is operating (a "TARGET
Settlement Day").

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

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

     Determination of CD Rate. If the Base Rate specified on the face hereof is
the "CD Rate," for any Interest Determination Date, the CD Rate with respect to
this Note shall be the rate on that date for negotiable U.S. dollar
certificates of deposit having the Index Maturity specified on the face hereof
as published by the Board of Governors of the Federal Reserve System in
"Statistical Release H.15(519), Selected Interest Rates," or any successor
publication of the Board of Governors of the Federal Reserve System
("H.15(519)") under the heading "CDs (Secondary Market)."

                                     A-20
<PAGE>

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

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

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

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

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

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

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

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

                                     A-21
<PAGE>

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

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

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

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

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

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

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

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

                                     A-22
<PAGE>

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

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

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

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

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

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

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

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

                                     A-23
<PAGE>

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

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

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

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

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

                                     A-24
<PAGE>

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

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

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

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

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

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

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

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

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

                                     A-25
<PAGE>

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

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

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

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

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

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

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

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

                                     A-26
<PAGE>

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

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

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

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

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

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

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

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

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

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

     (iii) If the information set forth above is not provided by 3:00 p.m., New
York City time, on the related Calculation Date, then the Calculation Agent
shall determine the CMT Rate to be a yield to maturity, based on the arithmetic
mean of the secondary market closing offer side

                                     A-27
<PAGE>

prices as of approximately 3:30 p.m., New York City time, on the Interest
Determination Date, reported, according to their written records, by three
leading primary U.S. government securities dealers ("Reference Dealers") in The
City of New York, which may include the initial dealer or its affiliates,
selected by the Calculation Agent as described in the following sentence. The
Calculation Agent shall select five reference dealers (after consultation with
the Issuer) and shall eliminate the highest quotation or, in the event of
equality, one of the highest, and the lowest quotation or, in the event of
equality, one of the lowest, for the most recently issued direct noncallable
fixed rate obligations of the United States ("Treasury Notes") with an original
maturity of approximately the Designated CMT Maturity Index, a remaining term
to maturity of no more than 1 year shorter than that Designated CMT Maturity
Index and in a principal amount that is representative for a single transaction
in the securities in that market at that time. If two Treasury Notes with an
original maturity as described above have remaining terms to maturity equally
close to the Designated CMT Maturity Index, the quotes for the Treasury Note
with the shorter remaining term to maturity shall be used.

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

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

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

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

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

                                     A-28
<PAGE>

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

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

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

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

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

                                     A-29
<PAGE>

integral multiple of 1,000 units of such Specified Currency, as determined by
reference to the noon dollar buying rate in The City of New York for cable
transfers of such Specified Currency published by the Federal Reserve Bank of
New York (the "Market Exchange Rate") on the Business Day immediately preceding
the date of issuance.

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

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

     The Senior Indenture provides that (a) if an Event of Default (as defined
in the Senior Indenture) due to the default in payment of principal of or
premium, if any, or interest on, any series of debt securities issued under the
Senior Indenture, including the series of Notes of which this Note forms a
part, or due to the default in the performance or breach of any other covenant
or warranty of the Issuer applicable to the debt securities of such series but
not applicable to all

                                     A-30
<PAGE>

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.

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

     Except as set forth below, if the principal of, premium, if any, or
interest on, this Note is payable in a Specified Currency other than U.S.
dollars and such Specified Currency is not available to the Issuer for making
payments hereon due to the imposition of exchange controls or other
circumstances beyond the control of the Issuer or is no longer used by the
government of the country issuing such currency or for the settlement of
transactions by public institutions within the international banking community,
then the Issuer will be entitled to satisfy its obligations to the holder of
this Note by making such payments in U.S. dollars on the basis of the Market
Exchange Rate on the date of such payment or, if the Market Exchange Rate is
not available on such date, as of the most recent practicable date; provided,
however, that if the euro has been substituted for such Specified Currency, the
Issuer may at its option (or shall, if so required by applicable law) without
the consent of the holder of this Note effect the payment of

                                     A-31
<PAGE>

principal of or premium, if any, or interest on any Note denominated in such
Specified Currency in euro in lieu of such Specified Currency in conformity
with legally applicable measures taken pursuant to, or by virtue of, the Treaty
establishing the European Community, as amended. Any payment made under such
circumstances in U.S. dollars or euro where the required payment is in an
unavailable Specified Currency will not constitute an Event of Default. If such
Market Exchange Rate is not then available to the Issuer or is not published
for a particular Specified Currency, the Market Exchange Rate will be based on
the highest bid quotation in The City of New York received by the Exchange Rate
Agent at approximately 11:00 a.m., New York City time, on the second Business
Day preceding the date of such payment from three recognized foreign exchange
dealers (the "Exchange Dealers") for the purchase by the quoting Exchange
Dealer of the Specified Currency for U.S. dollars for settlement on the payment
date, in the aggregate amount of the Specified Currency payable to those
holders or beneficial owners of Notes and at which the applicable Exchange
Dealer commits to execute a contract. One of the Exchange Dealers providing
quotations may be the Exchange Rate Agent unless the Exchange Rate Agent is an
affiliate of the Issuer. If those bid quotations are not available, the
Exchange Rate Agent shall determine the market exchange rate at its sole
discretion.

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

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

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

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

                                     A-32
<PAGE>

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

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

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

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

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

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

                                     A-33
<PAGE>

                                 ABBREVIATIONS

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

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

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

          Under Uniform Gifts to Minors Act ____________________________
                                                      (State)

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

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

                                     A-34
<PAGE>

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

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

_______________________________________________________________________________

_______________________________________________________________________________

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

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

Dated: ____________________

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

                                     A-35
<PAGE>

                           OPTION TO ELECT REPAYMENT

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

_______________________________________________________________________________

_______________________________________________________________________________

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

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

                                     A-36Exhibit 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.

<PAGE>

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

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

                                                     7% SPARQS(R) DUE JUNE 1, 2006
                                                       MANDATORILY EXCHANGEABLE
                                                        FOR ORDINARY SHARES OF
                                                      GLOBALSANTAFE CORPORATION

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

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

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

                                      A-2
<PAGE>

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

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

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

Interest Payment Dates.............  September 1, 2005, December 1, 2005,
                                     March 1, 2006 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 June 1, 2006, but no interest will
                                     accrue on this SPARQS or on such payment
                                     during the period from or after the
                                     scheduled Maturity Date.

                                      A-3
<PAGE>

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

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

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

Morgan Stanley Call Right..........  On any scheduled Trading Day on or after
                                     November 30, 2005 or on the Maturity Date
                                     (including the Maturity Date as it may be
                                     extended and regardless of whether the
                                     Maturity Date is a Trading Day), the Issuer
                                     may call the SPARQS, in whole but not in
                                     part, for mandatory exchange for the Call
                                     Price paid in cash (together with accrued
                                     but unpaid interest) on the Call Date.

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

                                      A-4
<PAGE>

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

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

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

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

                                      A-5
<PAGE>

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

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

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

Final Call Notice Date.............  May 22, 2006; provided that if May 22, 2006
                                     is not a Trading Day or if a Market
                                     Disruption Event occurs on such day, the
                                     Final Call Notice Date will be the
                                     immediately succeeding Trading Day on which
                                     no Market Disruption Event occurs.

Call Date..........................  The day specified in the Issuer's notice of
                                     mandatory exchange, on which the Issuer
                                     shall deliver cash to the holder of this
                                     SPARQS, for mandatory exchange, which day
                                     may be any scheduled Trading Day on or
                                     after November 30, 2005 or the Maturity
                                     Date (including the Maturity Date as it may
                                     be extended and regardless of whether the
                                     Maturity Date is a scheduled Trading Day).
                                     See "Maturity Date" above.

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

                                      A-6
<PAGE>

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

                                     The amount of GlobalSantaFe Stock to be
                                     delivered at maturity shall be subject to
                                     any applicable adjustments (i) to the
                                     Exchange Ratio (including, as applicable,
                                     any New Stock Exchange Ratio or any Basket
                                     Stock Exchange Ratio, each as defined in
                                     paragraph 5 under "Antidilution
                                     Adjustments" below) and (ii) in the
                                     Exchange Property, as defined in paragraph
                                     5 under "Antidilution Adjustments" below,
                                     to be delivered instead of, or in addition
                                     to, such GlobalSantaFe Stock as a result of
                                     any corporate event described under
                                     "Antidilution Adjustments" below, in each
                                     case, required to be made through the close
                                     of business on the third Trading Day prior
                                     to the scheduled Maturity Date.

                                     The Issuer shall, or shall cause the
                                     Calculation Agent to, provide written
                                     notice to the Trustee at its New York
                                     Office and to the Depositary, on which
                                     notice the Trustee and Depositary may
                                     conclusively rely, on or prior to 10:30
                                     a.m. on the Trading Day immediately prior
                                     to maturity of this SPARQS (but if such
                                     Trading Day is not a Business Day, prior to
                                     the close of business on the Business Day
                                     preceding the maturity of this SPARQS), of
                                     the amount of GlobalSantaFe Stock (or the
                                     amount of Exchange Property) or cash to be
                                     delivered with respect to each $
                                     principal amount of this SPARQS and of the
                                     amount of any cash to be paid in lieu of
                                     any fractional share of GlobalSantaFe Stock
                                     (or of any other securities included in
                                     Exchange Property, if applicable); provided
                                     that if the maturity date of this SPARQS is
                                     accelerated (x) because of a Price Event
                                     Acceleration (as described under "Price
                                     Event Acceleration" below) or (y) because
                                     of an Event

                                      A-7
<PAGE>

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

                                     The Issuer shall, or shall cause the
                                     Calculation Agent to, deliver any such
                                     shares of GlobalSantaFe Stock (or any
                                     Exchange Property) and cash in respect of
                                     interest and any fractional share of
                                     GlobalSantaFe Stock (or any Exchange
                                     Property) and cash otherwise due upon any
                                     acceleration described above to the Trustee
                                     for delivery to the holder of this Note.
                                     References to payment "per SPARQS" refer to
                                     each $         principal amount of this
                                     SPARQS.

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

                                      A-8
<PAGE>

                                     interest and any fractional share of
                                     GlobalSantaFe Stock (or any Exchange
                                     Property) and any other cash due at
                                     maturity as described in the preceding
                                     paragraph under this heading.

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

                                        (i) a number of shares of GlobalSantaFe
                                        Stock at the then current Exchange
                                        Ratio;
                                        (ii) accrued but unpaid interest on each
                                        $          principal amount of this
                                        SPARQS to but excluding the date of
                                        acceleration; and

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

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

                                      A-9
<PAGE>

                                     the Calculation Agent as of the second
                                     scheduled Trading Day prior to maturity of
                                     this SPARQS.

Exchange Ratio.....................  1.0, subject to adjustment for corporate
                                     events relating to GlobalSantaFe Stock
                                     described under "Antidilution Adjustments"
                                     below.

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

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

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

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

                                     If GlobalSantaFe Stock (or any such other
                                     security) is listed or admitted to trading
                                     on any national securities exchange or is a
                                     security of the Nasdaq National Market but
                                     the last reported sale price or Nasdaq
                                     official closing price, as applicable, is
                                     not available pursuant to the preceding
                                     sentence, then the Closing Price for one
                                     share of GlobalSantaFe Stock (or one unit
                                     of any such other security) on any Trading
                                     Day

                                     A-10
<PAGE>

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

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

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

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

                                     A-11
<PAGE>

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

Antidilution Adjustments...........  The Exchange Ratio shall be adjusted as
                                     follows:

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

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

                                     3. If GlobalSantaFe issues rights or
                                     warrants to all holders of GlobalSantaFe
                                     Stock to subscribe for or purchase
                                     GlobalSantaFe Stock at an exercise price
                                     per share less than the Closing Price of
                                     GlobalSantaFe Stock on both (i) the date
                                     the exercise price of such rights or
                                     warrants is determined and (ii) the
                                     expiration date of such rights or warrants,
                                     and if the expiration date of such rights
                                     or warrants precedes the maturity of this
                                     SPARQS, then the Exchange Ratio shall be
                                     adjusted to equal the product of the prior
                                     Exchange Ratio and a fraction, the
                                     numerator of which shall be the number of
                                     shares of GlobalSantaFe Stock outstanding
                                     immediately prior to the issuance of such
                                     rights or warrants plus the number of
                                     additional shares of GlobalSantaFe Stock
                                     offered for subscription or purchase
                                     pursuant to such rights or warrants and the

                                     A-12
<PAGE>

                                     denominator of which shall be the number of
                                     shares of GlobalSantaFe Stock outstanding
                                     immediately prior to the issuance of such
                                     rights or warrants plus the number of
                                     additional shares of GlobalSantaFe Stock
                                     which the aggregate offering price of the
                                     total number of shares of GlobalSantaFe
                                     Stock so offered for subscription or
                                     purchase pursuant to such rights or
                                     warrants would purchase at the Closing
                                     Price on the expiration date of such rights
                                     or warrants, which shall be determined by
                                     multiplying such total number of shares
                                     offered by the exercise price of such
                                     rights or warrants and dividing the product
                                     so obtained by such Closing Price.

                                     4. There shall be no adjustments to the
                                     Exchange Ratio to reflect cash dividends or
                                     other distributions paid with respect to
                                     GlobalSantaFe Stock other than
                                     distributions described in paragraph 2,
                                     paragraph 3 and clauses (i), (iv) and (v)
                                     of the first sentence of paragraph 5 and
                                     Extraordinary Dividends. "Extraordinary
                                     Dividend" means each of (a) the full amount
                                     per share of GlobalSantaFe Stock of any
                                     cash dividend or special dividend or
                                     distribution that is identified by
                                     GlobalSantaFe as an extraordinary or
                                     special dividend or distribution, (b) the
                                     excess of any cash dividend or other cash
                                     distribution (that is not otherwise
                                     identified by GlobalSantaFe as an
                                     extraordinary or special dividend or
                                     distribution) distributed per share of
                                     GlobalSantaFe Stock over the immediately
                                     preceding cash dividend or other cash
                                     distribution, if any, per share of
                                     GlobalSantaFe Stock that did not include an
                                     Extraordinary Dividend (as adjusted for any
                                     subsequent corporate event requiring an
                                     adjustment hereunder, such as a stock split
                                     or reverse stock split) if such excess
                                     portion of the dividend or distribution is
                                     more than 5% of the Closing Price of
                                     GlobalSantaFe Stock on the Trading Day
                                     preceding the "ex-dividend date" (that is,
                                     the day on and after which transactions in
                                     GlobalSantaFe Stock on an organized
                                     securities exchange or trading system no
                                     longer carry the right to receive that cash
                                     dividend or other cash distribution) for
                                     the payment of such cash dividend or other
                                     cash distribution (such Closing Price, the
                                     "Base Closing Price") and (c) the full cash
                                     value of any non-cash dividend or
                                     distribution per share of GlobalSantaFe
                                     Stock (excluding Marketable Securities, as
                                     defined in paragraph 5 below). Subject

                                     A-13
<PAGE>

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

                                     5. Any of the following shall constitute a
                                     Reorganization Event: (i) GlobalSantaFe
                                     Stock is reclassified or changed,
                                     including, without limitation, as a result
                                     of the issuance of any tracking stock by
                                     GlobalSantaFe, (ii) GlobalSantaFe has been
                                     subject to any merger, combination or
                                     consolidation and is not the surviving
                                     entity, (iii) GlobalSantaFe completes a
                                     statutory exchange of securities with
                                     another corporation (other than pursuant to
                                     clause (ii) above), (iv) GlobalSantaFe is
                                     liquidated, (v) GlobalSantaFe issues to all
                                     of its shareholders equity securities of an
                                     issuer other than GlobalSantaFe (other than
                                     in a transaction described in clause (ii),
                                     (iii) or (iv) above) (a "spinoff stock") or
                                     (vi) GlobalSantaFe Stock is the subject of
                                     a tender or exchange offer or going private
                                     transaction on all of the outstanding
                                     shares. If any Reorganization Event occurs,
                                     in each case as a result

                                     A-14
<PAGE>

                                     of which the holders of GlobalSantaFe Stock
                                     receive any equity security listed on a
                                     national securities exchange or traded on
                                     The Nasdaq National Market (a "Marketable
                                     Security"), other securities or other
                                     property, assets or cash (collectively
                                     "Exchange Property"), the amount payable
                                     upon exchange at maturity with respect to
                                     each $       principal amount of this
                                     SPARQS following the effective date for
                                     such Reorganization Event (or, if
                                     applicable, in the case of spinoff stock,
                                     the ex-dividend date for the distribution
                                     of such spinoff stock) and any required
                                     adjustment to the Exchange Ratio shall be
                                     determined in accordance with the
                                     following:

                                        (a) if GlobalSantaFe Stock continues to
                                        be outstanding, GlobalSantaFe Stock (if
                                        applicable, as reclassified upon the
                                        issuance of any tracking stock) at the
                                        Exchange Ratio in effect on the third
                                        Trading Day prior to the scheduled
                                        Maturity Date (taking into account any
                                        adjustments for any distributions
                                        described under clause (c)(i) below);
                                        and

                                        (b) for each Marketable Security
                                        received in such Reorganization Event
                                        (each a "New Stock"), including the
                                        issuance of any tracking stock or
                                        spinoff stock or the receipt of any
                                        stock received in exchange for
                                        GlobalSantaFe Stock, the number of
                                        shares of the New Stock received with
                                        respect to one share of GlobalSantaFe
                                        Stock multiplied by the Exchange Ratio
                                        for GlobalSantaFe Stock on the Trading
                                        Day immediately prior to the effective
                                        date of the Reorganization Event (the
                                        "New Stock Exchange Ratio"), as adjusted
                                        to the third Trading Day prior to the
                                        scheduled Maturity Date (taking into
                                        account any adjustments for
                                        distributions described under clause
                                        (c)(i) below); and

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

                                             (i) if the combined value of the
                                             amount of Non-Stock Exchange
                                             Property received per share of
                                             GlobalSantaFe Stock, as determined
                                             by the Calculation Agent in its
                                             sole discretion

                                     A-15
<PAGE>

                                             on the effective date of such
                                             Reorganization Event (the
                                             "Non-Stock Exchange Property
                                             Value"), by holders of
                                             GlobalSantaFe Stock is less than
                                             25% of the Closing Price of
                                             GlobalSantaFe Stock on the Trading
                                             Day immediately prior to the
                                             effective date of such
                                             Reorganization Event, a number of
                                             shares of GlobalSantaFe Stock, if
                                             applicable, and of any New Stock
                                             received in connection with such
                                             Reorganization Event, if
                                             applicable, in proportion to the
                                             relative Closing Prices of
                                             GlobalSantaFe Stock and any such
                                             New Stock, and with an aggregate
                                             value equal to the Non-Stock
                                             Exchange Property Value multiplied
                                             by the Exchange Ratio in effect for
                                             GlobalSantaFe Stock on the Trading
                                             Day immediately prior to the
                                             effective date of such
                                             Reorganization Event, based on such
                                             Closing Prices, in each case as
                                             determined by the Calculation Agent
                                             in its sole discretion on the
                                             effective date of such
                                             Reorganization Event; and the
                                             number of such shares of
                                             GlobalSantaFe Stock or any New
                                             Stock determined in accordance with
                                             this clause (c)(i) shall be added
                                             at the time of such adjustment to
                                             the Exchange Ratio in subparagraph
                                             (a) above and/or the New Stock
                                             Exchange Ratio in subparagraph (b)
                                             above, as applicable, or

                                             (ii) if the Non-Stock Exchange
                                             Property Value is equal to or
                                             exceeds 25% of the Closing Price of
                                             GlobalSantaFe Stock on the Trading
                                             Day immediately prior to the
                                             effective date relating to such
                                             Reorganization Event or, if
                                             GlobalSantaFe Stock is surrendered
                                             exclusively for Non-Stock Exchange
                                             Property (in each case, a
                                             "Reference Basket Event"), an
                                             initially equal-dollar weighted
                                             basket of three Reference Basket
                                             Stocks (as defined below) with an
                                             aggregate value on the effective
                                             date of such Reorganization Event
                                             equal to the Non-Stock Exchange
                                             Property Value multiplied by the
                                             Exchange Ratio in effect for
                                             GlobalSantaFe Stock on the Trading
                                             Day immediately prior to the
                                             effective date of such
                                             Reorganization Event. The
                                             "Reference Basket Stocks" shall be

                                     A-16
<PAGE>

                                             the three stocks with the largest
                                             market capitalization among the
                                             stocks that then comprise the S&P
                                             500 Index (or, if publication of
                                             such index is discontinued, any
                                             successor or substitute index
                                             selected by the Calculation Agent
                                             in its sole discretion) with the
                                             same primary Standard Industrial
                                             Classification Code ("SIC Code") as
                                             GlobalSantaFe; provided, however,
                                             that a Reference Basket Stock shall
                                             not include any stock that is
                                             subject to a trading restriction
                                             under the trading restriction
                                             policies of Morgan Stanley or any
                                             of its affiliates that would
                                             materially limit the ability of
                                             Morgan Stanley or any of its
                                             affiliates to hedge the SPARQS with
                                             respect to such stock (a "Hedging
                                             Restriction"); provided further
                                             that if three Reference Basket
                                             Stocks cannot be identified from
                                             the S&P 500 Index by primary SIC
                                             Code for which a Hedging
                                             Restriction does not exist, the
                                             remaining Reference Basket Stock(s)
                                             shall be selected by the
                                             Calculation Agent from the largest
                                             market capitalization stock(s)
                                             within the same Division and Major
                                             Group classification (as defined by
                                             the Office of Management and
                                             Budget) as the primary SIC Code for
                                             GlobalSantaFe. Each Reference
                                             Basket Stock shall be assigned a
                                             Basket Stock Exchange Ratio equal
                                             to the number of shares of such
                                             Reference Basket Stock with a
                                             Closing Price on the effective date
                                             of such Reorganization Event equal
                                             to the product of (a) the Non-Stock
                                             Exchange Property Value, (b) the
                                             Exchange Ratio in effect for
                                             GlobalSantaFe Stock on the Trading
                                             Day immediately prior to the
                                             effective date of such
                                             Reorganization Event and (c)
                                             0.3333333.

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

                                        (x)   if applicable, GlobalSantaFe Stock
                                              at the Exchange Ratio then in
                                              effect; and

                                     A-17
<PAGE>

                                        (y)   if applicable, for each New Stock,
                                              such New Stock at the New Stock
                                              Exchange Ratio then in effect for
                                              such New Stock; and

                                        (z)   if applicable, for each Reference
                                              Basket Stock, such Reference
                                              Basket Stock at the Basket Stock
                                              Exchange Ratio then in effect for
                                              such Reference Basket Stock.

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

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

                                     Following the occurrence of any
                                     Reorganization Event referred to in
                                     paragraphs 4 or 5 above, (i) references to
                                     "GlobalSantaFe Stock" under "No Fractional
                                     Shares," "Closing Price" and "Market
                                     Disruption Event" shall be deemed to also
                                     refer to any New Stock or Reference Basket
                                     Stock, and (ii) all other references in
                                     this SPARQS to "GlobalSantaFe Stock" shall
                                     be deemed to refer to the Exchange Property
                                     into which this SPARQS is thereafter
                                     exchangeable and references to a "share" or
                                     "shares" of GlobalSantaFe Stock shall be
                                     deemed to refer to the applicable unit or
                                     units of such Exchange Property, including
                                     any New Stock or Reference Basket Stock,
                                     unless the context otherwise requires. The
                                     New Stock Exchange Ratio(s) or Basket Stock
                                     Exchange Ratios resulting from any
                                     Reorganization Event described in paragraph
                                     5 above

                                     A-18
<PAGE>

                                     or similar adjustment under paragraph 4
                                     above shall be subject to the adjustments
                                     set forth in paragraphs 1 through 5 hereof.

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

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

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

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

                                     The Calculation Agent shall provide
                                     information as to any adjustments to the
                                     Exchange Ratio, or to the method of
                                     calculating the amount payable upon
                                     exchange at maturity of the SPARQS made
                                     pursuant to

                                     A-19
<PAGE>

                                     paragraph 5 above, upon written request by
                                     the holder of this SPARQS.

Market Disruption Event............  Market Disruption Event means, with respect
                                     to GlobalSantaFe Stock:

                                        (i) a suspension, absence or material
                                        limitation of trading of GlobalSantaFe
                                        Stock on the primary market for
                                        GlobalSantaFe 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 GlobalSantaFe Stock
                                        as a result of which the reported
                                        trading prices for GlobalSantaFe 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 GlobalSantaFe
                                        Stock, if available, during the one-half
                                        hour period preceding the close of the
                                        principal trading session in the
                                        applicable market, in each case as
                                        determined by the Calculation Agent in
                                        its sole discretion; and

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

                                     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

                                     A-20
<PAGE>

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

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

                                     A-21
<PAGE>

Treatment of SPARQS for
  United States Federal
  Income Tax Purposes..............  The Issuer, by its sale of this SPARQS, and
                                     the holder of this SPARQS (and any
                                     successor holder of, or holder of a
                                     beneficial interest in, this SPARQS), by
                                     its respective purchase hereof, agree (in
                                     the absence of an administrative
                                     determination or judicial ruling to the
                                     contrary) to characterize each $
                                     principal amount of this SPARQS for all tax
                                     purposes as a unit consisting of (A) a
                                     terminable contract (the "Terminable
                                     Forward Contract") that (i) requires the
                                     holder of this SPARQS (subject to the
                                     Morgan Stanley Call Right) to purchase, and
                                     the Issuer to sell, for an amount equal to
                                     $         (the "Forward Price"),
                                     GlobalSantaFe Stock at maturity and (ii)
                                     allows the Issuer, upon exercise of the
                                     Morgan Stanley Call Right, to terminate the
                                     Terminable Forward Contract by returning to
                                     such holder the Deposit (as defined below)
                                     and paying to such holder an amount of cash
                                     equal to the difference between the Deposit
                                     and the Call Price and (B) a deposit with
                                     the Issuer of a fixed amount of cash, equal
                                     to the Issue Price per each $
                                     principal amount of this SPARQS, to secure
                                     the holder's obligation to purchase
                                     GlobalSantaFe Stock pursuant to the
                                     Terminable Forward Contract (the
                                     "Deposit"), which Deposit bears a quarterly
                                     compounded yield of    % per annum.

                                     A-22
<PAGE>

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

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

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

                                     A-23
<PAGE>

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

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

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

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

                                     A-24
<PAGE>

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

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

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

                                     A-25
<PAGE>

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

DATED:                                        MORGAN STANLEY

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

TRUSTEE'S CERTIFICATE
  OF AUTHENTICATION

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

JPMORGAN CHASE BANK, N.A.,
  as Trustee

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

                                     A-26
<PAGE>

                               REVERSE OF SECURITY

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

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

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

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

                                     A-27
<PAGE>

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

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

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

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

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

                                     A-28
<PAGE>

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

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

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

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

                                     A-29
<PAGE>

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

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

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

                                     A-30
<PAGE>

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

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

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

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

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

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

                                     A-31
<PAGE>

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

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

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

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

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

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

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

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

                                     A-32
<PAGE>

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

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

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

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

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

                                     A-33
<PAGE>

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

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

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

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

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

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

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

                                     A-34
<PAGE>

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

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

                                     A-35
<PAGE>

                                  ABBREVIATIONS

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

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

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

     Under Uniform Gifts to Minors Act
                                      ------------------------------------------
                                                          (State)

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

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

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

                                     A-36
<PAGE>

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

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

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

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

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

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

Dated:_______________________________

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

                                     A-37
<PAGE>

                            OPTION TO ELECT REPAYMENT

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

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

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

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

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

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

                                     A-38

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