Document:

Agreement Letter with Alain H. Curaudeau

 

Exhibit 10.1

January 17, 2008

Dr. Alain Curaudeau

1785 Fulton Avenue

West Vancouver, British Columbia

V7V 1S8

WITHOUT PREJUDICE

Dear Alain,

We confirm that we have mutually agreed that your employment with QLT will end effective February
29th, 2008.

In consideration of your commitments described below, QLT will pay to you the amounts, and provide
to you the benefits, set out in Section 5.2 and 5.3 of the Employment Agreement entered into
between you and QLT and dated May 19th, 2000 (the “Employment Agreement”) in the manner described
below. The payment of those amounts and the provision of those benefits are subject to certain
other obligations set out in the Employment Agreement which expressly survive termination of the
Employment Agreement. Until accepted by you, the offer set out in this letter agreement is made on
a “without prejudice” basis.

	 	1.	 	Salary and Benefits to Departure Date. You will receive your regular base salary from
the date of this letter up to and including February 29th, 2008. Payment of your base
salary will be made at the times and in the same manner as it is presently paid, with the
final payment on February 29, 2008.
	 
	 	2.	 	Payment in Lieu of Future Salary. QLT will pay to you the equivalent of 13 months’
base salary. As you know, under Section 5.3(a) of the Employment Agreement, QLT is
permitted to pay that amount as installments over the severance period. Provided you sign
and return to us this letter and the attached release on or before the date set out below,
this amount will be paid as a lump sum on February 29th, 2008. Otherwise, this amount will
be paid in monthly installments and will therefore be subject to the mitigation provisions
existing under the Employment Agreement.
	 
	 	3.	 	Prorated Bonus for Current Year 2008. We have previously advised you that your bonus
for 2007 has been determined to be $115,666, which amount will be paid to you on or about
February 29, 2008. In connection with the termination of your employment and pursuant to
Section 5.3(d)(IV), QLT will pay you $28,091 in lieu of the cash incentive compensation
(bonus) that you would have earned for the first two months of 2008.
	 
	 	4.	 	Health Benefits and Compensation In Lieu. So long as you continue to reside in Canada,
QLT will continue all of your health-related benefits, other than short-term and long-term
disability, until the earlier of the date you obtain similar benefits from a new employer
or 30 days after February 29th, 2008.
	 
	 	 	 	As outlined in Section 5.3(b) of your Employment Agreement, on or about March 31, 2008 you
will receive, $41,253, being equal to 10% of your base salary in lieu of employee benefit
coverage to compensate you for the balance of your severance period. Under the terms of the
existing life insurance plan, we want to advise you that you will not be entitled to
the full amount of your life insurance and accidental death and disability policies. The
value of the life insurance and accidental death and disability policies will be limited by
QLT’s insurer at an amount which is less than the amount of insurance that you currently
enjoy. Therefore, if you determine that you require coverage in excess of those amounts,
you will be responsible to obtain that additional coverage yourself with an insurer of

 

 

Alain Curaudeau

January 17, 2008

Page 2

	 	 	 	your choice and at your own cost. Please speak with Human Resources for more information on
Benefits Coverage.
	 
	 	5.	 	Vacation Pay. On February 29th, 2008, QLT will pay to you an amount equal to any then
remaining accumulated but unpaid vacation pay to which you may be entitled up to and
including February 29, 2008 pursuant to Section 5.3(d)(II) of your Employment Agreement.
	 
	 	6.	 	Payment in Lieu of RRSP Matching Payment. Pursuant to Section 5.3(d)(III), to
compensate you for the RRSP matching payments you would otherwise have been eligible to
receive from January 1, 2007 to February 29, 2008, QLT will pay to you an amount equal to
Cdn.$10,000.
	 
	 	7.	 	Stock Options. We consider your departure to be a “termination without cause” for the
purpose of the vesting provisions in the stock option agreements previously entered into
between you and QLT. The vesting and exercise of any stock options previously granted to
you by QLT will be in accordance with the QLT Employee Incentive Stock Option Plan and each
of the Stock Option Agreements entered into between you and QLT.
	 
	 	8.	 	Outplacement Assistance. As provided in your Employment Agreement, QLT will reimburse
you for outplacement counseling assistance from a recognized national or international
outplacement counseling assistance provider to a maximum of Cdn.$5,000 to assist you in
seeking alternate employment. In order to be eligible for reimbursement, such services
must be rendered before April 30, 2008.
	 
	 	9.	 	Expense Reimbursement. As provided in your Employment Agreement, QLT will reimburse
you for all reasonable business related expenses properly incurred by you up to and
including February 29th, 2008, provided such expenses are in accordance with QLT’s policies
and procedures and you maintain and remit to QLT proper accounts and documentation of those
expenses upon request.
	 
	 	10.	 	Confidentiality, IP and Records. You acknowledge and agree that you are currently
bound by obligations of confidentiality and other obligations relating to QLT’s
intellectual property and records under Section 7 of the Employment Agreement and that such
obligations survive the termination of your employment with QLT and the termination of the
Employment Agreement. You further acknowledge and agree that, prior to February 29th,
2008, you will return to QLT all records or copies of records concerning QLT’s activities,
business interests or investigations made or received by you during your employment with
QLT, as well as any other property of QLT.
	 
	 	11.	 	Non-Competition and Non-Solicit. We remind you that you are bound by the
non-competition and non-solicitation restrictions set out in Section 8 of the Employment
Agreement and that those restrictions survive the termination of your employment and the
Employment Agreement for a period of two years from February 29, 2008.
	 
	 	12.	 	Goodwill. You will at all times refrain from making any statement or taking any action
which may reasonably be expected to have a negative impact on the goodwill, ongoing
business, products, management of QLT or its subsidiaries or litigation in which QLT or its
subsidiaries may be involved.
	 
	 	13.	 	Entire Agreement. This letter agreement, the Release referred to below and those
provisions of the Employment Agreement which expressly survive the termination of your
employment with QLT represent the entire agreement between you and QLT with respect to the
termination of your employment and full satisfaction of our obligations to you under the
terms of your Employment Agreement and the Change of Control agreement entered into between
you and QLT dated February 18, 2003.

All payments referred to above or other payments made by QLT to you pursuant to your Employment
Agreement will be subject to reduction for any applicable statutory withholding taxes.

 

 

Alain Curaudeau

January 17, 2008

Page 3

As a condition of QLT making the above payments and providing the above benefits to you, you must
sign and return on or before 4:00 p.m. on January 24, 2008:

(a)     this letter agreement;

(b)     the Final Release attached as Appendix A to this letter agreement to acknowledge that, except
as expressly set out in the Final Release, QLT has no further obligations to you in respect of the
Employment Agreement, Change of Control Agreement or your employment with QLT;

(c)     Appendix B “Post-Employment Restrictions”; and

(d)     Appendix C “Trading QLT Securities After Your Departure”.

If we have not received this letter signed by you on or before 4:00 p.m. on January 24th, 2008,
your employment with QLT will still be terminated effective February 29, 2008 but, as set out in
paragraph 2 above, we will elect to pay to you the amounts referred to in paragraph 2 in 13 equal
monthly installments over the 13 month period following February 29, 2008 subject to your
obligations to mitigate as set out in Section 5.5 of your Employment Agreement.

On behalf of QLT, I wish you the best of luck in your future endeavors.

Yours very truly

QLT Inc.

/s/ Linda Lupini

Linda Lupini

Senior Vice President, Human Resources & Organizational Development

In consideration of the payments to be made to me by QLT, I hereby agree to the foregoing terms
this 24th day of January, 2008. I also confirm that I have been advised by QLT that I should seek
independent legal advice in connection with this letter.

/s/ Alain Curaudeau

Dr. Alain Curaudeau

 

 

APPENDIX A

FINAL RELEASE

IN CONSIDERATION OF the terms set out in a letter dated on or about January 17, 2008 from QLT Inc.
(“QLT”) to me, a copy of which letter is attached to this Release, effective the date of this
Release, I, Alain Curaudeau of 1785 Fulton Avenue, West Vancouver, British Columbia, “Curaudeau”
do hereby remise, release and forever discharge QLT, having a place of business at 887 Great
Northern Way, in the City of Vancouver, Province of British Columbia, V5T 4T5, its officers,
directors, servants, employees and agents, and their heirs, executors, administrators, successors
and assigns, as the case may be, of and from any and all manner of actions, causes of action,
suits, contracts, claims, damages, costs and expenses of any nature or kind whatsoever, whether in
law or in equity, which as against QLT or such persons as aforesaid or any of them, I have ever
had, now have, or at any time hereafter I or my personal representatives can, shall or may have, by
reason of or arising out of my employment with QLT and/or the subsequent termination of my
employment with QLT on or about February 29th, 2008, or in any other way connected with my
employment with QLT and more specifically, without limiting the generality of the foregoing, any
and all claims for damages for termination of my employment, constructive termination of my
employment, loss of position, loss of status, loss of future job opportunity, loss of opportunity
to enhance my reputation, the timing of the termination and the manner in which it was effected,
loss of bonuses, loss of shares and/or share options, loss of benefits, including life insurance
and short and long-term disability benefit coverage, loss of housing allowance benefits, loss of
future relocation benefits and any other type of damages arising from the above. Notwithstanding
the foregoing, nothing in this Release will act to remise, release or discharge QLT from:

	 	(a)	 	obligations QLT may have to indemnify Curaudeau from claims by third parties
made against him in connection with his position as an employee and officer of QLT, but
only if and to the extent that QLT has such an obligation at law, or pursuant to the
separate Indemnity Agreement dated April 11, 2003 between QLT and Curaudeau;
	 
	 	(b)	 	rights, if any, Curaudeau may have under any applicable policy or policies of
insurance maintained by QLT, including directors and officers liability insurance; or
	 
	 	(c)	 	obligations which QLT has to Curaudeau pursuant to the letter dated January 18,
2008 from QLT to Curaudeau.

IT IS UNDERSTOOD AND AGREED that this Release includes any and all claims arising under the
Employment Standards Act, Human Rights Code, or other applicable legislation and that the
consideration provided includes any amount that I may be entitled to under such legislation. I
further acknowledge and agree that I have received all wages, overtime pay, vacation pay, general
holiday pay, and pay in respect of termination of employment that I am entitled to by virtue of the
Employment Standards Act (B.C.) or pursuant to other legislation, and I confirm that there are no
overtime pay, other wages or any other entitlements due and owing to me. I further acknowledge
that QLT has satisfied its obligations to me under the Human Rights Code of B.C. and that there is
no basis for a claim by me against QLT under the Human Rights Code (B.C.).

 

 

IT IS FURTHER UNDERSTOOD AND AGREED that this Release is subject to compliance by QLT with the said
conditions as stipulated in the aforementioned letter from QLT.

IT IS FURTHER UNDERSTOOD AND AGREED that Curaudeau will keep all communication relating to this
settlement confidential except to discuss the same with his immediate family members, Revenue
Agency or as is required to obtain legal and tax advice, to enforce Curaudeau’s rights hereunder in
a court of law, or as is required by law.

IT IS FURTHER UNDERSTOOD AND AGREED that the consideration described herein was voluntarily
accepted by Curaudeau for the purpose of making a full and final settlement of all claims described
above and that prior to agreeing to the settlement, Curaudeau was advised by QLT of his right to
receive independent legal advice.

IN WITNESS WHEREOF this Release has been executed effective the ___day of ___, 2008.

	 	 	 	 	 	 
	SIGNED, SEALED AND DELIVERED
	 	)	 	 
	 
	By Dr. Alain Curaudeau in the
	 	)	 	 
	 
	presence of:
	 	)	 	 
	 
	 	 	)	 	(seal)
	 
	 
	 	)	 	Dr. Alain Curaudeau
	 
	Name

	 	)	 	 
	 
	 
	 	)	 	 
	 
	Address

	 	)	 	 
	 
	 
	 	)	 	 
	 
	 
	 	)	 	 
	 
	 
	 	)	 	 
	 
	Occupation

	 	)	 	 
	 

 

 

APPENDIX B

POST- EMPLOYMENT RESTRICTIONS

CONFIDENTIALITY

Confidential Information of QLT — CURAUDEAU acknowledges and agrees that all business and
trade secrets and confidential proprietary information which CURAUDEAU has acquired or been given
access to during his or her employment with QLT Inc. (“QLT”) relating to the business and affairs
of QLT or to technology, systems, programs, ideas, products or services which have been or are
being developed or utilized by QLT (“QLT Confidential Information”), is the property of QLT.

Confidential Information of Third Parties — CURAUDEAU acknowledges that during the course
of his or her employment he/she has been given access to confidential information (“Third Party
Confidential Information”) of third parties to whom QLT owes a duty of confidentiality.

Non Disclosure — CURAUDEAU acknowledges and agrees, from the date of the termination of
his or her employment that he/she will not, without the express written consent of QLT, disclose
any QLT Confidential Information to any other person or party, nor make use of any QLT Confidential
Information for any purpose. CURAUDEAU further acknowledges that the period during which the Third
Party Confidential Information must be maintained in confidence varies according to the terms of
the agreement under which such Third Party Confidential Information was disclosed to QLT and to
CURAUDEAU (in his or her capacity as an employee of QLT). Therefore, CURAUDEAU acknowledges and
agrees that he/she will not disclose any Third Party Confidential Information to any other person
or party, nor make use of any Third Party Confidential Information for any purpose without the
express written consent of QLT, which consent QLT may withhold until such time as QLT no longer has
an obligation to the owner of that Third Party Confidential Information to maintain the same in
confidence.

NON-SOLICIT

Non-solicitation of QLT employees — CURAUDEAU agrees that, without the prior consent of
QLT, for a period of two years following termination of his or her employment with QLT, CURAUDEAU
will not directly or indirectly solicit any QLT employee for employment by CURAUDEAU or a third
party or induce or encourage any individual to leave QLT’s employment.

Initials:

 

 

APPENDIX C

Clarification from QLT with respect to the ability to trade QLT securities after your departure, in
what would otherwise be a “blackout period” if you were still an employee of QLT.

Securities legislation provides that any person who is in a “special relationship” with a company
(employees are included within the definition of persons in a special relationship) may not trade
in company securities with knowledge of a material fact or material change in the business or
affairs of the company that has not been generally disclosed to the public (and then only after a
reasonable period has passed after such disclosure).

Former employees of a company who may acquire knowledge of any material fact or material change
while still an employee would be subject to this trading restriction under the securities
legislation and would not be permitted to trade until a “reasonable period” had passed following
the disclosure to the public of the material fact or change.

Therefore, while the blackout period imposed on employees of QLT at this time would not apply to
you after you are no longer employed by QLT, you are still subject to general securities
legislation and if you have knowledge of a material fact or material change in the business or
affairs of QLT which you acquired while you were an employee of QLT, you should not trade in QLT
securities based on this knowledge until the material fact or change has been generally disclosed
by QLT to the public and a reasonable period of time (we generally suggest one full day) has passed
since such disclosure.

WE REMIND YOU THAT SINCE YOUR EMPLOYMENT WITH QLT DOES NOT END UNTIL FEBRUARY 29, 2008, UNTIL THAT
DATE YOU REMAIN SUBJECT TO ALL TRADING BLACK-OUT PERIODS APPLICABLE TO ALL QLT EMPLOYEES; HOWEVER
YOU ARE STILL SUBJECT TO LAWS PROHIBITING INSIDER TRADING ON QLT STOCK BASED ON MATERIAL
INFORMATION REGARDING QLT. IF YOU PLAN TO TRADE IN QLT STOCK (INCLUDING OPTIONS), AT ANY TIME
BEFORE 24 HOURS AFTER QLT HAS PUBLICLY RELEASED ITS YEAR END FINANCIAL RESULTS (WHICH WILL OCCUR IN
FEBRUARY 2008), PLEASE CONTACT QLT’S LEGAL DEPARTMENT BEFORE TRADING YOUR STOCK OR OPTIONS
FOLLOWING YOUR DEPARTURE.

Securities legislation and regulation are subject to change; the foregoing should not be relied
upon as legal advice.Exhibit
      4.1

     

    FORM
      OF FLOATING RATE SENIOR NOTE

     

    
      	
              REGISTERED

              No.
                FLR-1

            	 	
              REGISTERED

              U.S.
                $

              CUSIP:
                61747W364

            

    

     

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

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    MORGAN
      STANLEY

    SENIOR
      GLOBAL MEDIUM-TERM NOTES, SERIES F

    (Floating
      Rate)

    

    PROTECTED
      ABSOLUTE RETURN BARRIER NOTE DUE JULY 20, 2009

    BASED
      ON THE VALUE OF THE S&P 500®
      INDEX

     

    
      	
              BASE
                RATE: None

            	
              ORIGINAL
                ISSUE DATE:

            	
              MATURITY
                DATE:

              See  “Maturity
                Date” below.

            
	
              INDEX
                MATURITY: N/A

            	
              INTEREST
                ACCRUAL DATE: N/A

            	
              INTEREST
                PAYMENT DATE(S): N/A

            
	
              SPREAD
                (PLUS OR MINUS): N/A

            	
              INITIAL
                INTEREST RATE: N/A

            	
              INTEREST
                PAYMENT PERIOD: N/A

            
	
              SPREAD
                MULTIPLIER: N/A

            	
              INITIAL
                INTEREST RESET DATE: N/A

            	
              INTEREST
                RESET PERIOD: N/A

            
	
              REPORTING
                SERVICE: N/A

            	
              MAXIMUM
                INTEREST RATE: N/A

            	
              INTEREST
                RESET DATE(S): N/A

            
	
              INDEX
                CURRENCY: N/A

            	
              MINIMUM
                INTEREST RATE: N/A

            	
              CALCULATION
                AGENT: See “Calculation Agent” below.

            
	
              EXCHANGE
                RATE AGENT: N/A

            	
              INITIAL
                REDEMPTION DATE: N/A

            	
              SPECIFIED
                CURRENCY:

              U.S.
                dollars

            
	
              APPLICABILITY
                OF MODIFIED PAYMENT UPON ACCELERATION: See “Alternate Exchange Calculation
                in Case of an Event of Default” below.

            	
              INITIAL
                REDEMPTION PERCENTAGE: N/A

            	
              IF
                SPECIFIED CURRENCY OTHER THAN U.S. DOLLARS, OPTION TO ELECT PAYMENT
                IN
                U.S. DOLLARS: N/A

            
	 	
              ANNUAL
                REDEMPTION PERCENTAGE REDUCTION: N/A

            	
              DESIGNATED
                CMT TELERATE PAGE: N/A

            
	 	
              OPTIONAL
                REPAYMENT DATE(S): N/A

            	
              DESIGNATED
                CMT MATURITY INDEX: N/A

            
	 	
              REDEMPTION
                NOTICE PERIOD: N/A

            	 
	 	
              TAX
                REDEMPTION AND PAYMENT OF ADDITIONAL AMOUNTS: No

            	 
	 	
              IF
                YES, STATE INITIAL OFFERING DATE: N/A

            	
              OTHER
                PROVISIONS: See below.

            

    

     

    
      
        	
                Maturity
                  Date

              	 	
                July
                  20, 2009, subject to extension if the Index Valuation Date is postponed
                  in
                  accordance with the definition thereof.  If the Index Valuation
                  Date is postponed so that it falls less than two scheduled Business
                  Days
                  prior to the scheduled Maturity
                  Date,

              

      

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      
        	 	 	
                the
                  Maturity Date shall be the second scheduled Business Day following
                  the
                  Index Valuation Date as postponed.

              
	 	 	 
	 	 	
                In
                  the event that the Maturity Date of this Note is postponed due
                  to
                  postponement of the Index Valuation Date, as described in the immediately
                  preceding paragraph, the Issuer shall give notice of such postponement
                  and, once it has been determined, of the date to which the Maturity
                  Date
                  has been rescheduled (i) to the holder of this Note by mailing
                  notice of
                  such postponement by first class mail, postage prepaid, to the
                  holder’s
                  last address as it shall appear upon the registry books, (ii) to
                  the
                  Trustee by telephone or facsimile confirmed by mailing such notice
                  to the
                  Trustee by first class mail, postage prepaid, at its New York office
                  and
                  (iii) to The Depository Trust Company (the “Depositary”) by telephone or
                  facsimile confirmed by mailing such notice to the Depositary by
                  first
                  class mail, postage prepaid.  Any notice that is mailed in the
                  manner herein provided shall be conclusively presumed to have been
                  duly
                  given, whether or not the holder of this Note receives the
                  notice.  The Issuer shall give such notice as promptly as
                  possible, and in no case later than (i) with respect to notice
                  of
                  postponement of the Maturity Date, the Business Day immediately
                  following
                  the scheduled Index Valuation Date and (ii) with respect to notice
                  of the
                  date to which the Maturity Date has been rescheduled, the Business
                  Day
                  immediately following the actual Index Valuation Date.

              
	 	 	 
	
                Observation
                  Period

              	 	
                The
                  period of regular trading hours on each Index Business Day on which
                  there
                  is no Market Disruption Event with respect to the Index, beginning
                  on, and
                  including, the Index Business Day following the Pricing Date and
                  ending
                  on, and including, the Index Valuation Date.

              
	 	 	 
	
                Pricing
                  Date

              	 	 
	 	 	 
	
                Authorized
                  Denominations

              	 	
                $10
                  and integral multiples thereof.

              
	 	 	 
	
                Stated
                  Principal Amount

              	 	
                $10

              
	 	 	 
	
                Index

              	 	
                S&P
                  500®
                  Index

              

      

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      
        	
                Payment
                  at Maturity

              	 	
                At
                  maturity, upon delivery of this Note to the Trustee, the Issuer
                  shall pay
                  with respect to the Stated Principal Amount an amount in cash equal
                  to $10
                  plus the Supplemental Redemption Amount, if any, as determined
                  by the
                  Calculation Agent.

              
	 	 	 
	 	 	
                The
                  Payment at Maturity per Stated Principal Amount shall not be less
                  than the
                  Stated Principal Amount of $10.

              
	 	 	 
	 	 	
                The
                  Issuer shall, or shall cause the Calculation Agent to, (i) provide
                  written
                  notice to the Trustee and to the Depositary, on which notice the
                  Trustee
                  and the Depositary may conclusively rely, of the amount of cash
                  to be
                  delivered with respect to the Stated Principal Amount, on or prior
                  to
                  10:30 a.m. on the Business Day preceding the Maturity Date, and
                  (ii)
                  deliver the aggregate cash amount due with respect to this Note
                  to the
                  Trustee for delivery to the holder of this Note, on the Maturity
                  Date.

              

      

    

     

    
      
        	
                Supplemental
                  Redemption Amount

              	 	
                The
                  Supplemental Redemption Amount with respect to the Stated Principal
                  Amount
                  shall equal:

              
	 	 	 
	 	 	
                if
                  at all times during the Observation Period the Index
                  Value is within the Index Range, $10 times the Absolute Index
                  Return; or

              
	 	 	 
	 	 	
                if
                  at any time on any day during the Observation Period the
                  Index Value is outside the Index Range, $0.

              
	 	 	 
	 	 	
                The
                  Supplemental Redemption Amount shall not be less than
                  $0.

              
	 	 	 
	 	 	
                The
                  Calculation Agent shall calculate the Supplemental Redemption Amount
                  on
                  the Index Valuation Date.

              
	 	 	 
	
                Index
                  Value

              	 	
                The
                  Index Value at any time on any day during the Observation Period
                  shall
                  equal the value of the Index published at such time on such day
                  on
                  Bloomberg page “SPX” or any successor page, or in the case of any
                  Successor Index (as defined below), the Bloomberg page or successor
                  page
                  for any such Successor Index.

              

      

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      
        	
                Index
                  Range

              	 	
                The
                  Index Range includes any value of the Index that is:

              
	 	 	 
	 	 	
                (i)
                  greater than or equal to the Initial Index Value
                  times        %
                  and

              
	 	 	 
	 	 	
                (ii)
                  less than or equal to the Initial Index Value
                  times           %.

              
	 	 	 
	 	 	
                The
                  Index Range can also be expressed as follows:

              
	 	 	 
	 	 	
                
                  Index
                    Range =

                   

                  >  (Initial
                    Index Value
                    x                     );
                    and

                   

                  < (Initial
                    Index Value
                    x                     )

                

              

      

    

     

    
      
        	
                Absolute
                  Index Return

              	 	
                The
                  Absolute Index Return is the absolute value of the following
                  formula:

                 

                
                  Final
                    Index Value – Initial Index Value

                  Initial
                    Index Value

                

              

      

       

      
        	
                Initial
                  Index Value

              	 	 
	 	 	 
	
                Index
                  Closing Value

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

              
	 	 	 
	
                Final
                  Index Value

              	 	
                The
                  Index Closing Value on the Index Valuation Date, as determined
                  by the
                  Calculation Agent.

              
	 	 	 
	
                Index
                  Valuation Date

              	 	
                The
                  Index Valuation Date shall be July 16, 2009, subject to adjustment
                  for
                  Market Disruption Events as described in the following
                  paragraph.

              
	 	 	 
	 	 	
                If
                  a
                  Market Disruption Event with respect to the Index occurs on the
                  scheduled
                  Index Valuation Date, or if such Index Valuation Date is not an
                  Index
                  Business Day, the Index Closing Level on such date shall be determined
                  on
                  the immediately succeeding Index Business Day on which no Market
                  Disruption Event 

              

      

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      
        	 	 	
                shall
                  have occurred; provided that the Final Index Value shall not be
                  determined on a date later than the fifth scheduled Index Business
                  Day
                  after the scheduled Index Valuation Date, and if such date is not
                  an Index
                  Business Day or if there is a Market Disruption Event on such date,
                  the
                  Calculation Agent shall determine the Final Index Value on such
                  date in
                  accordance with the formula for calculating the Index last in effect
                  prior
                  to the commencement of the Market Disruption Event (or prior to
                  the
                  non-Index Business Day), without rebalancing or substitution, using
                  the
                  closing price (or, if trading in the relevant securities has been
                  materially suspended or materially limited, its good faith estimate
                  of the
                  closing price that would have prevailed but for such suspension,
                  limitation or non-Index Business Day) on such date of each security
                  most
                  recently constituting the Index.

              
	 	 	 
	
                Index
                  Business Day

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

              
	 	 	 
	
                Calculation
                  Agent

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

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

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

              

      

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      
        	 	 	the
                aggregate principal amount of this Note shall be rounded to the nearest
                cent, with one-half cent rounded upward.
	 	 	 
	
                Market
                  Disruption Event

              	 	
                Market
                  Disruption Event means, with respect to the Index:

              
	 	 	 
	
                 

              	 	
                
                  (i)
                    the occurrence or existence of a suspension, absence or material
                    limitation of trading of stocks then constituting 20 percent
                    or more of
                    the level of the Index (or the Successor Index) on the Relevant
                    Exchanges
                    for such securities for more than two hours of trading or during
                    the
                    one-half hour period preceding the close of the principal trading
                    session
                    on such Relevant Exchange; or a breakdown or failure in the price
                    and
                    trade reporting systems of any Relevant Exchange as a result
                    of which the
                    reported trading prices for stocks then constituting 20 percent
                    or more of
                    the level of the Index (or the Successor Index) during the last
                    one-half
                    hour preceding the close of the principal trading session on
                    such Relevant
                    Exchange are materially inaccurate; or the suspension, material
                    limitation
                    or absence of trading on any major U.S. securities market for
                    trading in
                    futures or options contracts or exchange traded funds related
                    to the Index
                    (or the Successor Index) for more than two hours of trading or
                    during the
                    one-half hour period preceding the close of the principal trading
                    session
                    on such market, in each case as determined by the Calculation
                    Agent in its
                    sole discretion; and

                

              
	 	 	 
	
                 

              	 	
                
                  (ii)
                    a determination by the Calculation Agent in its sole discretion
                    that any
                    event described in clause (i) above materially interfered with
                    the
                    Issuer’s ability or the ability of any of the Issuer’s affiliates to
                    unwind or adjust all or a material portion of the hedge position
                    with
                    respect to the Protected Absolute Return Barrier Note Due July
                    20, 2009
                    Based on the Value of the S&P 500®
                    Index.

                

              
	 	 	 
	 	 	
                For
                  the purpose of determining whether a Market Disruption Event exists
                  at any
                  time, if trading in a security included in the Index is materially
                  suspended or materially limited at that time, then the relevant
                  percentage
                  contribution of that security to the level of the Index shall be
                  based on
                  a comparison of (x) the 

              

      

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      
        	 	 	portion
                of the value of the Index attributable to that security relative
                to (y)
                the overall value of the Index, in each case immediately before that
                suspension or limitation.
	 	 	 
	 	 	
                For
                  the purpose of determining whether a Market Disruption Event has
                  occurred:  (1) a limitation on the hours or number of days of
                  trading shall not constitute a Market Disruption Event if it results
                  from
                  an announced change in the regular business hours of the Relevant
                  Exchange
                  or market, (2) a decision to permanently discontinue trading in
                  the
                  relevant futures or options contract or exchange traded fund shall
                  not
                  constitute a Market Disruption Event, (3) limitations pursuant
                  to the
                  rules of any Relevant Exchange similar to NYSE Rule 80A (or any
                  applicable
                  rule or regulation enacted or promulgated by any other self-regulatory
                  organization or any government agency of scope similar to NYSE
                  Rule 80A as
                  determined by the Calculation Agent) on trading during significant
                  market
                  fluctuations shall constitute a suspension, absence or material
                  limitation
                  of trading, (4) a suspension of trading in futures, options contracts
                  or
                  exchange traded funds on the Index by the primary securities market
                  trading in such contracts or funds 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 funds or (c)
                  a disparity
                  in bid and ask quotes relating to such contracts or funds shall
                  constitute
                  a suspension, absence or material limitation of trading in futures,
                  options contracts or exchange traded funds related to the Index
                  and (5) a
                  “suspension, absence or material limitation of trading” on any Relevant
                  Exchange or on the primary market on which futures, options contracts
                  or
                  exchange traded funds related to the Index are traded shall not
                  include
                  any time when such securities market is itself closed for trading
                  under
                  ordinary circumstances.

              
	 	 	 
	
                Relevant
                  Exchange

              	 	
                Relevant
                  Exchange means, with respect to the Index or any Successor Index
                  (as
                  defined below), the primary exchange or market of trading for (i)
                  any
                  security then included in the Index, or any Successor Index, and
                  (ii) any
                  futures or options contracts related to the Index, or
                  

              

      

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      
        	 	 	any
                Successor Index, or to any security then included in the Index, or
                any
                Successor Index.
	
                Alternate
                  Exchange Calculation

              	 	 
	
                in
                  Case of an Event of Default

              	 	
                In
                  case an event of default with respect to this Note shall have occurred
                  and
                  be continuing, the amount declared due and payable per Stated Principal
                  Amount upon any acceleration of this Note (the “Acceleration Amount”)
                  shall be equal to $10 plus the Supplemental Redemption Amount,
                  if any,
                  determined as though the Observation Period ended at 4:00 p.m.
                  on the date
                  of acceleration and using the Index Closing Value on the date of
                  such
                  acceleration as the Final Index Value.

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

              
	 	 	 
	
                Discontinuance
                  of the Index;

              	 	 
	
                Alteration
                  of Method of Calculation

              	 	
                If
                  Standard & Poor’s®
                  Corporation
                  (“S&P”) discontinues publication of the Index and S&P or another
                  entity (including MS & Co.) publishes a successor or substitute index
                  that MS & Co., as the Calculation Agent, determines, in its sole
                  discretion, to be comparable to the discontinued Index (such index
                  being
                  referred to herein as a “Successor Index”), then any subsequent Index
                  Closing Value shall be determined by reference to the published
                  value of
                  such Successor Index at the regular weekday close of trading on
                  the Index
                  Business Day that any Index Closing Value is to be
                  determined.

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

              
	 	 	 
	 	 	If
                S&P discontinues publication of the Index prior to, and such
                discontinuance is continuing on, the Index

      

      

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

         

      

      
        	 	 	
                Valuation
                  Date, any Index Business Day (on which determination need be made
                  as to
                  whether the Index Value is outside of the Index Range) or the date
                  of
                  acceleration and MS & Co., as the Calculation Agent, determines, in
                  its sole discretion, that no Successor Index is available at such
                  time,
                  then the Calculation Agent shall determine the Index Closing Value
                  for
                  such date.  Following any such determination, the Calculation
                  Agent shall not compute the Index Value on any Index Business Day
                  and
                  shall instead rely on the Index Closing Value as computed by the
                  Calculation Agent for the purpose of determining whether the Index
                  Value
                  is outside the Index Range.  The Index Closing Value shall be
                  computed by the Calculation Agent in accordance with the formula
                  for
                  calculating the Index last in effect prior to such discontinuance,
                  using
                  the closing price (or, if trading in the relevant securities has
                  been
                  materially suspended or materially limited, its good faith estimate
                  of the
                  closing price that would have prevailed but for such suspension
                  or
                  limitation) at the close of the principal trading session of the
                  Relevant
                  Exchange on such date of each security most recently constituting
                  the
                  Index without any rebalancing or substitution of such securities
                  following
                  such discontinuance.

              
	 	 	 
	 	 	
                If
                  at any time the method of calculating the Index or a Successor
                  Index, or
                  the value thereof, is changed in a material respect, or if the
                  Index or a
                  Successor Index is in any other way modified so that such index
                  does not,
                  in the opinion of MS & Co., as the Calculation Agent, fairly represent
                  the value of the Index or such Successor Index had such changes
                  or
                  modifications not been made, then, from and after such time, the
                  Calculation Agent shall, at the close of business in New York City
                  on each
                  date or during such day on which the Index Closing Value or Index
                  Value,
                  respectively, is to be determined, make such calculations and adjustments
                  as, in the good faith judgment of the Calculation Agent, may be
                  necessary
                  in order to arrive at a value of a stock index comparable to the
                  Index or
                  such Successor Index, as the case may be, as if such changes or
                  modifications had not been made, and the Calculation Agent shall
                  calculate
                  the Final Index Value or Index Values with

              

      

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      
        	 	 	reference
                to the Index or such Successor Index, as adjusted.  Accordingly,
                if the method of calculating the Index or a Successor Index is modified
                so
                that the value of such index is a fraction of what it would have
                been if
                it had not been modified (e.g., due to a split in the index),
                then the Calculation Agent shall adjust such index in order to arrive
                at a
                value of the Index or such Successor Index as if it had not been
                modified
                (e.g., as if such split had not
                occurred).

      

    

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

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

       

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

       

      Payment
        of
        the principal of and premium, if any, and interest on this Note due at maturity
        (or any redemption or repayment date), unless this Note is denominated in
        a
        Specified Currency other than U.S. dollars and is to be paid in whole or
        in part
        in such Specified Currency, will be made in immediately available funds upon
        surrender of this Note at the office or agency of the 

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      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.

       

      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.

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

      

       

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

       

      
        
          	
                  DATED:

                	
                  MORGAN
                    STANLEY

                	 
	 	 	 	 
	 	
                  By:

                	 	 
	 	
                  Name:

                	 
	 	
                  Title:

                	 

        

         

      

      TRUSTEE’S
        CERTIFICATE

      OF
        AUTHENTICATION

       

      This
        is
        one of the Notes referred

      to
        in the within-mentioned

      Senior
        Indenture.

       

      THE
        BANK
        OF NEW YORK,

      as
        Trustee

       

      
        	
              	 
	
                By:

              	 
	
                Authorized
                  Signatory

              

         

        
          
            
            

          

          
            15

            
              

            

          

          
            
            

          

        

      

      

      

      FORM
        OF REVERSE OF SECURITY

       

      This
        Note
        is one of a duly authorized issue of Senior Global Medium-Term Notes, Series
        F,
        (the “Notes”) of the Issuer.  The Notes are issuable
        under a Senior Indenture, dated as of November 1, 2004, between the Issuer
        and
        The Bank of New York, a New York banking corporation (as successor to JPMorgan
        Chase Bank, N.A. (formerly known as JPMorgan Chase Bank)), as Trustee (the
        “Trustee,” which term includes any successor trustee under the
        Senior Indenture) (as may be amended or supplemented from time to time, the
        “Senior Indenture”), to which Senior Indenture and all
        indentures supplemental thereto reference is hereby made for a statement
        of the
        respective rights, limitations of rights, duties and immunities of the Issuer,
        the Trustee and holders of the Notes and the terms upon which the Notes are,
        and
        are to be, authenticated and delivered.  The Issuer has appointed The
        Bank of New York, 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, 

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      together
        with interest accrued and unpaid hereon to the date of repayment.  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.

       

      If
        the
        face hereof indicates that this Note is subject to “Tax Redemption and Payment
        of Additional Amounts,” this Note may be redeemed, as a whole, at the option of
        the Issuer at any time prior to maturity, upon the giving of a notice of
        redemption as described below, at a redemption price equal to 100% of the
        principal amount hereof, together with accrued interest to the date fixed
        for
        redemption, if the Issuer determines that, as a result of any change in or
        amendment to the laws (including a holding, judgment or as ordered by a court
        of
        competent jurisdiction), or any regulations or rulings promulgated thereunder,
        of the United States or of any political subdivision or taxing authority
        thereof
        or therein affecting taxation, or any change in official position regarding
        the
        application or interpretation of such laws, regulations or rulings, which
        change
        or amendment occurs, becomes effective or, in the case of a change in official
        position, is announced on or after the Initial Offering Date hereof, the
        Issuer
        has or will become obligated to pay Additional Amounts, as defined below,
        with
        respect to this Note as described below.  Prior to the giving of any
        notice of redemption pursuant to this paragraph, the Issuer shall deliver
        to the
        Trustee (i) a certificate stating that the Issuer is entitled to effect
        such redemption and setting forth a statement of facts showing that the
        conditions precedent to the right of the Issuer to so redeem have occurred,
        and
        (ii) an opinion of independent legal counsel satisfactory to the Trustee to
        such effect based on such statement of facts; provided that no such
        notice of redemption shall be given earlier than 60 calendar days prior to
        the
        earliest date on which the Issuer would be obligated to pay such Additional
        Amounts if a payment in respect of this Note were then due.

       

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

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

       

      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”).

       

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

       

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

       

      Determination
        of CD Rate.  If the Base Rate specified on the face hereof is the
“CD Rate,”  for any Interest Determination Date, the
        CD Rate with respect to this Note shall be the rate on 

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

       

      that
        date
        for negotiable U.S. dollar certificates of deposit having the Index Maturity
        specified on the face hereof as published by the Board of Governors of the
        Federal Reserve System in “Statistical Release H.15(519), Selected Interest
        Rates,” or any successor publication of the Board of Governors of the Federal
        Reserve System (“H.15(519)”) under the heading “CDs (Secondary
        Market).”

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

       

      
        	
                Money
                  Market Yield   =    

              	
                D
                  x
                  360

              	
                  
                  x  100

              
	
                360
                  – (D x M)

              

      

       

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

       

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

       

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

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

       

      New
        York,
        which may include the initial dealer and its affiliates, selected by the
        Calculation Agent (after consultation with the Issuer).

       

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

       

      Determination
        of Federal Funds (Open) Rate. If the Base Rate specified on the face hereof
        is the “Federal Funds (Open) Rate”, for any Interest
        Determination Date, the Federal Funds (Open) Rate with respect to this Note
        shall be the rate on that date for U.S. dollar federal funds as published
        in
        H.15(519) under the heading “Federal Funds (Open)” as displayed on Moneyline
        Telerate, or any successor service, on page 5 or any other page as may replace
        page 5 on that service, (“Telerate Page 5”).

       

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

       

      
        	
                ·  

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

              

      

       

      
        	
                ·  

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

              

      

       

      
        	
                ·  

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

              

      

       

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

       

      (i)
        As of
        the Interest Determination Date, LIBOR shall be either (a)  if
“LIBOR Reuters” is specified as the Reporting Service on the
        face hereof, the arithmetic mean of the offered rates for deposits in the
        Index
        Currency having the Index Maturity designated on the face hereof, 

       

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      

       

      
        	
                Bond
                  Equivalent Yield   =    

              	
                D
                  x
                  N

              	
                   
                  x  100

              
	
                360
                  – (D x M)

              

      

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      (iii)
        If
        the information set forth above is not provided by 3:00 p.m., New York City
        time, on the related Calculation Date, then the Calculation Agent shall
        determine the CMT Rate to be a yield to maturity, based on the arithmetic
        mean
        of the secondary market closing offer side prices as of approximately 3:30
        p.m.,
        New York City time, on the Interest Determination Date, reported, according
        to
        their written records, by three leading primary U.S. government securities
        dealers (“Reference Dealers”) in The City of New York, which
        may include the initial dealer or its affiliates, selected by the Calculation
        Agent as described in the following sentence.  The Calculation Agent
        shall select five reference dealers (after consultation with the Issuer)
        and
        shall eliminate the highest quotation or, in the event of equality, one of
        the
        highest, and the lowest quotation or, in the event of equality, one of the
        lowest, for the most recently issued direct 

       

      
        
          
          

        

        
          28

          
            

          

        

        
          
          

        

      

       

      noncallable
        fixed rate obligations of the United States (“Treasury Notes”)
        with an original maturity of approximately the Designated CMT Maturity Index,
        a
        remaining term to maturity of no more than 1 year shorter than that Designated
        CMT Maturity Index and in a principal amount that is representative for a
        single
        transaction in the securities in that market at that time.  If two
        Treasury Notes with an original maturity as described above have remaining
        terms
        to maturity equally close to the Designated CMT Maturity Index, the quotes
        for
        the Treasury Note with the shorter remaining term to maturity shall be
        used.

       

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

       

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

      
        
          
          

        

        
          31

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

      
        
          
          

        

        
          32

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          33

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          34

          
            

          

        

        
          
          

        

      

       

      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.
	 	 

            

          

        

         

        
          

        

         

        
          
            
            

          

          
            35

            
              

            

          

          
            
            

          

        

         

        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.

                    

            

          

        

         

        
          
            
            

          

          
            36

            
              

            

          

          
            
            

          

        

         

      

      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.

          

           

          37

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