Document:

EXHIBIT 4.1

                             FIXED RATE SENIOR NOTE

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

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

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<PAGE>

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

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

                         7% SPARQS(R) DUE MARCH 1, 2005
                            MANDATORILY EXCHANGEABLE
                         FOR SHARES OF COMMON STOCK OF
                                 CORNING, INC.

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

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

Maturity Date..................March 1, 2005, subject to acceleration as
                               described below in "Price Event Acceleration"
                               and "Alternate Exchange Calculation in Case of
                               an Event of Default" and subject

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                               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.........

                               If the scheduled Maturity Date is postponed due
                               to a Market Disruption Event or otherwise, the
                               Issuer shall pay interest on the Maturity Date
                               as postponed rather than on March 1, 2005, but
                               no interest will accrue on this SPARQS or on
                               such payment during the period from or after the
                               scheduled Maturity Date.

Record Date....................Notwithstanding the definition of "Record Date"
                               on page 21 hereof, the Record Date for each
                               Interest Payment Date, including the Interest
                               Payment Date scheduled to

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<PAGE>

                               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 August
                                  , 2004 or on the Maturity Date (including the
                               Maturity Date as it may be extended and
                               regardless of whether the Maturity Date is a
                               Trading Day), the Issuer may call the SPARQS, in
                               whole but not in part, for mandatory exchange
                               for the Call Price paid in cash (together with
                               accrued but unpaid interest) on the Call Date.

                               On the Morgan Stanley Notice Date, the Issuer
                               shall give notice of the Issuer's exercise of
                               the Morgan Stanley Call Right (i) to the holder
                               of this SPARQS by mailing notice of such
                               exercise, specifying the Call Date on which the
                               Issuer shall effect such exchange, by first
                               class mail, postage prepaid, to the holder's
                               last address as it shall appear upon the
                               registry books, (ii) to the Trustee by telephone
                               or facsimile confirmed by mailing such notice to
                               the Trustee by first class mail, postage
                               prepaid, at its

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<PAGE>

                               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
                               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

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<PAGE>

                               Call Right.

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

Final Call Notice Date.........February 19, 2005; provided that if February 19,
                               2005 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 August  , 2004
                               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.

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

                               The amount of Corning Stock to be delivered at
                               maturity

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<PAGE>

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

                               The Issuer shall, or shall cause the Calculation
                               Agent to, provide written notice to the Trustee
                               at its New York Office and to the Depositary, on
                               which notice the Trustee and Depositary may
                               conclusively rely, on or prior to 10:30 a.m. on
                               the Trading Day immediately prior to maturity of
                               this SPARQS (but if such Trading Day is not a
                               Business Day, prior to the close of business on
                               the Business Day preceding maturity of this
                               SPARQS), of the amount of Corning 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 Corning Stock (or of any other securities
                               included in Exchange Property, if applicable);
                               provided that if the maturity date of this
                               SPARQS is accelerated (x) because of a Price
                               Event Acceleration (as described under "Price
                               Event Acceleration" below) or (y) because of an
                               Event of Default Acceleration (as defined under
                               "Alternate Exchange Calculation in Case of an
                               Event of Default" below), the Issuer shall give
                               notice of such acceleration as promptly as
                               possible, and in no case later than (A) in the
                               case of an Event of Default Acceleration, two
                               Trading Days following such deemed maturity date
                               or (B) in the case of a Price Event
                               Acceleration, 10:30 a.m. on the Trading Day
                               immediately prior to the date of acceleration
                               (as defined under "Price Event Acceleration"
                               below), (i) to the holder of this SPARQS by
                               mailing notice of such acceleration by first
                               class mail, postage prepaid, to the holder's
                               last address as it shall appear upon the
                               registry books, (ii) to the Trustee by telephone
                               or facsimile confirmed by mailing such notice to
                               the Trustee by first class mail, postage
                               prepaid, at its New York office and (iii) to the
                               Depositary by telephone or facsimile confirmed
                               by mailing such notice to the Depositary by
                               first class

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<PAGE>

                               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
                               Corning 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 Corning
                               Stock (or any Exchange Property) and cash in
                               respect of interest and any fractional share of
                               Corning 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 Corning Stock (and, if
                               applicable, any Exchange Property) and any cash
                               in respect of interest and any fractional share
                               of Corning 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 per share
                               of Corning 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 Corning Stock at
                                  the then current Exchange Ratio;

                                      A-8

<PAGE>

                                  (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 Corning Stock due with
                               respect to this SPARQS, as described above, but
                               the Issuer shall pay cash in lieu of delivering
                               any fractional share of Corning Stock in an
                               amount equal to the corresponding fractional
                               Closing Price of such fraction of a share of
                               Corning Stock as determined by 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 Corning, Inc. ("Corning") described
                               under "Antidilution Adjustments" below.

Closing Price..................The Closing Price for one share of Corning 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 Corning 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 Corning Stock (or any
                               such other security) is listed or admitted to
                               trading,

                               o if Corning Stock (or any such other security)
                               is a security of the Nasdaq National Market (and
                               provided

                                      A-9
<PAGE>

                               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 Corning Stock (or any such other security)
                               is not listed or admitted to trading on any
                               national securities exchange or 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 Corning 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 Corning Stock (or one unit of any
                               such other security) on any Trading Day will
                               mean the last reported sale price of the
                               principal trading session on the
                               over-the-counter market as reported on the
                               Nasdaq National Market or the OTC Bulletin Board
                               on such day. If, because of a Market Disruption
                               Event (as defined below) or otherwise, the last
                               reported sale price or Nasdaq official closing
                               price, as applicable, for Corning 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 Corning 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

                                      A-10
<PAGE>

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

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

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

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

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

                                    1. If Corning 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 Corning
                               Stock.

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

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<PAGE>

                                    3. If Corning issues rights or warrants to
                               all holders of Corning Stock to subscribe for or
                               purchase Corning Stock at an exercise price per
                               share less than the Closing Price of Corning
                               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 Corning Stock
                               outstanding immediately prior to the issuance of
                               such rights or warrants plus the number of
                               additional shares of Corning Stock offered for
                               subscription or purchase pursuant to such rights
                               or warrants and the denominator of which shall
                               be the number of shares of Corning Stock
                               outstanding immediately prior to the issuance of
                               such rights or warrants plus the number of
                               additional shares of Corning Stock which the
                               aggregate offering price of the total number of
                               shares of Corning 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 Corning
                               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 Corning Stock of any cash dividend or
                               special dividend or distribution that is
                               identified by Corning 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 Corning as
                               an extraordinary or special dividend or
                               distribution) distributed per share of Corning
                               Stock over the immediately preceding cash
                               dividend or other cash distribution, if any, per
                               share of Corning 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

                                      A-12
<PAGE>

                               such excess portion of the dividend or
                               distribution is more than 5% of the Closing
                               Price of Corning Stock on the Trading Day
                               preceding the "ex-dividend date" (that is, the
                               day on and after which transactions in Corning
                               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 Corning Stock
                               (excluding Marketable Securities, as defined in
                               paragraph 5 below). Subject to the following
                               sentence, if any cash dividend or distribution
                               of such other property with respect to Corning
                               Stock includes an Extraordinary Dividend, the
                               Exchange Ratio with respect to Corning 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 3(b) 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 Corning 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) Corning Stock is
                               reclassified or changed, including, without
                               limitation, as a result of the issuance of any
                               tracking stock by Corning, (ii) Corning has been
                               subject to any merger, combination or
                               consolidation and is not the surviving entity,
                               (iii) Corning completes a statutory exchange of
                               securities with another corporation (other than
                               pursuant to clause (ii) above), (iv)

                                      A-13
<PAGE>

                               Corning is liquidated, (v) Corning issues to all
                               of its shareholders equity securities of an
                               issuer other than Corning (other than in a
                               transaction described in clause (ii), (iii) or
                               (iv) above) (a "spinoff stock") or (vi) Corning
                               Stock is the subject of a tender or exchange
                               offer or going private transaction on all of the
                               outstanding shares. If any Reorganization Event
                               occurs, in each case as a result of which the
                               holders of Corning 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) shall be determined in
                               accordance with the following:

                               (1) if Corning Stock continues to be
                               outstanding, Corning 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 (3)(a) below); and

                               (2) 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 Corning Stock where
                               Corning is not the surviving entity, the number
                               of shares of the New Stock received with respect
                               to one share of Corning Stock multiplied by the
                               Exchange Ratio for Corning 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 (3)(a)
                               below); and

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

                                  (a) if the combined value of the amount of
                                  Non-Stock Exchange Property received per
                                  share of

                                      A-14
<PAGE>

                                  Corning Stock, as determined by the
                                  Calculation Agent in its sole discretion on
                                  the effective date of such Reorganization
                                  Event (the "Non-Stock Exchange Property
                                  Value"), by holders of Corning Stock is less
                                  than 25% of the Closing Price of Corning
                                  Stock on the Trading Day immediately prior to
                                  the effective date of such Reorganization
                                  Event, a number of shares of Corning 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 Corning Stock and any such
                                  New Stock, and with an aggregate value equal
                                  to the Non-Stock Exchange Property Value
                                  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 Corning Stock or any New Stock
                                  determined in accordance with this clause
                                  (3)(a) shall be added at the time of such
                                  adjustment to the Exchange Ratio in
                                  subparagraph (1) above and/or the New Stock
                                  Exchange Ratio in subparagraph (2) above, as
                                  applicable, or

                                  (b) if the Non-Stock Exchange Property Value
                                  is equal to or exceeds 25% of the Closing
                                  Price of Corning Stock on the Trading Day
                                  immediately prior to the effective date
                                  relating to such Reorganization Event or, if
                                  Corning 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. The
                                  "Reference Basket Stocks" shall be the three
                                  stocks with the largest market capitalization
                                  among the stocks that then comprise the S&P
                                  500 Index (or, if publication of such index
                                  is discontinued, any successor or substitute
                                  index selected by the Calculation Agent in
                                  its sole discretion) with the same primary
                                  Standard Industrial Classification Code ("SIC
                                  Code") as Corning; 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

                                      A-15
<PAGE>

                                  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 Corning. 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 Corning
                                  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:

                                  (i)   if applicable, Corning Stock at the
                                        Exchange Ratio then in effect; and

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

                                  (iii) 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

                                      A-16
<PAGE>

                               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 "Corning 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
                               "Corning 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 Corning Stock shall be
                               deemed to refer to the applicable unit or units
                               of such Exchange Property, including any New
                               Stock or Reference Basket Stock, unless the
                               context otherwise requires. The New Stock
                               Exchange Ratio(s) or Basket Stock Exchange
                               Ratios resulting from any Reorganization Event
                               described in paragraph 5 above or similar
                               adjustment under paragraph 4 above shall be
                               subject to the adjustments set forth in
                               paragraphs 1 through 5 hereof.

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

                               No adjustment to any Exchange Ratio (including
                               for this purpose, any New Stock Exchange Ratio
                               or Basket Stock Exchange Ratio) shall be
                               required unless such adjustment would require a
                               change of at least 0.1% in the Exchange Ratio
                               then in effect. The Exchange Ratio resulting
                               from any of the adjustments specified above will
                               be rounded to

                                      A-17
<PAGE>

                               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 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 paragraphs 1 through 5 above upon
                               written request by any holder of this SPARQS.

Market Disruption Event........"Market Disruption Event" means, with respect to
                               Corning Stock:

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

                                      A-18
<PAGE>

                                  determined by the Calculation Agent in its
                                  sole discretion; and

                                  (ii) a determination by the Calculation Agent
                                  in its sole discretion that any event
                                  described in clause (i) above materially
                                  interfered with the ability of the Issuer or
                                  any of its affiliates to unwind or adjust all
                                  or a material portion of the hedge with
                                  respect to the SPARQS due March 1, 2005,
                                  Mandatorily Exchangeable for Shares of Common
                                  Stock of Corning, Inc.

                               For purposes of determining whether a Market
                               Disruption Event has occurred: (i) 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, (ii) a
                               decision to permanently discontinue trading in
                               the relevant options contract shall not
                               constitute a Market Disruption Event, (iii)
                               limitations pursuant to NYSE Rule 80A (or any
                               applicable rule or regulation enacted or
                               promulgated by the NYSE, any other
                               self-regulatory organization or the Securities
                               and Exchange Commission of scope similar to NYSE
                               Rule 80A as determined by the Calculation Agent)
                               on trading during significant market
                               fluctuations shall constitute a suspension,
                               absence or material limitation of trading, (iv)
                               a suspension of trading in options contracts on
                               Corning Stock by the primary securities market
                               trading in such options, if available, by reason
                               of (a) a price change exceeding limits set by
                               such securities exchange or market, (b) an
                               imbalance of orders relating to such contracts
                               or (c) a disparity in bid and ask quotes
                               relating to such contracts shall constitute a
                               suspension, absence or material limitation of
                               trading in options contracts related to Corning
                               Stock and (v) a suspension, absence or material
                               limitation of trading on the primary securities
                               market on which options contracts related to
                               Corning 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

                                      A-19
<PAGE>

                               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 Corning Stock
                               (and/or the value of any Exchange Property) as
                               of the date of such acceleration and (y) the
                               then current Exchange Ratio and (ii) the Call
                               Price calculated as though the date of
                               acceleration were the Call Date (but in no event
                               less than the Call Price for the first Call
                               Date), in each case plus accrued but unpaid
                               interest to but excluding the date of
                               acceleration; provided that if the Issuer has
                               called the SPARQS in accordance with the Morgan
                               Stanley Call Right, the amount declared due and
                               payable upon any such acceleration shall be an
                               amount in cash for each $      principal amount
                               of this SPARQS equal to the Call Price for the
                               Call Date specified in the Issuer's notice of
                               mandatory exchange, plus accrued but unpaid
                               interest to but excluding the date of
                               acceleration.

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

                                      A-20
<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 Corning 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 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

                                      A-21
<PAGE>

Payment Date, the interest on which is payable in U.S. dollars, shall be
entitled to receive payments of interest, other than interest due at maturity
or on any date of redemption or repayment, by wire transfer of immediately
available funds if appropriate wire transfer instructions have been received by
the Paying Agent in writing not less than 15 calendar days prior to the
applicable Interest Payment Date.

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

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

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

                                      A-22
<PAGE>

     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-23
<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,
  as Trustee

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

                                      A-24
<PAGE>

                              REVERSE OF SECURITY

     This Note is one of a duly authorized issue of Senior Global Medium-Term
Notes, Series C, having maturities more than nine months from the date of issue
(the "Notes") of the Issuer. The Notes are issuable under an Amended and
Restated Senior Indenture, dated as of May 1, 1999, between the Issuer and
JPMorgan Chase Bank (formerly known as The Chase Manhattan 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 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 if this Note
is issued with original issue discount, this Note will be repayable on the
applicable Optional Repayment Date or Dates at

                                      A-25
<PAGE>

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

                                      A-26
<PAGE>

     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 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

                                      A-27
<PAGE>

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 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

                                      A-28
<PAGE>

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 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;

                                      A-29
<PAGE>

          (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 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.

                                      A-30
<PAGE>

     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 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.

                                      A-31
<PAGE>

     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 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-32
<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-33
<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-34
<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-35Exhibit 10.1

Exhibit 10.1

 

 EXECUTION COPY 

 PURCHASE AGREEMENT
   

       THIS
  PURCHASE AGREEMENT is made and entered into as of February 16, 2004, by and
  between Silicon Graphics, Inc., a Delaware corporation (the “Company”)
  and the purchasers whose names and addresses are set forth on the signature
  page hereof (the “Purchasers”).
   

      1. 
  Authorization and Sale of the Shares.
  Subject to the terms and conditions of this Agreement, the Company has authorized
  the issuance and sale of up to 18,181,818 shares (the “Shares”)
  of its common stock, par value $0.001 per share (the “Common
  Stock”).  

      2.
   Agreements to Sell and Purchase.
  On the basis of the representations and warranties contained in this Agreement,
  and subject to its terms and conditions, the Company hereby agrees to sell to
  the Purchasers, and each Purchaser severally and not jointly agrees to purchase
  from the Company, the number of Shares set forth on the signature page under
  each Purchaser’s name hereto at a purchase price of $2.75 per share (the
  “Purchase Price”).
  The agreements to sell and purchase the Shares hereunder constitute separate
  agreements between the Company and each Purchaser.  

       3. 
  Payment and Delivery.
  Payment for the Shares shall be made to the Company
  in Federal funds immediately available in New York City against delivery of
  such Shares (such payment and delivery hereinafter referred to as the “Closing”)
  at 10:00 a.m., New York City time, on February 19, 2004, or at such other time
  on the same or such other date as shall be agreed by the Company and the Purchaser.
  The time and date of such payment are hereinafter referred to as the “Closing
  Date.” Payment for the Shares shall
  be made by wire transfer to an account designated in writing by the Company.
   

      Certificates
  for the Shares shall be registered in the name of each Purchaser or if so indicated
  on the signature page hereto, in the name of a nominee designated by such Purchaser.
  The certificates evidencing the Shares shall be delivered to the Purchasers
  on the Closing Date, with any transfer taxes payable in connection with the
  transfer of the Shares to the Purchasers duly paid by the Company, against payment
  of the aggregate Purchase Price therefor.  

      4.
  Conditions to the Company’s Obligations.
  The Company’s obligations to issue and sell the Shares to the Purchasers
  are subject to the following conditions:  

        (a)
    Receipt by the Company of Federal funds immediately
    available in the full amount of the aggregate Purchase Price.  

  

        (b)
    Accuracy of the representations and warranties
    made by the Purchasers and the fulfillment in all material respects of those
    undertakings of the Purchasers to be fulfilled prior to the Closing. 
  

      5.
  Conditions to Each Purchaser’s Obligations.
  The several obligations of each Purchaser to purchase and pay for the Shares
  on the Closing Date are subject to the following conditions:  

        (a)
    The Purchaser shall have received on the
    Closing Date a certificate, dated the Closing Date and signed by an executive
    officer of the Company, to the effect that the representations and warranties
    of the Company contained in this Agreement are true and correct as of the
    Closing Date and that the Company has complied with all of the agreements
    and satisfied all of the conditions on its part to be performed or satisfied
    hereunder on or before the Closing Date.  

   The officer signing and delivering
    such certificate may rely upon the best of his or her knowledge as to proceedings
    threatened.  

        (b)
    All representations and warranties of the
    Company contained herein shall remain true and correct as of the Closing Date
    and the Company shall have performed and complied with all of the agreements
    and satisfied all of the conditions on its part to be performed or satisfied
    hereunder on or before the Closing Date. 

        (c)
    Except as described in the Exchange Act Documents
    (as defined in Section 6(a) below), there shall have been no material adverse
    change in the condition, financial or otherwise, or in the earnings, business
    or operations of the Company taken as a whole, since the date hereof. 
  

        (d)
    The Purchaser shall have received on the
    Closing Date an opinion of Davis Polk & Wardwell, counsel for the Company,
    dated the Closing Date, in the form set forth as Exhibit A. Such opinion shall
    be rendered to the Purchaser at the request of the Company and shall so state
    therein.  

        (e)
    From the date hereof to the Closing Date,
    trading in the Common Stock shall not have been suspended by the Commission
    or by the New York Stock Exchange, other than as part of a general suspension
    of trading by the Commission or such exchange.  

        (f)
    All corporate and other proceedings in connection
    with the transactions contemplated at the Closing hereby, and all documents
    and instruments incident to such transactions, shall be reasonably satisfactory
    in substance to the Purchaser and its counsel.  

  2
   

        (g)
    A minimum of $40 million in gross proceeds
    shall have been obtained pursuant to the offering contemplated by this Agreement.
     

       6. 
  Representations, Warranties and Covenants
  of the Company. The  Company
  represents and warrants to, and covenants with, the Purchaser that, as of the
  date hereof and as of the Closing Date (or as of such other date as may be expressly
  set forth below):  

        (a)
    The Company has timely filed with the Securities
    and Exchange Commission (the “Commission”) all documents
    required to be filed pursuant to the Securities Exchange Act of 1934, as amended
    (the “Exchange Act”) during
    the 12 months preceding the date of this Agreement. The following documents
    (collectively, the “Exchange Act Documents”) complied when
    filed in all material respects with the Exchange Act and the applicable rules
    and regulations of the Commission thereunder, and did not, when so filed,
    contain any untrue statement of a material fact or omit to state a material
    fact necessary to make the statements therein, in the light of the circumstances
    under which they were made, not misleading:  

  
          (i)
      Annual Report on Form 10-K for the Year
      ended June 27, 2003;  

          (ii)
      Quarterly Reports on Form 10-Q for the
      Quarters ended September 26, 2003 and December 26, 2003;  

          (iii)
      Definitive Proxy Statement filed with the
      Commission on November 4, 2003; and  

          (iv)
      All other documents filed by the Company
      with the Commission since June 27, 2003.  

  

   The financial statements of the Company
    included in the Exchange Act Documents comply in all material respects with
    applicable accounting requirements and the rules and regulations of the Commission
    with respect thereto as in effect at the time of filing. Such financial statements
    have been prepared in accordance with United States generally accepted accounting
    principles applied on a consistent basis during the periods involved (“GAAP”), except as may be
    otherwise specified in such financial statements or the notes thereto and
    except that unaudited financial statements may not contain all footnotes required
    by GAAP, and fairly present in all material respects the financial position
    of the Company and its consolidated subsidiaries as of and for the dates thereof
    and the results of operations and cash flows for the periods then ended, subject,
    in the case of unaudited statements, to normal, immaterial, year-end audit
    adjustments.  

  3
   

        (b)
    The information contained in the Exchange
    Act Documents, taken as a whole and as amended to the date hereof, does not
    as of the date hereof contain any untrue statement of a material fact or omit
    to state a material fact necessary to make the statements therein, in the
    light of the circumstances under which they were made, not misleading. 
  

        (c)
    The Company has been duly incorporated, is
    validly existing as a corporation in good standing under the laws of the jurisdiction
    of its incorporation, has the corporate power and authority to own or lease
    its properties and to conduct its business as currently conducted and as described
    in the Exchange Act Documents (as defined below) and is duly qualified to
    transact business and is in good standing in each jurisdiction in which the
    conduct of its business or its ownership or leasing of property requires such
    qualification, except to the extent that the failure to be so qualified or
    be in good standing would not reasonably be expected to have a material adverse
    effect on the Company and its Subsidiaries, taken as a whole.  

        (d)
    Each “significant subsidiary” (as
    defined in Rule 1.02(w) of Regulation S-X under the Securities Act of 1933,
    as amended (the “Securities Act”))
    of the Company that is incorporated in the United States (the “Subsidiaries”)
    has been duly incorporated, is validly existing as a corporation in good standing
    under the laws of the jurisdiction of its incorporation, has the corporate
    power and authority to own its property and to conduct its business as currently
    conducted and described in the Exchange Act Documents and is duly qualified
    to transact business and is in good standing in each jurisdiction in which
    the conduct of its business or its ownership or leasing of property requires
    such qualification, except to the extent that the failure to be so qualified
    or be in good standing would not reasonably be expected to have a material
    adverse effect on the Company and its Subsidiaries, taken as a whole; all
    of the issued shares of capital stock of each Subsidiary of the Company have
    been duly and validly authorized and issued, are fully paid and non-assessable
    and are owned directly by the Company, free and clear of all liens, encumbrances,
    equities or claims and free of preemptive or similar rights.  

        (e)
    This Agreement has been duly authorized,
    executed and delivered by, and is a valid and binding agreement of, the Company,
    enforceable in accordance with its terms, subject to applicable bankruptcy,
    insolvency or similar laws affecting creditors’ rights generally and
    general principles of equity and except as rights to indemnification and contribution
    in Section 11 hereof may be limited under applicable law.  

 4 

        (f)
    The Company is not required to obtain any
    consent, waiver, authorization or order of, give any notice to, or make any
    filing or registration with, any court or other federal, state, local or other
    governmental authority any regulatory or self-regulatory agency or any other
    individual, corporation, partnership, limited liability company, association,
    trust or other entity or organization (each, a “Person”)
    in connection with the execution, delivery and performance by the Company
    of this Agreement, other than (a) the filing with the Commission of the Registration
    Statement and a Form D, (b) applicable Blue Sky filings and (c) the filing
    of a listing notification with the New York Stock Exchange.  

        (g)
    The authorized capital stock of the Company
    consists of 750,000,000 shares of Common Stock, par value $0.001, of which
    211,034,000 shares were outstanding as of December 26, 2003. The authorized
    capital stock of the Company conforms as to legal matters to the description
    thereof contained in the Exchange Act Documents. Except as disclosed in the
    Exchange Act Documents or under existing employee benefits plans of the Company
    described in the Exchange Act Documents, there are no outstanding warrants,
    options, convertible securities or other rights, agreements or arrangements
    of any character under which the Company is or may be obligated to issue any
    equity securities of any kind (whether or not presently convertible into or
    exercisable or exchangeable for shares of capital stock of the Company). All
    outstanding shares of capital stock are duly authorized, validly issued, fully
    paid and nonassessable and have been issued in compliance with all applicable
    securities laws.  

        (h)
    The issue and sale of the Shares will not
    obligate the Company to issue shares of Common Stock or other securities to
    any Person (other than the Purchasers) and will not result in a right of any
    holder of Company securities to adjust the exercise, conversion, exchange
    or reset price under such securities.  

        (i)
    The shares of common stock outstanding prior
    to the issuance of the Shares have been duly authorized and are validly issued,
    fully paid and non-assessable.  

        (j)
    The Shares have been duly authorized and,
    when issued and delivered in accordance with the terms of this Agreement,
    will be validly issued, fully paid and non-assessable, and the issuance of
    such Shares will not be subject to any preemptive or similar rights. 
  

        (k)
    The execution and delivery by the Company
    of, and the performance by the Company of its obligations under, this Agreement
    will not contravene any provision of applicable law or the certificate of
     

 5  

   incorporation or by-laws of the Company
    or any agreement or other instrument binding upon the Company or any of its
    Subsidiaries that is material to the Company and its Subsidiaries, taken as
    a whole, or any judgment, order or decree of any governmental body, agency
    or court having jurisdiction over the Company or any Subsidiary, and no consent,
    approval, authorization or order of, or qualification with, any governmental
    body or agency is required for the performance by the Company of its obligations
    under this Agreement, except such as may be required by the securities or
    Blue Sky laws of the various states or foreign jurisdictions in connection
    with the offer and sale of the Shares and by Federal and state securities
    laws with respect to the Company’s obligations under Sections 8 and 10
    of this Agreement.  

        (l)
    Other than intraquarter working capital fluctuations
    of the type described in the Exchange Act Documents, there has not occurred
    any material adverse change in the condition, financial or otherwise, or in
    the earnings, business or operations of the Company and its Subsidiaries,
    taken as a whole, since December 26, 2003.  

        (m)
    There are no legal or governmental proceedings
    pending or threatened to which the Company or any of its Subsidiaries is a
    party or to which any of the properties of the Company or any of its Subsidiaries
    is subject other than proceedings accurately described in all material respects
    in the Exchange Act Documents and proceedings that would not reasonably be
    expected to have a material adverse effect on the Company and its Subsidiaries,
    taken as a whole, or that would have any material effect on the power or ability
    of the Company to perform its obligations under this Agreement to consummate
    the transactions contemplated by this Agreement.  

        (n)
    Except as described in the Exchange Act Documents
    or as would not reasonably be expected by the Company to result in a material
    adverse effect, neither the Company nor any Subsidiary (i) is in default under
    or in violation of (and no event has occurred that, with notice or lapse of
    time or both, would result in a default by the Company or any Subsidiary under)
    any indenture, loan, or credit agreement of any kind or any other instrument
    to which it is a party or by which any of its properties is bound, (ii) is
    in violation of any order of any court, arbitrator or governmental body or
    (iii) is or has been in violation of any statute, rule or regulation of any
    governmental authority, including without limitation all foreign, federal,
    state and local laws applicable to its business, except in the case of clauses
    (i), (ii) and (iii) as would not have or reasonably be expected to result
    in a material adverse effect on the Company and its Subsidiaries, taken as
    a whole.  

 6  

        (o)
    Except as described in the Exchange Act Documents,
    the Company and its Subsidiaries (i) are in compliance with any and all applicable
    foreign, federal, state and local laws and regulations relating to the protection
    of human health and safety, the environment or hazardous or toxic substances
    or wastes, pollutants or contaminants (“Environmental Laws”),
    (ii) have received all permits, licenses or other approvals required of them
    under applicable Environmental Laws to conduct their respective businesses
    and (iii) are in compliance with all terms and conditions of any such permit,
    license or approval, except where such noncompliance with Environmental Laws,
    failure to receive required permits, licenses or other approvals or failure
    to comply with the terms and conditions of such permits, licenses or approvals
    would not, alone or in the aggregate, reasonably be expected to have a material
    adverse effect on the Company and its Subsidiaries, taken as a whole. 
  

        (p)
    Except as described in the Exchange Act Documents,
    there are no costs or liabilities associated with Environmental Laws (including,
    without limitation, any capital or operating expenditures required for clean-up,
    closure of properties or compliance with Environmental Laws or any permit,
    license or approval, any related constraints on operating activities and any
    potential liabilities to third parties) which would, alone or in the aggregate,
    reasonably be expected to have a material adverse effect on the Company and
    its Subsidiaries, taken as a whole.  

        (q)
    Except as described in the Exchange Act Documents,
    the Company and its Subsidiaries own or possess, or can acquire on reasonable
    terms, all material patents, patent rights, licenses, inventions, copyrights,
    know-how (including trade secrets and other unpatented and/or unpatentable
    proprietary or confidential information, systems or procedures), trademarks,
    service marks and trade names currently employed by them in connection with
    the business now operated by them, and neither the Company nor any of its
    Subsidiaries has received any notice of infringement of or conflict with asserted
    rights of others with respect to any of the foregoing which, alone or in the
    aggregate, would reasonably be expected to have a material adverse effect
    on the Company and its Subsidiaries, taken as a whole.  

        (r)
    The Company and its Subsidiaries have good
    and marketable title in fee simple to all real property owned by them that
    is material to the business of the Company and its Subsidiaries and good and
    marketable title in all personal property owned by them that is material to
    the business of the Company and its Subsidiaries, in each case free and clear
    of all liens, except for liens as do not materially affect the value of such
    property and do not materially interfere with the use made and proposed to
    be made of such property by the Company and its Subsidiaries  

 7  

   and liens for the payment of federal,
    state or other taxes, the payment of which is neither delinquent nor subject
    to penalties. Any real property and facilities held under lease by the Company
    and its Subsidiaries are held by them under valid, subsisting and enforceable
    leases of which the Company and its Subsidiaries are in compliance in all
    material respects.  

        (s)
    No material labor dispute exists or, to the
    knowledge of the Company, is imminent with respect to any of the employees
    of the Company or its Subsidiaries which could reasonably be expected to result
    in a material adverse effect on the Company and its Subsidiaries, taken as
    a whole.  

        (t)
    The Company is in material compliance with
    all provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it
    as of the Closing Date. The Company and its Subsidiaries maintain a system
    of internal accounting controls sufficient to provide reasonable assurance
    that (i) transactions are executed in accordance with management’s general
    or specific authorizations, (ii) transactions are recorded as necessary to
    permit preparation of financial statements in conformity with GAAP and to
    maintain asset accountability, (iii) access to assets is permitted only in
    accordance with management’s general or specific authorization, and (iv)
    the recorded accountability for assets is compared with the existing assets
    at reasonable intervals and appropriate action is taken with respect to any
    differences. The Company has established disclosure controls and procedures
    (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company
    and designed such disclosure controls and procedures to ensure that material
    information relating to the Company, including its Subsidiaries, is made known
    to the certifying officers by others within those entities. The Company’s
    certifying officers have evaluated the effectiveness of the Company’s
    controls and procedures as of the date prior to the filing date , as stated
    in such report, of the most recently filed periodic report under the Exchange
    Act (such date, the “Evaluation Date”).
    The Company presented in its most recently filed periodic report under the
    Exchange Act the conclusions of the certifying officers about the effectiveness
    of the disclosure controls and procedures based on their evaluations as of
    the Evaluation Date. Since the Evaluation Date, there have been no significant
    changes in the Company’s internal controls (as such term is defined in
    Item 307(b) of Regulation S-K under the Exchange Act) or, the Company’s
    knowledge, in other factors that could significantly affect the Company’s
    internal controls.  

        (u)
    Except as set forth in the Exchange Act documents,
    there are no relationships or transactions involving the Company that would
    be required to be disclosed by the Company pursuant to Item 402 of Regulation
    S-K under the Securities Act.  

 8  

        (v)
    Since December 26, 2003, except as specifically
    disclosed in the Exchange Act Documents, (i) the Company has not materially
    altered its method of accounting (other than as required by GAAP) or the identity
    of its auditors, (ii) the Company has not declared or made any dividend or
    distribution of cash or other property to its stockholders or purchased, redeemed
    or made any agreements to purchase or redeem any shares of its capital stock
    and (iii) the Company has not issued any equity securities to any executive
    officer, director or Affiliate, except pursuant to existing Company stock
    option or stock purchase plans. Except as specified in the Exchange Act Documents,
    the Company does not have pending before the Commission any request for confidential
    treatment of information.  

        (w)
    The Company has not, in the twelve months
    preceding the date hereof, received notice from any market on which the Common
    Stock is or has been listed or quoted to the effect that the Company is not
    in compliance with the listing or maintenance requirements of such market.
     

        (x)
    The Company is not, and after giving effect
    to the offering and sale of the Shares and the application of the proceeds
    thereof will not be, required to register as, an “investment company”
    as such term is defined in the Investment Company Act of 1940, as amended.
     

        (y)
    Neither the Company nor any Affiliate (as
    defined in Rule 501(b) of Regulation D under the Securities Act) of the Company
    has, directly, or through any agent, (i) sold, offered for sale, solicited
    offers to buy or otherwise negotiated in respect of, any security (as defined
    in the Securities Act) which is or will be integrated with the sale of the
    Shares in a manner that would require the registration under the Securities
    Act of the issuance and sale of the Shares by the Company pursuant to this
    Agreement; or (ii) offered, solicited offers to buy or sold the Shares by
    any form of general solicitation or general advertising (as those terms are
    used in Regulation D under the Securities Act) or in any manner involving
    a public offering within the meaning of Section 4(2) of the Securities Act;
    and neither the Company nor any Affiliate of the Company will engage in any
    of the actions described in clauses (i) and (ii) of this paragraph. 
  

        (z)
    Subject to the accuracy of the Purchaser’s
    representations herein, it is not necessary in connection with the offer,
    sale and delivery of the Shares to the Purchasers in the manner contemplated
    by this Agreement to register the Shares under the Securities Act. 
  

        (aa)
    The Company shall comply with all requirements
    of the New York Stock Exchange with respect to the issuance of the Shares
    and the listing thereof on the New York Stock Exchange.  

 9  

        (bb)
    The Company has not taken and will not, in
    violation of applicable law, take, any action designed to or that might reasonably
    be expected to cause or result in stabilization or manipulation of the price
    of the Common Stock to facilitate the sale or resale of the Shares. 
  

        (cc)
    The Company is eligible to file a registration
    statement on Form S-3.  

        (dd)
    The Company shall, prior to the open of trading
    succeeding the execution of this Agreement issue a press release in order
    to publicly disclose the sale of Shares pursuant to this Agreement, which
    press release shall contain all the material terms of the transactions contemplated
    hereunder and otherwise disclose all material information possessed by the
    Purchaser; provided that no disclosure will be made identifying the Purchaser.
    In addition, as promptly as practicable after the Closing, the Company shall
    file a Form 8-K disclosing the transactions contemplated hereunder and including
    as exhibits all agreements executed in connection with such transactions.
    Except for the material terms and conditions of this Agreement which shall
    all be disclosed as provided in the first sentence, the Company confirms that
    neither it, nor to its knowledge any other Person acting on its behalf, has
    provided any of the Purchasers or their agents or counsel with any information
    that the Company believes constitutes material, non-public information. The
    Company understands and confirms that the Purchasers will rely on the foregoing
    representations and covenants in effecting transactions in securities of the
    Company.  

        (ee)
    No stockholder of the Company has any right
    (which has not been waived) to require the Company to register the sale of
    any shares owned by such stockholder under the Securities Act in the Registration
    Statement (as defined in Section 8(a)) to be filed by the Company on behalf
    of the Purchaser pursuant to Section 8(a).  

      7. 
  Representations, Warranties and Covenants
  of the Purchasers. Each
  Purchaser severally represents and warrants to, and covenants with, the Company
  that:  

        (a)
    The Purchaser is an “accredited investor”
    as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities
    Act or a “qualified institutional buyer” as defined in Rule 144A
    under the Securities Act, and has requested, received, reviewed and considered
    all information it deems relevant in making an informed decision to purchase
    the Shares. The Purchaser is experienced in evaluating companies such as the
    Company. At no time was the Purchaser presented with or solicited by any publicly
    issued or circulated newspaper, mail, radio, television, or to  

 10  

   the Purchaser’s knowledge, any
    other form of general advertising or solicitation in connection with the offer,
    sale and purchase of the Shares.  

        (b)
    The Purchaser is acquiring the number of
    Shares set forth on the signature page hereto in the ordinary course of its
    business and for its own account for investment only and with no present intention
    of distributing any of such Shares without prejudice, however, to such Purchaser’s
    right, subject to the provisions of this Agreement, to sell or otherwise dispose
    of all or any part of such Shares pursuant to an effective registration statement
    under the Securities Act or under an exemption from such registration, in
    compliance with applicable federal and state securities laws and subject to
    this Agreement. Nothing contained herein shall be deemed a representation
    or warranty by such Purchaser to hold Shares for any period of time. Such
    Purchaser does not have any arrangement or understanding with any other Persons
    regarding the distribution of such Shares, other than as contemplated in Section
    8 of this Agreement; without prejudice, however, to such Purchaser’s
    right, subject to the provisions of this Agreement, to sell or otherwise dispose
    of all or any part of such Securities pursuant to an effective registration
    statement under the Securities Act or under an exemption from such registration
    and in compliance with applicable federal and state securities laws. 
  

        (c)
    The Purchaser will not, directly or indirectly,
    offer, sell, pledge, transfer or otherwise dispose of (or solicit offers to
    buy, purchase or otherwise acquire or take a pledge of) any of the Shares,
    except in compliance with this Agreement and the Securities Act and the applicable
    rules and regulations of the Commission thereunder, including without limitation
    if applicable, the prospectus delivery requirements in connection with any
    sales made under the Registration Statement referred to in Section 8 hereof.
  

        (d)
    The Purchaser will have, on or prior to the
    Closing Date, furnished to the Company a fully completed Selling Stockholder
    Questionnaire attached as Appendix I hereto for use in preparation of the
    Registration Statement and all of the information contained therein will be
    true and correct as of the Closing Date.  

        (e)
    The Purchaser will notify the Company immediately
    of any change in any such information required to be disclosed until such
    time as the Purchaser has sold all of its Shares or until the Company is no
    longer required to keep the Registration Statement effective.  

        (f)
    In connection with its decision to purchase
    the number of Shares set forth on the signature page hereto, the Purchaser
    (i) has relied only upon the Exchange Act Documents and the representations
    and  

 11  

   warranties of the Company contained
    herein and the information described in Section 7(a), and (ii) has not relied
    on any information or advice furnished by or on behalf of Bear Stearns &
    Co., Inc.  

        (g)
    The Purchaser acknowledges that the certificates
    evidencing the Shares will be imprinted with a legend in substantially the
    following form (and a stop-transfer order may be placed against transfer of
    the certificates for the Shares):  

  
     “THE SECURITIES REPRESENTED
      BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
      1933, AS AMENDED. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED
      IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
      UNDER SAID ACT UNTIL THE PASSAGE OF TWO YEARS FROM [CLOSING DATE], UNLESS
      THE  SECURITIES ARE OTHERWISE SOLD, TRANSFERRED
      OR ASSIGNED IN COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS, AND THE COMPANY
      RECEIVES AN OPINION OF COUNSEL AS TO THE EXEMPTION FROM REGISTRATION OF
      SUCH SALE, TRANSFER OR  ASSIGNMENT. THESE
      SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
      SECURED BY SUCH SECURITIES, PROVIDED SUCH PLEDGE IS MADE IN COMPLIANCE WITH
      APPLICABLE LAW.”  

  

   The Purchaser acknowledges that there
    may occasionally be times when the Company determines that it must suspend
    the use of the Prospectus (as defined in Section 11(a)) forming part of the
    Registration Statement, as set forth in Section 10. Certificates evidencing
    the Shares shall not contain any legend (i) after such Shares have been sold
    pursuant to an effective registration statement, (ii) following any sale of
    such Shares pursuant to and in compliance with Rule 144 or (iii) while such
    Shares are eligible for sale under Rule 144(k) and, within five business days
    after receipt of a Purchaser’s stock certificate for cancellation, together
    with evidence reasonably satisfactory to the Company or its counsel that any
    of the foregoing conditions have been satisfied, the Company shall deliver
    or cause to be delivered instructions to the Company’s transfer agent
    to deliver to such Purchaser or its transferee either (i) shares via electronic
    DTC delivery or (ii) a certificate representing such Shares that is free from
    all restrictive and other legends. The Company may not make any notation on
    its records or give instructions to any transfer agent of the Company that
    enlarge the restrictions on transfer set forth in this Section except as it
    may reasonably determine are necessary or appropriate to  

 12  

   comply or to ensure compliance with
    those applicable laws that are enacted or modified after the Closing. 
  

        (h)
    The Purchaser will notify the Company promptly
    of the sale of any of its Shares, other than (i) sales pursuant to a Registration
    Statement contemplated in Section 8 of this Agreement and (ii) sales following
    termination of the transfer restrictions described in Section 12, and the
    Purchaser will furnish any information reasonably requested by the Company,
    including an opinion of counsel reasonably satisfactory to the Company, to
    evidence the exemption from the registration requirements of the Securities
    Act, the applicable rules and regulations of the Commission thereunder, and
    state securities laws, in reliance upon which such sales have been made. 
  

        (i)
    This Agreement has been duly authorized,
    executed and delivered by, and is a valid and binding agreement of, the Purchaser,
    enforceable in accordance with its terms, subject to applicable bankruptcy,
    insolvency or similar laws affecting creditors’ rights generally and
    general principles of equity and except as rights to indemnification and contribution
    in Section 11 hereof may be limited under applicable law.  

        (j)
    The Purchaser will not use any of the Shares
    acquired pursuant to this Agreement to cover any short position in the Common
    Stock if doing so would be in violation of applicable securities laws. 
  

        (k)
    The Purchaser will hold in confidence all
    information concerning this Agreement and the placement of Shares hereunder
    until the earlier of such time as the Company has made a public announcement
    concerning this Agreement and the placement of Shares hereunder, or this Agreement
    is terminated. 

        (l)
    The Purchaser represents, warrants and covenants
    neither the Purchaser nor any Affiliate of such Purchaser which: (i) had knowledge
    of the transactions contemplated hereby; (ii) has or shares discretion relating
    to such Purchaser’s investments or trading or information concerning
    such Purchaser’s investments, including in respect of the Shares; or
    (iii) is subject to such Purchaser’s review or input concerning such
    Affiliate’s investments or trading, has or will, directly or indirectly,
    during the period beginning on the date on which the Company or a financial
    advisor to the Company, first contacted such Purchaser regarding the transactions
    contemplated by this Agreement and ending earlier of the date the transaction
    is publicly announced, the Closing date, or the date the transaction is described
    in a Current Report on Form 8-K filed by the Company, engage in: (1) any “short
    sales” (as such term is defined in Rule 3b-3 promulgated under the Exchange
    Act) of the  

 13  

   Common Stock, including, without
    limitation, the maintaining of any short position with respect to, establishing
    or maintaining a “put equivalent position” (within the meaning of
    Rule 16a-1(h) under the Exchange Act) with respect to, entering into any swap,
    derivative transaction or other arrangement (whether any such transaction
    is to be settled by delivery of Common Stock, other securities, cash or other
    consideration) that transfers to another, in whole or in part, any economic
    consequences or ownership, or otherwise dispose of, any Common Stock by the
    Purchaser; or (2) any hedging transaction which establishes a net short position
    with respect to the Common Stock (clauses (1) and (2) together, a “Short
    Sale”); except for (A) Short Sales
    by a Purchaser or Affiliate of such Purchaser which was, prior to the date
    on which such Purchaser was first contacted by the Company or a financial
    advisor to the Company regarding the transactions contemplated by this Agreement,
    a market maker for the Common Stock, provided that such Short Sales are in
    the ordinary course of business of such Purchaser or Affiliate of such Purchaser
    and are in compliance with the Securities Act, the rules and regulations under
    the Securities Act and such other securities laws as may be applicable, (B)
    Short Sales by the Purchaser or an Affiliate of such Purchaser which by virtue
    of the procedures of such Purchaser or Affiliate of such Purchaser are made
    without knowledge of the transactions contemplated by this Agreement or (C)
    Short Sales by the Purchaser or an Affiliate of such Purchaser to the extent
    that such Purchaser or Affiliate of such Purchaser is acting in the capacity
    of a broker-dealer executing unsolicited third-party transactions. 
  

      8. 
  Shelf Registration.
  The Company shall:  

        (a)
    use all reasonable efforts to prepare and
    file or cause to be prepared and filed with the Commission, as soon as practicable
    but in any event by the date (the “Filing
    Deadline Date”) ten business days
    after the Closing Date, a registration statement (the “Registration Statement”)
    registering the resale from time to time by Purchasers of all of the Shares
    (including, for purposes of this Section 8 only, any shares of Common Stock
    issued on or about the Closing Date by the Company to any Purchaser or its
    Affiliates as an incentive to convert the Company’s 6.50% Senior Secured
    Convertible Notes due 2009 held by such persons, but not the Common Stock
    underlying such notes). The Registration Statement shall be on Form S-3 or
    a successor form permitting registration of such Shares for resale by the
    Purchasers from time to time in accordance with the plan of distribution contained
    therein. The Company shall use all reasonable efforts, subject to receipt
    of necessary information from the Purchaser, to cause the Registration Statement
    to be declared effective under the Securities Act as promptly as is practicable
    but in any event by the date (the “Effectiveness Deadline Date”)
    that is or sixty days after the date the Registration Statement is filed.
     

 14  

        (b)
    prepare and file with the Commission such
    amendments to the Registration Statement as may be necessary to keep such
    Registration Statement continuously effective for a period not to exceed the
    earlier of (i) the second anniversary of the Closing Date, or (ii) such time
    as all Shares purchased by such Purchaser pursuant to this Agreement have
    been sold pursuant to a registration statement or pursuant to Rule 144 under
    the Securities Act (such period, the “Effectiveness
    Period”); cause the related prospectus
    to be supplemented by any required Prospectus supplement, and as so supplemented
    to be filed pursuant to Rule 424 (or any similar provisions then in force)
    under the Securities Act; and use all reasonable efforts to comply with this
    Agreement and the provisions of the Securities Act applicable to it with respect
    to the disposition of all securities covered by such Registration Statement
    during the Effectiveness Period in accordance with this Agreement and the
    intended methods of disposition by the sellers thereof set forth in such Registration
    Statement as so amended or such Prospectus as so supplemented.  

        (c)
    as promptly as practicable give notice to
    the Purchaser (i) when any Prospectus, Prospectus supplement, or the Registration
    Statement or a post-effective amendment to the Registration Statement has
    been filed with the Commission and, with respect to a Registration Statement
    or any post-effective amendment, when the same has been declared effective.
     

        (d)
    use all reasonable efforts to obtain the
    withdrawal of any order suspending the effectiveness of the Registration Statement
    or the lifting of any suspension of the qualification (or exemption from qualification)
    of any of the Shares for sale in any jurisdiction in which they have been
    qualified for sale, in either case at the earliest possible moment, and provide
    prompt notice to the Purchaser of the withdrawal of any such order. 
  

        (e)
    during the Effectiveness Period, deliver
    to the Purchaser in connection with any sale by the Purchaser of Shares pursuant
    to the Registration Statement, without charge, as many copies of the Prospectus
    or Prospectuses relating to such Shares (including each preliminary prospectus)
    and any amendment or supplement thereto as such the Purchaser may reasonably
    request.  

        (f)
    file documents required of the Company for
    customary Blue Sky clearance in states specified in writing by the Purchaser;
    provided that the Company will not be required to (i) qualify as a foreign
    corporation or as a dealer in securities in any jurisdiction where it would
    not otherwise be required to qualify but for this Agreement or (ii) take any
     

 15  

   action that would subject it to general
    service of process in suits or to taxation in any such jurisdiction where
    it is not then so subject.  

        (g)
    bear all fees and expenses incurred in connection
    with the performance by the Company of its obligations under paragraphs (a)
    through (f) of this Section whether or not the Registration Statement is declared
    effective, other than fees and expenses, if any, of counsel or other advisors
    to the Purchaser or underwriting discounts, brokerage fees and commissions
    incurred by the Purchaser.  

      9. 
  Delay in Filing or Effectiveness of Registration
  Statement. If the  Registration
  Statement is not filed by the Company with the Commission on or prior to the
  Filing Deadline Date, then for each day following the Filing Deadline Date,
  until but excluding the date the Registration Statement is filed, or if the
  Registration Statement is not declared effective by the Commission by the Effectiveness
  Deadline Date, or if, after the date the registration statement is declared
  effective, sales pursuant to the registration statement are suspended for more
  than the periods set forth in Section 10(c) below, then for each day following
  the Filing Deadline Date or Effectiveness Deadline Date (as the case may be),
  until but excluding the date the Registration Statement is filed or the Commission
  declares the Registration Statement effective (as the case may be), and for
  each day in excess of the days permitted for suspensions under Section 10(c),
  the Company shall, for each such day, pay each Purchaser that has completed
  and delivered to the Company, at least five business days prior to the date
  the Registration Statement is declared effective, a Selling Stockholder Questionnaire,
  as liquidated damages and not as a penalty, an amount equal to a rate per year
  of 12% of the Purchase Price for the first 28-day period and a rate per year
  of 18% of the Purchase Price thereafter; and for any such day, such payment
  shall be made no later than the first business day of the calendar month next
  succeeding the month in which such day occurs and shall be prorated for partial
  periods.  

      The parties
  agree that the sole damages payable for a violation of the terms of this Agreement
  with respect to which liquidated damages are expressly provided shall be such
  liquidated damages. Nothing shall preclude the Purchaser from pursuing or obtaining
  specific performance or other equitable relief with respect to this Agreement.
   

      The parties
  hereto agree that the liquidated damages provided for in this Section 9 constitute
  a reasonable estimate of the damages that may be incurred by the Purchaser by
  reason of the failure of the Registration Statement to be filed or declared
  effective in accordance with the provisions hereof, except in the case of the
  Company’s willful breach.  

      10.
  Transfer of Shares After Registration; Suspension.
   

 16  

        (a)
    Each Purchaser agrees that it will not effect
    any disposition of the Shares or its right to purchase the Shares that would
    constitute a sale within the meaning of the Securities Act except as contemplated
    in the Registration Statement referred to in Section 8(a) and as described
    below or as otherwise permitted by law, and that it will promptly notify the
    Company of any changes in the information set forth in the Registration Statement
    regarding the Purchaser or its plan of distribution.  

        (b)
    The Company shall, as promptly as practicable,
    give notice to the Purchaser (i) of any request, following the effectiveness
    of the Registration Statement under the Securities Act, by the Commission
    or any other federal or state governmental authority for amendments or supplements
    to any Registration Statement or related prospectus or for additional information,
    (ii) of the issuance by the Commission or any other federal or state governmental
    authority of any stop order suspending the effectiveness of the Registration
    Statement or the initiation or threatening of any proceedings for that purpose,
    (iii) of the receipt by the Company of any notification with respect to the
    suspension of the qualification or exemption from qualification of any of
    the Shares for sale in any jurisdiction or the initiation or threatening of
    any proceeding for such purpose, (iv) of the occurrence of a Material Event
    (as defined in Section 10(c)) and (v) of the determination by the Company
    that a post-effective amendment to a Registration Statement will be filed
    with the Commission, which notice may, at the discretion of the Company (or
    as required pursuant to paragraph 10(c)), state that it constitutes a Deferral
    Notice, in which event the provisions of Section 10(c) shall apply. 
  

        (c)
    The Company shall, upon (A) the issuance
    by the Commission of a stop order suspending the effectiveness of the 
    Registration Statement or the initiation of proceedings
    with respect to the Registration Statement under Section 8(d) or 8(e) of the
    Securities Act, (B) the occurrence of any event or the existence of any fact
    (a “Material Event”)
    as a result of which the Registration Statement shall contain any untrue statement
    of a material fact or omit to state any material fact required to be stated
    therein or necessary to make the statements therein not misleading, or the
    related prospectus shall contain any untrue statement of a material fact or
    omit to state any material fact required to be stated therein or necessary
    to make the statements therein, in the light of the circumstances under which
    they were made, not misleading, or (C) the occurrence or existence of any
    pending corporate development that, in the reasonable discretion of the Company,
    makes it appropriate to suspend the availability of the Registration Statement
    and the related Prospectus, (i) in the case of clause (B) above, subject to
    the next sentence, as promptly as practicable prepare and file, if necessary
    pursuant to applicable law, a post-effective amendment to such Registration
    Statement or a supplement  

 17  

   to the related Prospectus or any
    document incorporated therein by reference or file any other required document
    that would be incorporated by reference into such Registration Statement and
    Prospectus so that such Registration Statement does not contain any untrue
    statement of a material fact or omit to state any material fact required to
    be stated therein or necessary to make the statements therein not misleading,
    and such prospectus does not contain any untrue statement of a material fact
    or omit to state any material fact required to be stated therein or necessary
    to make the statements therein, in the light of the circumstances under which
    they were made, not misleading, as thereafter delivered to the purchasers
    of the Shares being sold thereunder, and, in the case of a post-effective
    amendment to the Registration Statement, subject to the next sentence, use
    all reasonable efforts to cause it to be declared effective as promptly as
    is practicable, and (ii) give notice (which notice, in the case of clauses
    (B) and (C) above, need not specify the reasons for such deferral) to the
    Purchasers that the availability of the Registration Statement is suspended
    (a “Deferral Notice”)
    and, upon receipt of any Deferral Notice, the Purchaser agrees not to sell
    any Shares pursuant to the Registration Statement until such Purchaser’s
    receipt of copies of the supplemented or amended prospectus provided for in
    clause (i) above, or until it is advised in writing by the Company that the
    Prospectus may be used, and has received copies of any additional or supplemental
    filings that are incorporated or deemed incorporated by reference in such
    Prospectus. The Company will use all reasonable efforts to ensure that the
    use of the Prospectus may be resumed (x) in the case of clause (A) and (B)
    above, as promptly as is practicable, and (y) in the case of clause (C) above,
    as soon as, in the sole judgment of the Company, public disclosure of such
    development would not be prejudicial to or contrary to the interests of the
    Company or, if necessary to avoid unreasonable burden or expense, as soon
    as practicable thereafter. The Company shall be entitled to exercise its right
    under this Section 10(c) to suspend the availability of the Registration Statement
    or any Prospectus no more than four (4) times in any 12 month period and for
    no more than an aggregate of 90 days in any 12 month period (each such suspension
    a “Deferral Period”)
    and provided that no single Deferred Period shall last more than 45 days.
    The Company shall use all reasonable efforts to limit the duration and number
    of any Deferral Periods. Each Purchaser hereby agrees that upon receipt of
    any Deferral Notice from the Company, such Purchaser shall, and shall cause
    each of its officers, directors, employees, affiliates, advisors, agents and
    representatives to, keep confidential all nonpublic information set forth
    in such notice including the existence and terms of such Deferral Notice.
     

      11.
  Indemnity and Contribution.
   

 18  

        (a)
    The Company agrees to indemnify and hold
    harmless such Purchasers and each Person, if any, who controls such Purchasers
    within the meaning of either Section 15 of the Securities Act or Section 20
    of the Exchange Act from and against any and all losses, claims, damages and
    liabilities (including, without limitation, any legal or other expenses reasonably
    incurred in connection with defending or investigating any such action or
    claim) caused by any untrue statement or alleged untrue statement of a material
    fact contained in the Registration Statement or the prospectus included in
    the Registration Statement, as amended or supplemented by any amendment or
    prospectus supplement, including post-effective amendments, and all material
    incorporated by reference in such prospectus (the “Prospectus”) or in any
    amendment or supplement thereto or in any preliminary prospectus, or caused
    by any omission or alleged omission to state therein a material fact required
    to be stated therein or necessary to make the statements therein not misleading,
    except insofar as such losses, claims, damages or liabilities are caused by
    (i) any such untrue statement or omission or alleged untrue statement or omission
    based upon information relating to such Purchaser furnished to the Company
    in writing by such Purchaser expressly for use therein, or (ii) the failure
    of such Purchaser to comply with the covenants and agreements contained in
    Sections 7 and 10 hereof respecting resale of the Shares.  

        (b)
    Each Purchaser agrees to indemnify and hold
    harmless the Company, its directors and its officers and each Person, if any,
    who controls the Company within the meaning of either Section 15 of the Securities
    Act or Section 20 of the Exchange Act, from and against any and all losses,
    claims, damages and liabilities (including, without limitation, any legal
    or other expenses reasonably incurred in connection with defending or investigating
    any such action or claim), insofar as such losses, claims, damages or liabilities
    are caused by (i) the failure of such Purchaser to comply with the covenants
    and agreements contained in Sections 7 and 10 hereof respecting resale of
    the Shares, (ii) any untrue statement or alleged untrue statement of a material
    fact contained in the Registration Statement or the Prospectus or in any amendment
    or supplement thereto or in any preliminary prospectus, or caused by any omission
    or alleged omission to state therein a material fact required to be stated
    therein or necessary to make the statements therein not misleading, in each
    case to the extent, but only to the extent, that such untrue statement or
    alleged untrue statement or omission or alleged omission was made in reliance
    upon and in conformity with information relating to such Purchaser furnished
    in writing by the Purchaser to the Company expressly for use in the Registration
    Statement or Prospectus, and provided that in no case shall any Purchaser
    be required to indemnify any other Person for amounts in excess of the net
    proceeds to such Purchaser from the sale of Shares under the Registration
    Statement.  

 19  

        (c)
    In case any proceeding (including any governmental
    investigation) shall be instituted involving any Person in respect of which
    indemnity may be sought pursuant to Section 11(a) or 11(b), such Person (the
    “indemnified party”)
    shall promptly notify the Person against whom such indemnity may be sought
    (the “indemnifying party”)
    in writing and the indemnifying party, upon request of the indemnified party,
    shall retain counsel reasonably satisfactory to the indemnified party to represent
    the indemnified party and any others the indemnifying party may designate
    in such proceeding and shall pay the fees and disbursements of such counsel
    related to such proceeding. In any such proceeding, any indemnified party
    shall have the right to retain its own counsel, but the fees and expenses
    of such counsel shall be at the expense of such indemnified party unless (i)
    the indemnifying party and the indemnified party shall have mutually agreed
    to the retention of such counsel at the indemnifying party’s expense
    or (ii) the named parties to any such proceeding (including any impleaded
    parties) include both the indemnifying party and the indemnified party and
    representation of both parties by the same counsel would be inappropriate
    due to actual differing interests between them. It is understood that the
    indemnifying party shall not, in respect of the legal expenses of any indemnified
    party in connection with any proceeding or related proceedings in the same
    jurisdiction, be liable for the fees and expenses of more than one separate
    firm (in addition to any local counsel) for all indemnified parties, and that
    all such fees and expenses shall be reimbursed as they are incurred. The indemnifying
    party shall not be liable for any settlement of any proceeding effected without
    its written consent, but if settled with such consent or if there be a final
    judgment for the plaintiff, the indemnifying party agrees to indemnify the
    indemnified party from and against any loss or liability by reason of such
    settlement or judgment. No indemnifying party shall, without the prior written
    consent of the indemnified party, effect any settlement of any pending or
    threatened proceeding in respect of which any indemnified party is or could
    have been a party and indemnity could have been sought hereunder by such indemnified
    party, unless such settlement includes an unconditional release of such indemnified
    party from all liability on claims that are the subject matter of such proceeding.
     

        (d)
    To the extent that the indemnification provided
    for under Section 11(a) or 11(b) is unavailable to an indemnified party or
    is insufficient in respect of any losses, claims, damages or liabilities referred
    to therein, then each indemnifying party under such paragraph, in lieu of
    indemnifying such indemnified party thereunder, shall contribute to the amount
    paid or payable by such indemnified party as a result of such losses, claims,
    damages or liabilities (i) in such proportion as is appropriate to reflect
    the relative benefits received by the indemnifying party or parties on the
    one hand and the indemnified party or parties on the  

 20  

   other hand or (ii) if the allocation
    provided by clause (i) above is not permitted by applicable law, in such proportion
    as is appropriate to reflect not only the relative benefits referred to in
    clause (i) above but also the relative fault of the indemnifying party or
    parties on the one hand and of the indemnified party or parties on the other
    hand in connection with the statements or omissions or other matters that
    resulted in such losses, claims, damages or liabilities, as well as any other
    relevant equitable considerations. The relative fault of the Purchasers on
    the one hand and the Company on the other hand shall be determined by reference
    to, among other things, whether the untrue or alleged untrue statement of
    a material fact or the omission or alleged omission to state a material fact,
    or the inaccurate or the alleged inaccurate representation or warranty relates
    to information supplied by the Purchasers or by the Company and the parties’
    relative intent, knowledge, access to information and opportunity to correct
    or prevent such statement or omission.  

        The
    parties hereto agree that it would not be just and equitable if contribution
    pursuant to this Section 11(d) were determined by pro rata allocation or by
    any other method or allocation that does not take account of the equitable
    considerations referred to in the immediately preceding paragraph. The amount
    paid or payable by an indemnified party as a result of the losses, claims,
    damages and liabilities referred to in the immediately preceding paragraph
    shall be deemed to include, subject to the limitations set forth above, any
    legal or other expenses reasonably incurred by such indemnified party in connection
    with investigating or defending any such action or claim. Notwithstanding
    this Section 11(d), the Purchasers shall not be required to contribute any
    amount in excess of the amount by which the net amount received by the Purchasers
    from the sale of the Shares to which such loss relates exceeds the amount
    of any damages that such indemnifying party has otherwise been required to
    pay by reason of such untrue or alleged untrue statement or omission or alleged
    omission. No Person guilty of fraudulent misrepresentation (within the meaning
    of Section 11(f) of the Securities Act) shall be entitled to contribution
    from any Person who was not guilty of such fraudulent misrepresentation. 
  

        (e)
    The remedies provided for in this Section
    11 are not exclusive and shall not limit any rights or remedies which may
    otherwise be available to any indemnified party at law or equity. 
  

        (f)
    The indemnity and contribution provisions
    contained in this Section 11 and the representations, warranties and other
    statements of the Company and the Purchaser contained in this Agreement shall
    survive the execution of this Agreement and shall remain operative and in
    full force and effect regardless of (i) any investigation made by or on behalf
    of the  

 21  

   Purchaser or any Person controlling
    the Purchaser, or the Company, or the Company’s officers or directors
    or any Person controlling the Company and (ii) the sale of any Shares by the
    Purchaser.  

      12.
  Termination of Conditions and Obligations.
  The conditions precedent imposed by Sections 7, 8 and 10 upon the transferability
  of the Shares shall cease and terminate as to any particular number of the Shares
  (and any legend on the Shares will be removed by the Company) at such time as
  such Shares have been effectively registered under the Securities Act and sold
  or otherwise disposed of in accordance with the intended method of disposition
  set forth in the Registration Statement covering such Shares, upon the passage
  of two years from the Closing Date, or at such time as an opinion of counsel
  satisfactory to the Company shall have been rendered to the effect that such
  conditions are not necessary in order to comply with the Securities Act. 

      13.
  Information Available.
  So long as the Registration Statement is effective covering the resale of Shares
  owned by the Purchasers, the Company will furnish to each Purchaser: 

        (a)
    as soon as practicable after it is available
    (but in the case of the Company’s Annual Report to Shareholders, within
    90 days of each fiscal year of the Company), one copy of:  

  
          (i)
      its Annual Report to Shareholders (which
      Annual Report shall contain financial statements audited in accordance with
      generally accepted accounting principles by a national firm of certified
      public accountants);  

          (ii)
      if not included in substance in the Annual
      Report to Stockholders, its Annual Report on Form 10-K;  

          
      (iii) its
      Quarterly Reports on Form 10-Q; and  

          (iv)
      a full copy of the particular Registration
      Statement covering the Shares (the foregoing, in each case, excluding exhibits
      unless specifically requested); and 

  

        (b)
    upon the reasonable request of the Purchaser,
    an adequate number of copies of the Prospectus to supply to any other party
    requiring such Prospectus.  

      14.
  Placement Agent’s Fee.
  The Purchaser acknowledges that the Company intends to pay to the Placement
  Agent for the Shares, a fee in respect of the sale of the Shares to the Purchaser.
  Each of the parties to this Agreement hereby represents that, on the basis of
  any actions and agreements by it, there are  

 22  

 no other brokers or finders entitled
  to compensation in connection with the sale of the Shares to the Purchaser.
   

      15.
  Rule 144.
   

        (a)
    The Company covenants that, if at any time
    before the end of the Effectiveness Period the Company is not subject to the
    reporting requirements of the Exchange Act, it will cooperate with the Purchaser
    and take such further reasonable action as the Purchaser may reasonably request
    in writing (including, without limitation, making such reasonable representations
    as the Purchaser may reasonably request), all to the extent required from
    time to time to enable the Purchaser to sell Shares without registration under
    the Securities Act within the limitation of the exemptions provided by Rule
    144 and Rule 144A under the Securities Act and customarily taken in connection
    with sales pursuant to such exemptions. Upon the written request of the Purchaser,
    the Company shall deliver to the Purchaser a written statement as to whether
    it has complied with such reporting requirements, unless such a statement
    has been included in the Company’s most recent report filed pursuant
    to Section 13 or Section 15(d) of Exchange Act. Notwithstanding the foregoing,
    nothing in this Section 15 shall be deemed to require the Company to register
    any of its securities (other than the Common Stock) under any section of the
    Exchange Act.  

        (b)
    The Company shall timely file the reports
    required to be filed by it under the Exchange Act and shall timely comply
    with all other requirements set forth in the instructions to Form S-3 in order
    to allow the Company to be eligible to file registration statements on Form
    S-3.  

      16.
  Notices.
  All notices and other communications provided for or permitted hereunder shall
  be made in writing by hand delivery, by telecopier, by courier guaranteeing
  overnight delivery or by first-class mail, return receipt requested, and shall
  be deemed given (i) when made, if made by hand delivery, (ii) upon confirmation,
  if made by telecopier, (iii) one (1) business day after being deposited with
  such courier, if made by overnight courier or (iv) on the date indicated on
  the notice of receipt, if made by first-class mail, to the parties as follows:
   

        (a)
    if to the Purchaser, at its address on the
    signature page hereto;  

         (b)
    if to the Company, to:  

 23  

  
     Silicon Graphics, Inc. 

      1500 Crittenden Lane 

      Mountain View, CA 94043 

      Attention: Sandra Escher,

      Senior Vice President and General
                  Counsel 

      Facsimile 650-933-0298  

  

         (c)
    if to the Placement Agent, to:  

  
     Bear Stearns & Co., Inc.
      

      383 Madison Avenue 

      New York, NY 10179 

      Attn: Syndicate Operations  

  

 or to such other address as such
          Person may have furnished to the other Persons identified in this Section
          16 in writing in accordance herewith.  

      17.
  No Piggyback on Registrations.
  Neither the Company nor any of its security holders (other than the Purchasers
  pursuant hereto) may include securities of the Company in the Registration Statement,
  and the Company shall not, after the date hereof, enter into any agreement providing
  any such right to any of its security holders. The Company shall not file any
  other registration statement until after the earlier of the date the registration
  statement is declared effective and the date 90 days after the Closing other
  than any registration statement on Form S-4 or Form S-8.  

      18.
  Subsequent Placements. From
  the date hereof until the earlier of the date the registration statement is
  declared effective and the date 90 days after the Closing, the Company shall
  not effect a financing through the sale of its Common Stock or common stock
  equivalents (a “Subsequent Financing”)
  unless the Company delivers to each of the Purchasers hereunder a written notice
  at least 5 business days prior to the closing of such Subsequent Financing (the
   “Subsequent
  Financing Notice”) of its intention
  to effect such Subsequent Financing, which Subsequent Financing Notice shall
  describe in reasonable detail the proposed terms of such Subsequent Financing,
  the amount of proceeds intended to be raised thereunder, the Persons or entities
  with whom such Subsequent Financing is proposed to be effected, and attached
  to which shall be any term sheet or similar document relating thereto and offer
  to each Purchaser the opportunity to participate in such Subsequent Financing
  on the same terms and conditions as set forth in the Subsequent Financing Notice.
  Each Purchaser shall have until 6:30 p.m. (New York City time) on the fifth
  (5th) business day after its receipt of the Subsequent Financing Notice to notify
  the Company of its willingness to provide, subject to completion of mutually
  acceptable documentation, an amount equal to the proportion of the aggregate
  amount to be raised in such transaction represented by such Purchaser’s
  proportionate share of  

 24  

 the amounts purchased in the transactions
  contemplated hereby, on the same terms and conditions set forth in the Subsequent
  Financing Notice.  

      Notwithstanding
  anything to the contrary herein, this Section 19 shall not apply to the following:
  (i) the granting of options or restricted stock to employees, officers, directors
  and key consultants of the Company pursuant to any stock option plan or agreement
  duly adopted by the Company’s board of directors by vote of a majority
  of the independent members of the board or a committee of independent directors
  established for such purpose, or (ii) the exercise of any security issued by
  the Company in connection with the offer and sale of the Company’s securities
  pursuant to this Agreement, or (iii) the exercise of or conversion of any convertible
  securities, options or warrants issued and outstanding on the date hereof, provided
  such securities have not been amended since the date hereof, or (iv) the issuance
  of securities to customers, vendors or joint venture partners or in connection
  with other strategic alliances approved by the Company’s board of directors
  which involve the grant of licenses or localization, marketing or distribution,
  OEM, bundling, manufacturing or resale rights respect to the Company’s
  products or technology, the primary purpose of which is not to raise equity
  capital, or (v) the issuance of securities in connection with an equipment lease
  financing transaction or a bank financing transaction approved by the Company’s
  board of directors, no significant purpose of which is to raise equity capital;
  or (vi) the exercise of or conversion of any convertible securities, options
  or warrants issued and outstanding pursuant to subclauses (i), (iv) and (v)
  above.  

      19.
  Restriction on Actions Regarding Public
  Debt. From the Closing until the earlier
  of (a) fifteen business days after the Registration Statement has been declared
  effective or (b) 90 days after the Closing, the Company shall not (i) call any
  publicly traded convertible debt securities for redemption, (ii) make or announce
  any discretionary reduction in the conversion price or any discretionary increase
  in the conversion rate, or offer any other consideration as an incentive for
  conversion, of any publicly traded convertible debt securities or (iii) commence
  any consent solicitation with respect to any publicly traded debt securities
  for purposes of making such securities convertible or changing the terms upon
  which such securities are convertible into shares of the Company’s Common
  Stock or other equity securities.  

      20.
  Non-Public Information.
  The Company covenants and agrees that neither it nor any other Person acting
  on its behalf will provide any Purchaser or its agents with any information
  that the Company believes constitutes material non-public information, unless
  prior thereto such Purchaser shall have executed a written agreement regarding
  the confidentiality and use of such information. The Company understands and
  confirms that each Purchaser shall be relying on the foregoing representations
  in effecting transactions in securities of the Company.  

 25  

      21.
  Severability.
  If any term provision, covenant or restriction of this Agreement is held to
  be invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
  covenants and restrictions set forth herein shall remain in full force and effect
  and shall in no way be affected, impaired or invalidated thereby, and the parties
  hereto shall use their best efforts to find and employ an alternative means
  to achieve the same or substantially the same result as that contemplated by
  such term, provision, covenant or restriction, it being intended that all of
  the rights and privileges of the parties shall be enforceable to the fullest
  extent permitted by law.  

      22.
  Modification; Amendment.
  The provisions of this Agreement, including the provisions of this sentence,
  may not be amended, modified or supplemented unless pursuant to an instrument
  in writing signed by the Company and the Purchaser.  

      23.
  Entire Agreement.
  This Agreement is intended by the parties as a final expression of their agreement
  and is intended to be a complete and exclusive statement of the agreement and
  understanding of the parties hereto with respect to the subject matter contained
  herein. Except as provided in this Agreement, there are no restrictions, promises,
  warranties or undertakings, other than those set forth or referred to herein,
  with respect to such matters. This Agreement supersedes all prior agreements
  and undertakings among the parties with respect to such matters. No party hereto
  shall have any rights, duties or obligations other than those specifically set
  forth in this Agreement.  

      24.
  Counterparts.
  This Agreement may be signed in any number of counterparts, each of which shall
  be an original, with the same effect as if the signatures thereto and hereto
  were upon the same instrument.  

      25.
  Applicable Law.
  This Agreement shall be governed by and construed in accordance with the internal
  laws of the State of New York. 

      26.
  Headings.
  The headings of the sections of this Agreement have been inserted for convenience
  of reference only and shall not be deemed a part of this Agreement. 

      27.
  Independent Nature of Purchasers’ Obligations
  and Rights. The obligations of each Purchaser
  under this Agreement are several and not joint with the obligations of any other
  Purchaser, and no Purchaser shall be responsible in any way for the performance
  of the obligations of any other Purchaser under this Agreement. The decision
  of each Purchaser to purchase Securities pursuant to this Agreement has been
  made by such Purchaser independently of any other Purchaser. Nothing contained
  herein, and no action taken by any Purchaser pursuant to this Agreement, shall
  be deemed to constitute the Purchasers as a partnership, an association, a joint
  venture or any other kind of entity, or create a  

 26  

 presumption that the Purchasers are
  in any way acting in concert or as a group with respect to such obligations
  or the transactions contemplated by this Agreement. Each Purchaser acknowledges
  that no other Purchaser has acted as agent for such Purchaser in connection
  with making its investment hereunder and that no Purchaser will be acting as
  agent of such Purchaser in connection with monitoring its investment in the
  Securities or enforcing its rights under this Agreement. Each Purchaser shall
  be entitled to independently protect and enforce its rights, including without
  limitation the rights arising out of this Agreement, and it shall not be necessary
  for any other Purchaser to be joined as an additional party in any proceeding
  for such purpose.  

      28.
  Survival.
  The representations, warranties and covenants contained in this Agreement shall
  survive the Closing for a period of two years.  

      29.
  Termination. This
  Agreement may be terminated by either party in the event the closing has not
  occurred within 3 business days following the date of execution of this Agreement.
   

 27 

      IN WITNESS
  WHEREOF, the parties have executed this Agreement as of the date first written
  above.

	 	[NAME OF PURCHASER]
         

       By: __________________________________

        

              Name: _____________________________

        

              Title: ______________________________

        

              Address:____________________________

        

              Number of Shares: ____________________

        

              Aggregate Purchase Price: $ _____________

        

              Tax ID No.: _________________________

        

              Contact Name: _______________________

        

              Telephone: __________________________
      

            Name
        in which the Shares should be

             registered (if different): __________________
      

            Relationship
        between the Purchaser and 

             the Person or entity in whose name the 

             Shares should be registered (if 

             different): ____________________________

     ____________________________________

    
	Agreed to and Accepted by: 	 
	 	Silicon Graphics, Inc. 
      

       By: __________________________________

              Name: 

              Title: 

  

 EXHIBIT A 

 FORM OF OPINION OF COUNSEL FOR
  THE COMPANY  

      The opinion
  of the counsel for the Company, to be delivered pursuant to Section 5(b) of
  the Purchase Agreement shall be to the effect that:  

      (A)
      The Company has been
  duly incorporated and is validly existing as a corporation in good standing
  under the laws of the jurisdiction of its incorporation.  

      (B)
      The Purchase Agreement
  has been duly authorized, executed and delivered by, and is a valid and binding
  agreement of, the Company, enforceable in accordance with its terms, subject
  to applicable bankruptcy, insolvency or similar laws affecting creditors’
  rights generally and general principles of equity and except as rights to indemnification
  and contribution in Section 11 thereof may be limited under applicable law.
   

      (C)
       The
  Shares have been duly authorized and, when issued and delivered in accordance
  with the terms of the Purchase Agreement, will be validly issued, fully paid
  and non-assessable, and the issuance of such Shares will not be subject to any
  preemptive or similar rights set forth in any document filed as an exhibit to
  the Exchange Act Documents.  

      (D)
      
  Assuming the accuracy of the representations,
  warranties and agreements of the Purchaser in Section 7 of the Purchase Agreement,
  it is not necessary in connection with the offer, sale and delivery of the Shares
  to the Purchasers under the Purchase Agreement to register the Shares under
  the Securities Act, it being understood that no opinion is expressed as to any
  subsequent resale of any Shares.  

      (E) 
      The
  execution, delivery and performance of the Purchase Agreement by the Company
  and the consummation by the Company of the transactions contemplated by such
  agreement does not and will not (i) conflict with or violate any provision of
  its Certificate of Incorporation or Bylaws or (ii) conflict with, or constitute
  a default (or an event which with notice or lapse of time or both would become
  a default) under, or give to others any rights of termination, amendment, acceleration
  or cancellation of, any agreement specified on Schedule I hereto.  

 APPENDIX I 

 SILICON GRAPHICS, INC. 

 SELLING STOCKHOLDER QUESTIONNAIRE
   

  FOR INTENDED SALE OF 

  SHARES OF COMMON STOCK

   PURSUANT TO SHELF REGISTRATION STATEMENT
   

      The following
  questionnaire and agreement (the “Questionnaire”)
  elicits information necessary to prepare a registration statement on Form S-3
  (the “Shelf Registration Statement”)
  for the registration and resale under Rule 415 of the Securities Act of 1933,
  as amended (the “Securities Act”),
  of certain shares of common stock of Silicon Graphics, Inc. (the “Company”) to be filed by the Company with the Securities and Exchange
  Commission (the “Commission”),
  in accordance with the terms of the Purchase Agreement, dated as of February
  [__], 2004 (the “Purchase Agreement”),
  between the Company and the undersigned beneficial owner of shares of common
  stock of the Company purchased pursuant to such agreement (the “Selling
  Stockholder”). All capitalized terms
  not otherwise defined herein shall have the meaning ascribed thereto in the
  Purchase Agreement.  

      In order
  to sell or otherwise dispose of any Shares pursuant to the Shelf Registration
  Statement, you generally will be required to be named as a selling stockholder
  in the related prospectus, deliver a prospectus to purchasers of the Shares
  and be bound by the provisions of the Purchase Agreement (including certain
  indemnification provisions, as described below). If you do not complete
  this Questionnaire and deliver it to the Company as provided below you will
  not be named as a selling stockholder in the prospectus and therefore will not
  be permitted to sell any Shares pursuant to the Shelf Registration Statement.
  Please complete and deliver this Questionnaire to [__________] of [
  ____________________ ] as soon as possible and in any event no later than February
  __, 2004 [Closing Date].  

      Certain
  legal consequences arise from being named as a selling stockholder in the Shelf
  Registration Statement and the related prospectus. Accordingly, holders and
  beneficial owners of the Shares are advised to consult their own securities
  law counsel regarding the consequences of being named or not being named as
  a selling stockholder in the Shelf Registration Statement and the related prospectus.
   

      The Selling
  Stockholder, by signing and returning this Questionnaire, understands that it
  will be bound by the terms and conditions of this Questionnaire and the Purchase
  Agreement.  

      Pursuant
  to the Purchase Agreement, the undersigned has agreed to indemnify and hold
  harmless the Company, any of its directors and officers who sign the Shelf Registration
  Statement, and each person, if any, who controls the Company within the meaning
  of either Section 15 of the Securities Act or Section 20 of the Securities Exchange
  Act of 1934, as amended (the “Exchange
  Act”), from and against certain losses arising in connection
  with statements concerning the undersigned made in the Company’s Shelf
  Registration Statement or the related prospectus in reliance upon the information
  provided in this Questionnaire.  

      The undersigned
  hereby provides the following information to the Company and represents and
  warrants that such information is accurate and complete:  

 QUESTIONNAIRE 

   
   

	 	1. 	(a) Full Legal Name of Selling Stockholder:1
      

      

       ______________________________________________________
      

      	 
	 	 	 	 
	 	 	(b) Full Legal Name of Registered
        Holder (if not the same as (a) above) through which the Shares listed
        in Item 3 below are held:  

       
        ______________________________________________________
	 
	 	 	 	 
	 	 	(c) Full Legal Name of DTC participant
        (if applicable and if not the same as (b) above) through which the Shares
        listed in Item 3 below are held:  

       
        ______________________________________________________
        
	 
	 	 	 	 
	 	 	(d) If Selling Stockholder is
        not, and is not a wholly-owned subsidiary of, a company that is required
        to file periodic and other reports (e.g., Forms 10-K, 10-Q, 8-K) with
        the Commission pursuant to Section 13(a) or 15(d) of the Securities Exchange
        Act of 1934, identify the natural person(s) who exercise voting power
        and investment control over any Shares:  

       
        ______________________________________________________
	 
	 	 	 	 
	 	2.	Address for Notices to Selling Stockholder:
      

      

      ______________________________________________________

      

      ______________________________________________________

      

Telephone: __________________________

      

      Fax: ________________________________

      

      Contact Person: _______________________	 
	 	 	 	 
	 	3.	Beneficial Ownership of the
        Shares:  

       (a) Type and principal amount
        of the Shares beneficially owned:  

       
        ______________________________________________________

        

	 

___________________    

        1 If
  this Questionnaire is being completed by or on behalf of an entity, state the
  name of that entity. 

	 	 	______________________________________________________

      

      (b) CUSIP No(s). of such Shares beneficially owned: 

      ______________________________________________________

      	 
	 	 	 	 
	 	4.	 Beneficial
        Ownership of Other Securities of the Company Owned by the Selling Stockholder.
         

       Except as set forth below in
        this Item 4, the undersigned is not the beneficial or registered owner
        of any securities of the Company other than the Shares listed above in
        Item 3.  

       (a) Type and amount of other
        securities beneficially owned by the Selling Stockholder:  

        ______________________________________________________

        

        ______________________________________________________

        

        (b) CUSIP No(s). of such other securities beneficially owned: 

        ______________________________________________________

        

        ______________________________________________________

        
	 
	 	 	 	 
	 	5.	Relationships with the Company:
         

       Except as set forth below, neither
        the undersigned nor any of its affiliates, officers, directors or principal
        equity holders (5% or more) has held any position or office or has had
        any other material relationship with the Company (or its predecessors
        or affiliates) during the past three years.  

        State any exceptions here: 
      

      
        ______________________________________________________

        

        ______________________________________________________

        

        ______________________________________________________

    
	 
	 	 	 	 
	 	6.	Plan of Distribution: 
      

       Except as set forth below, the
        undersigned (including its donees or pledgees) intends to distribute the
        Shares pursuant to the Shelf Registration Statement only as follows (if
        at all): Such Shares may be sold from time to time directly by the undersigned
        or,  
	 

   

  

	 	 	alternatively, through underwriters,
        broker-dealers or agents. If the Shares are sold through underwriters
        or broker-dealers, the Selling Stockholder will be responsible for underwriting
        discounts or commissions or agent’s commissions. Such Shares may
        be sold in one more or transactions at fixed prices, at prevailing market
        prices at the time of sale, at varying prices determined at the time of
        sale or at negotiated prices. Such sales may be effected in transactions
        (which may involve block transactions) (i) on any national securities
        exchange or quotation service on which the Shares may be listed or quoted
        at the time of sale, (ii) in the over-the-counter market, (iii) in transactions
        otherwise than on such exchanges or services or in the over-the-counter
        market or (iv) through the writing of options. In connection with sales
        of the Shares or otherwise, the undersigned may enter into hedging transactions
        with broker-dealers, which may in turn engage in short sales of the Shares
        in the course of hedging positions they assume. The undersigned may also
        sell Shares short and deliver Shares to close out short positions, or
        loan or pledge Shares to broker-dealers that in turn may sell such securities.
         

        State any exceptions here: 
      

       
        ______________________________________________________

        

        ______________________________________________________

        

        ______________________________________________________ 

     Note: In no event will such method(s)
        of distribution take the form of an underwritten offering of the Shares
        without the prior agreement of the Company. 
        	 
	 	 	 	 
	 	7. 	Broker-Dealer Status: 
      

       (a) Is the Selling Stockholder
        a registered broker-dealer? 

        

        Yes____________________   No____________________

        

        If so, please answer the remaining question in this section.  

      
          1. Please advise whether the
          Shares were received by the  Selling
          Stockholder as compensation for investment banking services or as investment
          shares, and if so please describe the circumstances:  

         
          _______________________________________________ 

      
	 

 
   

  

	 	 	
        

          _______________________________________________

           

          _______________________________________________  

      

       Note that in general we may be
        required to identify any registered broker-dealer as an underwriter in
        the prospectus.  

       (b) Affiliation with Broker-Dealers.
         

      
          Is the Selling Stockholder
          an affiliate2
          of a registered broker-dealer?  

          Yes____________________  No____________________
           

          If so, please answer the remaining
          questions in this section.  

          1.   Please describe
          the affiliation between the Selling  
          Stockholder and any registered broker-dealers:  

          _______________________________________________

          

          _______________________________________________

          

          _______________________________________________
           

          2.   If the Shares
          were purchased by the Selling Stockholder other than in the ordinary
          course of business, please describe the circumstances:  

          _______________________________________________

          

          _______________________________________________

          

          _______________________________________________
           

         3.   Please advise whether the Shares
        were received by the  Selling Stockholder
        as compensation for investment banking services or as investment shares,
        and if so please describe the circumstances:  

        

        _______________________________________________

         

        _______________________________________________ 
	 
	 	 	 	 

___________________

     2 An
“affiliate” of a specified person or entity means a person or entity
that directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the person or entity specified.

  

	 	 	
        _______________________________________________
           

          4.   If the Selling
          Stockholder, at the time of its purchase of the Shares, had any agreements
          or understandings, directly or indirectly, with any person to distribute
          the Shares, please describe such agreements or understandings: 
        

         _______________________________________________

        

        _______________________________________________

        

        _______________________________________________

      Note that if the Selling Stockholder
        is an affiliate of a broker-dealer and did not purchase its debentures
        in the ordinary course of business or at the time of the purchase had
        any agreements or understandings, directly or indirectly, to distribute
        the securities, we may be required to identify the Selling Stockholder
        as an underwriter in the prospectus.  

      
         (c)   Beneficial
          Ownership by Natural Persons:  

         If the Selling Stockholder
          is an entity, does any natural person having voting or investment power
          over the Shares held by the Selling Stockholder?3  

          Yes____________________  No____________________

          

          If so, please state the person’s or persons’ name(s): 

          

          _______________________________________________

          

          _______________________________________________

          

          _______________________________________________ 

      
	 
	 	 	 	 
	 	8.	Beneficial Ownership by Natural
        Persons or by a Board or  Committee:
         

       Is the Selling Stockholder a
        reporting entity with the Securities and Exchange Commission? 
      
	 
	 	 	 	 

___________________

     3Please
answer “Yes” if any natural person, directly or indirectly, through
any contract, arrangement, understanding, relationship, or otherwise has or shares:
(a) voting power which includes the power to vote, or to direct the voting of,
such security; and/or, (b) investment power which includes the power to dispose,
or to direct the disposition of, the Shares held by the Selling Stockholder. 

  

	 	 	
      
          Yes____________________  No____________________

          

          If No, please answer the remaining questions in this section. 
        

         1. Please name the natural
          person or person(s) having voting and/or investment control over the
          Selling Stockholder:4
           

         
          _______________________________________________

          

          _______________________________________________

          

          _______________________________________________
           

         2. If
          the voting and/or investment control over the Selling Stockholder is held by board
          or committee, please state the name of the natural person or person(s)
          on such board or committee:  

         _______________________________________________

        

        _______________________________________________

        

        _______________________________________________

      
	 

      The undersigned
  acknowledges that it understands its obligation to comply with the provisions
  of the Exchange Act and the rules thereunder relating to stock manipulation,
  particularly Regulation M thereunder (or any successor rules or regulations),
  in connection with any offering of the Shares pursuant to the Shelf Registration
  Statement. The undersigned agrees that neither it nor any person acting on its
  behalf will engage in any transaction in violation of such provisions. 

      The Selling
  Stockholder hereby acknowledges its obligations under the Purchase Agreement
  to indemnify and hold harmless certain persons as set forth therein. 

      Pursuant
  to the Purchase Agreement, the Company has agreed under certain circumstances
  to indemnify the Selling Stockholder against certain liabilities.  

      In accordance
  with the undersigned’s obligation under the Purchase Agreement to provide
  such information as may be required by law for inclusion in the Shelf Registration
  Statement, the undersigned agrees to promptly notify the  

 ___________________

       4 Please
  include any natural person that, directly or indirectly, through any contract,
  arrangement, understanding, relationship, or otherwise has or shares: (a) voting
  power which includes the power to vote, or to direct the voting of, such security;
  and/or , (b) investment power which includes the power to dispose, or to direct
  the disposition of, the Shares held by the Selling Stockholder.  

 Company of any inaccuracies or changes
  in the information provided herein that may occur subsequent to the date hereof
  at any time while the Shelf Registration Statement remains effective. 

      All notices
  hereunder and pursuant to the Purchase Agreement shall be made in writing by
  hand delivery, first class mail or air courier guaranteeing overnight delivery
  to the address set forth below.  

      By signing
  below, the undersigned consents to the disclosure of the information contained
  herein in its answers to Items 1 through 6 above and the inclusion of such information
  in the Shelf Registration Statement and the related prospectus. The undersigned
  understands that such information will be relied upon by the Company in connection
  with the preparation or amendment of the Shelf Registration Statement and the
  related prospectus.  

      Once
  this Notice and Questionnaire is executed by the Selling Stockholder and received
  by the Company, the terms of this Notice and Questionnaire, and the representations
  and warranties contained herein, shall be binding on, shall inure to the benefit
  of and shall be enforceable by the respective successors, heirs, personal representatives
  and assigns of the Company and the Selling Stockholder with respect to the Shares
  beneficially owned by such Selling Stockholder and listed in Item (3) above.
  This Agreement shall be governed in all respects by the laws of the State of
  New York.  

      IN WITNESS
  WHEREOF, the undersigned, by authority duly given, has caused this Questionnaire
  to be executed and delivered either in person or by its duly authorized agent.
   

	 	Dated: 	 
	 	 	 
	 	 	[NAME OF SELLING STOCKHOLDER]
         

       By: ____________________________
         

              Name:_______________________

              Title:  _______________________

  

 APPENDIX A 

 Definitions of Terms Used
   

      30.     
  You are the “beneficial
  owner” of a security if you directly
  or indirectly, through any contract, arrangement, understanding, relationship,
  or otherwise, have or share: (i) voting power which includes the power to vote,
  or to direct the voting of, such security, or (ii) investment power which includes
  the power to dispose, or to direct the disposition of, such security. You are
  deemed the beneficial owner of a security if you, directly or indirectly, create
  or use a trust, proxy, power of attorney, pooling arrangement or any other contract,
  arrangement, or device with the purpose or effect of divesting yourself of beneficial
  ownership of a security or preventing the vesting of such beneficial ownership.
  Finally, you are deemed to be the beneficial owner of a security if you have
  the right to acquire beneficial ownership of such security at any time within
  sixty days, including but not limited to any right to acquire (a) through the
  exercise of any option, warrant or right, or (b) through the conversion of a
  security, or (c) pursuant to the power to revoke a trust, discretionary account,
  or similar arrangement, or (d) pursuant to the automatic termination of a trust,
  discretionary account or similar arrangement. If you have acquired any security
  or power specified in (a), (b) or (c) above, with the purpose or effect of changing
  or influencing the control of the issuer, or in connection with or as a participant
  in any transaction having such purpose or effect, then immediately upon such
  acquisition you are deemed to be the beneficial owner of the securities which
  may be acquired through the exercise or conversion of such security or power.
   

      All securities
  of the same class that are beneficially owned by you, regardless of the form
  which such beneficial ownership takes, must be aggregated in calculating the
  number of shares beneficially owned by you.  

      The above
  definition is broad and although you may not actually have or share voting or
  investment power with respect to securities owned by persons in your family
  or living in your home, you should include such shares in your beneficial ownership
  disclosure, and then, as appropriate, disclaim beneficial ownership of such
  securities.  

      31.
     The term “underwriter
  or related person” includes, with respect to a proposed offering, any underwriter,
  underwriter’s counsel, financial consultant and advisors, finders, members
  of the selling or distribution group, any member participating in the proposed
  offering and any and all other persons associated with or related to and members
  of the immediate family of any of such persons. NASD Rule 2710(a)(6). 

      32.     
  The NASD defines a “member”
  as being either any broker or dealer admitted to membership in the NASD or any
  individual, partnership, corporation  

 or other legal entity admitted to membership
  in the NASD under the provisions of Articles III and IV of the By-laws. NASD
  Rule 0120(i).  

      33.
     The NASD defines a “person
  associated with a member” as being every sole proprietor, general or limited partner,
  officer, director or branch manager of any member, or any natural person occupying
  a similar status or performing similar functions, or any natural person engaged
  in the investment banking or securities business who is directly or indirectly
  controlling or controlled by such member (for example, any employee), whether
  or not any such person is registered or exempt from registration with the NASD.
  Thus, “person associated with a member”
  includes a sole proprietor, general or limited partner, officer, director or
  branch manager of an organization of any kind (whether a corporation, partnership
  or other business entity) which itself is a “member”
  or a “person associated with a member”.
  In addition, an organization of any kind is a “person
  associated with a member” if its sole
  proprietor or any one of its general or limited partners, officers, directors
  or branch managers is a “member”
  or “person associated with a member”.
  (Article I of the NASD By-Laws.)  

      34.   
  The NASD defines “affiliate”
  to include a company which controls, is controlled by or is under common control
  with a member. A company is presumed to control a member if the company beneficially
  owns 10 percent or more of the outstanding voting securities of a member which
  is a corporation, or beneficially owns a partnership interest in 10 percent
  or more of the distributable profits or losses of a member which is a partnership.
  A company is presumed to be controlled by a member if the member and persons
  associated with the member beneficially own 10 percent or more of the outstanding
  voting securities of a company which is a corporation, or beneficially own a
  partnership interest in 10 percent or more of the distributable profits or losses
  of a company which is a partnership. A company is presumed to be under common
  control with a member if (i) the same natural person or company controls both
  the member and company by beneficially owning 10 percent or more of the outstanding
  voting securities of a member or company which is a corporation, or by beneficially
  owning a partnership interest in 10 percent or more of the distributable profits
  or losses of a member or company which is a partnership or (ii) a person having
  the power to direct or cause the direction of the management or policies of
  the member or the company also has the power to direct or cause the direction
  of the management or policies of the other entity in question. NASD Rule 2720(b)(1).

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00061-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00061-of-00352.parquet"}]]