Document:

EXHIBIT 10.2

                         EMPLOYMENT AGREEMENT LION, INC.
                   (Steve Thomson, CFO & Secretary/Treasurer)

                  This Employment Agreement (this "Agreement") is made effective
May 22, 2007 ("Effective Date"), by LION, Inc. ("Employer"),  and Steve Thomson,
CFO & Secretary/Treasurer of LION, Inc. ("Executive").

                                    RECITALS

         Employer desires  Executive's  employment with Employer,  and Executive
wishes to accept such  employment,  upon the terms and  conditions  set forth in
this Agreement.

                                    AGREEMENT

         The parties, intending to be legally bound, agree as follows:

                                 1. DEFINITIONS

         For the  purposes  of this  Agreement,  the  following  terms  have the
meanings specified or referred to in this Section 1.

         1.1 "Basic Compensation" is defined as Salary and Benefits (see Section
3.1.1 and 3.1.2).

         1.2  "Bonus Compensation" is defined in Section 3.2.

         1.3  "Cause" is defined in Section 6.2

         1.4 "Confidential  Information" is defined as the following information
and materials in written,  oral, magnetic,  photographic,  optical or other form
and  whether  now  existing  or  developed  or  created  during the term of this
Agreement which are proprietary to Employer and are highly sensitive in nature.

                  1.4.1  INFORMATION  MARKED  PROPRIETARY OR  CONFIDENTIAL.  All
data, documents, materials, drawings and information in tangible form and marked
"Proprietary" or "Confidential."

                  1.4.2  PRODUCTS.  Any  and  all  ideas,  designs,  inventions,
discoveries,   processes,   methods,  plans,  concepts,   methods,   techniques,
structures,  specifications,  design specifications,  design notes, flow charts,
documentation,  technical and engineering data, laboratory studies, test results
and any other  information  and  materials,  whether  or not in  tangible  form,
relating to Employer's operations.

                  1.4.3 TRADE SECRETS.  All Employer's trade secrets, as defined
in the  Washington  Trade Secrets Law, RCW 19.108 et seq. and including  without
limitation,  the specific terms of Employer's  relationships  or agreements with
significant  vendors  and  customers,   and  targeted  prospective  vendors  and
customers;  Employer's  customer list;  and  information  concerning  Employer's
management, finance, marketing and business plans.

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                  1.4.4  LEGAL  RIGHTS.  Patents,   copyrights,  trade  secrets,
trademarks, and service marks ("Intellectual Property"), including any documents
containing information concerning such Intellectual Property.

                  1.4.5 THIRD PARTY  INFORMATION.  Any and all  information  and
materials in Employer's possession or under its control from any other person or
entity  which  Employer is  obligated to treat as  confidential  or  proprietary
("Third Party Information").

                  1.4.6  NOT  GENERALLY  KNOWN.  Any  and  all  information  not
generally  known to the  public  or  within  the  industries  or trades in which
Employer competes.

         1.5  "Effective  Date" means the date stated in the first  paragraph of
the Agreement.

         1.6  "Employment  Period"  means the period  beginning on the Effective
Date and ending on termination of Executive's employment pursuant to Section 6.

         1.7 "Person" is any individual,  corporation  (including any non-profit
corporation),  general or limited partnership,  limited liability company, joint
venture, estate, trust, association, organization, or governmental body.

         1.8 "Post-Employment Period" is defined in Section 8.2.4.

         1.9 "Proprietary Items" is defined in Section 7.2.4.

         1.10 "Salary" is defined in Section 3.1.1.

         1.11 "Severance  Benefit" is defined as 50% of the  Executive's  annual
salary for the calendar  year in which this  Agreement is  terminated,  together
with  continuation of Benefits as defined in Sections 3.1.2 and 6.3.5 herein, at
the level the Executive is receiving at the time of  Termination  for six months
immediately following the Date of Termination.

         1.12 "Stock" - Common stock of LION, Inc.

                            2. EMPLOYMENT AND DUTIES

         2.1  EMPLOYMENT

         Employer  hereby  employs  Executive,   and  Executive  hereby  accepts
employment  by  Employer,  upon  the  terms  and  conditions  set  forth in this
Agreement.

         2.2  TERM

         Subject  to the  provision  of  Section  6,  the  term  of  Executive's
employment  under  this  Agreement  will be three (3)  years,  beginning  on the
effective date (May 22, 2007) and ending May 31, 2010.

         2.3  DUTIES

         Executive  will  have such  duties  as are  assigned  or  delegated  to
Executive by the Chief Executive Officer of Employer and will serve as the CFO &
Secretary/Treasurer. Executive will devote his entire business, time, attention,
skill,  and energy  exclusively  to the business of

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Employer,  will use his best  efforts  to  promote  the  success  of  Employer's
business,  and will  cooperate  fully with the Chief  Executive  Officer and the
Board of  Directors in the  advancement  of the best  interests of Employer.  If
Executive  is elected as a director  of  Employer or as a director or officer of
any of its  affiliates,  Executive  will fulfill his duties as such  director or
officer without additional compensation.

                                 3. COMPENSATION

         3.1  BASIC COMPENSATION

                  3.1.1  SALARY.  Executive  will be paid an  annual  salary  of
$153,000/year subject to adjustment as provided below (the "Salary"), which will
be payable in equal  periodic  installments  according to  Employer's  customary
payroll practices,  but no less frequently than monthly. The Salary and Benefits
(i.e.  Basic  Compensation)  will be reviewed by the Board of Directors not less
frequently than annually.

                  3.1.2 BENEFITS.  Executive will, during the Employment Period,
be permitted  to  participate  in such  pension,  profit  sharing,  bonus,  life
insurance,  hospitalization,  major medical, and other employee benefit plans of
Employer  that may be in effect from time to time,  to the extent  Executive  is
eligible under the terms of those plans (collectively, the "Benefits").

         3.2  BONUS COMPENSATION

         Annually the  Compensation  Committee will review and/or  determine any
bonus compensation plans.

                           4.0 FACILITIES AND EXPENSES

         4.1  GENERAL

         Employer will furnish Executive office space, equipment,  supplies, and
such other  facilities and personnel as Employer deems  necessary or appropriate
for the performance of Executive's  duties under this  Agreement.  Employer will
pay on behalf of Executive  (or reimburse  Executive  for)  reasonable  expenses
incurred  by  Executive  at the  request  of, or on behalf of,  Employer  in the
performance of Executive's duties pursuant to this Agreement,  and in accordance
with  Employer's  policies.  Executive must file expense reports with respect to
such expenses in accordance with Employer's policies.

         4.2  BUSINESS EXPENSES

         Employer shall  reimburse  Executive for all  reasonable,  ordinary and
necessary  business  expenses  incurred by Executive in the  performance  of his
duties and the promotion of the Employer's business.

         4.3  CELLULAR PHONE

         Employer  will pay for and  provide  Executive  with a cellular  phone,
phone service and wireless  connectivity device for business use if so requested
by the Executive.

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                            5. VACATIONS AND HOLIDAYS

         Executive will be entitled to vacation each calendar year in accordance
with the vacation  policies of Employer in effect for its employee officers from
time to time,  in any  event  not less  than  four (4)  weeks  vacation  a year.
Vacation  must be taken by  Executive  at such time or times as  approved by the
Chief  Executive  Officer.  Executive will also be entitled to the paid holidays
set forth in Employer's policies. Vacation days and holidays during any calendar
year that are not used by Executive during such calendar year may not be used in
any subsequent calendar year without Employer's prior written consent.

                                 6. TERMINATION

         6.1  EVENTS OF TERMINATION

         The Employment Period,  Executive's Salary and Benefits and any and all
other  rights of Executive  under this  Agreement or otherwise as an employee of
Employer will terminate (except as otherwise  provided in this Section 6) on the
earliest of:

                  6.1.1 Upon the death of Executive;

                  6.1.2  Upon written notice by Executive;

                  6.1.3  Upon written notice by Employer;

                  6.1.4 For Cause (as defined in Section 6.2),  immediately upon
notice  from  Employer  to  Executive,  or at such later time as such notice may
specify.

         6.2  DEFINITION OF "FOR CAUSE"

         For purposes of Section 6.2, "Cause for Employer" shall mean any of the
following:  (i) Executive's  theft,  dishonesty,  or falsification of Employer's
documents  or  records;  (ii)  Executive's  participation  in a fraud  or act of
dishonesty  against  Employer;  (iii) any action taken in bad faith by Executive
which has a  detrimental  effect on  Employer's  reputation  or  business;  (iv)
Executive's  willful  failure or  inability to perform any  reasonable  assigned
duties that is not remedied by Executive  within forty five (45) days of written
notice of such failure or inability from Employer;  (v)  Executive's  unremedied
material breach of this Agreement after receipt of the written notice  discussed
above,  or any  violation of  Employer's  written  policies  constituting  gross
intentional  misconduct adversely and demonstrably affecting Employer's business
or reputation;  or (vi) Executive's  conviction (including any plea of guilty or
NOLO CONTENDERE) of any felony or crime involving dishonesty.

         For purposes of Section 6.2,  "Cause for Executive"  shall mean any one
of the  following  events  which occurs  without  Executive's  consent:  (i) any
reduction of Executive's then existing  compensation or benefits,  except to the
extent that such  compensation  of all other  senior  executives  of Employer is
equally   reduced;   (ii)  any  material   diminution  of  Executive's   duties,
responsibilities,  authority,  reporting  structure,  titles or offices provided
Executive  gives Employer  written notice of such material  diminution and it is
not  remedied by  Employer  within  thirty (30) days of receipt of such  notice;
(iii) any request  that  Executive  relocate to a work site that would  increase
Executive's  one-way  commute  distance  by more  than  fifty  (50)  miles  from
Executive's  then principal  residence;  (iv) any material breach by Employer of
its  obligations  under this  Agreement  that is not remedied by Company  within
thirty (30) days of written  notice of such

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breach from Executive;  (v) another entity or person becoming the majority owner
through a hostile takeover of Employer; or (vi) a slate of directors is elected,
a  majority  of  which  were  not  recommended  by the  existing  directors  and
management prior to the vote.

         6.3  TERMINATION PAY

         Effective  upon the  termination  of this  Agreement,  Employer will be
obligated to pay Executive only such compensation as is provided in this Section
6.3, and in lieu of all other amounts and in settlement and complete  release of
all claims Executive may have against Employer.

                  6.3.1  TERMINATION  BY EMPLOYER  FOR CAUSE OR  TERMINATION  BY
EXECUTIVE  WITHOUT CAUSE.  If Employer  terminates  this Agreement for Cause, or
Executive terminates this Agreement without cause, Executive will be entitled to
receive his Salary only through the date such termination is effective.

                  6.3.2  TERMINATION UPON DEATH. If this Agreement is terminated
because of Executive's  death,  Executive will be entitled to receive his Salary
through  the end of the  calendar  month  in  which  his  death  occurs,  plus a
Severance Benefit.

                  6.3.3  TERMINATION  BY  EMPLOYER  WITHOUT  CAUSE.  If Employer
terminates this Agreement without Cause,  Employer will pay Executive his Salary
through the end of the calendar month in which such termination occurs. Employer
will also pay the Severance Benefit.

                  6.3.4  TERMINATION  BY EXECUTIVE  FOR CAUSE.  If the Executive
terminates  this  Agreement  "for cause",  the Employer  will pay  Executive his
Salary through the end of the calendar month in which such  termination  occurs.
Employer will also pay the Severance Benefit.

                  6.3.5 BENEFITS.  Executive's  accrual of, or  participation in
plans providing for benefits will cease at the effective date of the termination
of this Agreement,  and Executive will be entitled to accrued Benefits  pursuant
to such plans only as provided in such plans.  Following the  Termination  Date,
the Executive  has the right to continue  coverage  under the  Company's  health
insurance plans as provided by the  Consolidated  Omnibus Budget  Reconciliation
Act of  1985,  as  amended  ("COBRA"),  provided  the  Executive  makes a timely
election for such continued coverage.  However, if the Executive terminates "for
cause" or the Employer  terminates the Executive "without cause",  Employer will
provide, at no expense to the Executive during the 6 month Severance Period, any
health insurance benefits provided under the Employer's Plans.

                           7. NON-DISCLOSURE COVENANT

         7.1  ACKNOWLEDGMENTS BY THE EXECUTIVE

         Executive  acknowledges  that (a) during the Employment Period and as a
part of his  employment,  Executive  will be  afforded  access  to  Confidential
Information;  (b) public disclosure of such Confidential  Information could have
an adverse  effect on Employer and its business;  and (c) the provisions of this
Section 7 are reasonable and necessary to prevent the improper use or disclosure
of Confidential Information.

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         7.2  AGREEMENTS OF THE EXECUTIVE

         In  consideration  of the  compensation  and  benefits  to be  paid  or
provided to Executive by Employer under this Agreement,  Executive  covenants as
follows:

                  7.2.1 During and following the  Employment  Period,  Executive
will hold in confidence the Confidential Information and will not disclose it to
any person except with the specific prior written  consent of Employer or except
as otherwise expressly permitted by the terms of this Agreement.

                  7.2.2 Any trade secrets of Employer will be entitled to all of
the  protections and benefits under  Washington  trade secret law, RCW 19.108 et
seq., and any other applicable law. If any information that Employer deems to be
a trade secret is found by a court of competent  jurisdiction  not to be a trade
secret for purposes of this Agreement,  such information will, nevertheless,  be
considered  Confidential  Information for purposes of this Agreement.  Executive
hereby waives any  requirement  that Employer submit proof of the economic value
of any trade secret or post a bond or other security.

                  7.2.3  None  of the  foregoing  obligations  and  restrictions
applies to any part of the Confidential  Information that Executive demonstrates
was or became  generally  available  to the  public  other than as a result of a
disclosure by Executive.

                  7.2.4  Executive  will not  remove  from  Employer's  premises
(except to the  extent  such  removal  is for  purposes  of the  performance  of
Executive's  duties  at  home  or  while  traveling,   or  except  as  otherwise
specifically  authorized  by Employer)  any document,  record,  notebook,  plan,
model,  component,  device, or computer software or code,  whether embodied in a
disk or in any other form  (collectively,  the "Proprietary  Items").  Executive
recognizes  that,  as between  Employer and  Executive,  all of the  Proprietary
Items,  whether or not  developed by Executive,  are the  exclusive  property of
Employer.  Upon  termination  of this  Agreement  by either  party,  or upon the
request of  Employer  during the  Employment  Period,  Executive  will return to
Employer all of the  Proprietary  Items in Executive's  possession or subject to
Executive's  control,  and  Executive  shall not retain any  copies,  abstracts,
sketches, or other physical embodiment of any of the Proprietary Items.

         7.3  DISPUTES OR CONTROVERSIES

         Executive  recognizes that should a dispute or controversy arising from
or  relating to this  Agreement  be  submitted  for  adjudication  to any court,
arbitration  panel,  or other third party,  the  preservation  of the secrecy of
Confidential   Information  may  be  jeopardized.   All  pleadings,   documents,
testimony,  and records relating to any such  adjudication will be maintained in
secrecy and will be available for inspection by Employer,  Executive,  and their
respective  attorneys and experts, who will agree, in advance and in writing, to
receive and maintain all such  information in secrecy,  except as may be limited
by them in writing.

                     8. NON-COMPETITION AND NON-INTERFERENCE

         8.1  ACKNOWLEDGMENTS BY THE EXECUTIVE

         Executive  acknowledges  that:  (a) the services to be performed by him
under this  Agreement  are of a special,  unique,  unusual,  extraordinary,  and
intellectual character;  (b) Employer competes with other businesses that are or
could  be  located  in any part of the  world;

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and (c) the provisions of this Section 8 are reasonable and necessary to protect
Employer's business.

         Executive  acknowledges that the products or activities and services of
the  Employer  include,  but are not limited to, the  acquisition,  assemblence,
marketing and sales of Employer's products and services,  including industry web
site development and hosting,  rate and fee content information from lenders for
mortgage brokers,  and Internet-based  technology solutions for mortgage brokers
and lenders.  Executive further acknowledges that the products,  activities, and
services of the Employer may expand during  Executive's term of employment,  and
that the  provisions  of this Section 8 apply to all products,  activities,  and
services of Employer in effect at the time of Executive's termination.

         8.2  COVENANTS OF THE EXECUTIVE

         In  consideration  of  the   acknowledgments   by  Executive,   and  in
consideration  of the  compensation  and  benefits  to be  paid or  provided  to
Executive  by  Employer,  Executive  covenants  that he will  not,  directly  or
indirectly:

                  8.2.1 During the  Employment  Period,  except in the course of
his employment hereunder,  engage or invest in, own, manage,  operate,  finance,
control, or participate in the ownership,  management,  operation, financing, or
control of, be employed by,  associated  with, or in any manner  connected with,
lend  Executive's  name or any similar  name to, lend  Executive's  credit to or
render services or advice to, any business whose products or activities  compete
in whole or in part with the products or activities of Employer  anywhere within
the United States;  provided,  however, that Executive may purchase or otherwise
acquire up to (but not more than) one percent of any class of  securities of any
enterprise  (but  without  otherwise  participating  in the  activities  of such
enterprise) if such securities are listed on any national or regional securities
exchange or have been registered under Section 12(g) of the Securities  Exchange
Act of 1934;

                  8.2.2 Whether for  Executive's  own account or for the account
of any  other  person,  at  any  time  during  the  Employment  Period  and  the
Post-Employment  Period,  solicit  business  of the same or  similar  type being
carried on by  Employer,  from any person known by Executive to be a customer of
Employer,  whether or not Executive had personal contact with such person during
and by reason of Executive's employment with Employer;

                  8.2.3  Whether for  Executive's  own account or the account of
any  other  person  (a) at  any  time  during  the  Employment  Period  and  the
Post-Employment  Period,  solicit,  employ,  or otherwise engage as an employee,
independent contractor,  or otherwise, any person who is an employee of Employer
or in any  manner  induce or  attempt  to induce any  employee  of  Employer  to
terminate his employment with Employer; or (b) at any time during the Employment
Period and the Post Employment  Period,  interfere with Employer's  relationship
with any  person,  including  any person who at any time  during the  Employment
Period was an employee, contractor, supplier, or customer of Employer; or

         8.2.4 At any time  during or after  the  Employment  Period,  disparage
Employer or any of its shareholders, directors, officers, employees, or agents.

         For purposes of this Section  8.2,  the term  "Post-Employment  Period"
means the 1 year period  beginning  on the date of  termination  of  Executive's
employment with Employer.

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         If any  covenant  in  this  Section  8.2 is  held  to be  unreasonable,
arbitrary,  or against  public  policy,  such  covenant will be considered to be
divisible  with respect to scope,  time,  and  geographic  area, and such lesser
scope,  time,  or  geographic  area,  or all of them,  as a court  of  competent
jurisdiction  may determine to be  reasonable,  not  arbitrary,  and not against
public policy, will be effective, binding, and enforceable against Executive.

         The period of time  applicable to any covenant in this Section 8.2 will
be extended by the duration of any violation by Executive of such covenant.

         Executive will, while the covenant under this Section 8.2 is in effect,
give notice to Employer,  within ten days after accepting any other  employment,
of the identity of Executive's employer.  Employer may notify such employer that
Executive is bound by this Agreement and, at Employer's  election,  furnish such
employer with a copy of this Agreement or relevant portions thereof.

                              9. GENERAL PROVISIONS

         9.1  INJUNCTIVE RELIEF AND ADDITIONAL REMEDY

         Executive  acknowledges  that the  injury  that  would be  suffered  by
Employer as a result of a breach of the provisions of this Agreement  (including
any  provision  of Sections 7 and 8) would be  irreparable  and that an award of
monetary  damages to Employer for such a breach would be an  inadequate  remedy.
Consequently,  Employer will have the right,  in addition to any other rights it
may have,  to obtain  injunctive  relief to  restrain  any breach or  threatened
breach or otherwise to  specifically  enforce any  provision of this  Agreement.
Without limiting Employer's rights under this Section 9 or any other remedies of
Employer,  if  Executive  breaches  any of the  provisions  of  Section  7 or 8,
Employer  will have the right to cease  making  any  payments  otherwise  due to
Executive under this Agreement.

         9.2  COVENANTS  OF  SECTIONS  7  AND 8 ARE  ESSENTIAL  AND  INDEPENDENT
COVENANTS

         The covenants by Executive in Sections 7 and 8 are  essential  elements
of this  Agreement,  and  without  Executive's  agreement  to  comply  with such
covenants,  Employer  would not have  entered  into this  Agreement  or employed
Executive.  Executive  has  independently  consulted  his  counsel  and has been
advised in all respects  concerning  the  reasonableness  and  propriety of such
covenants,  with  specific  regard to the nature of the  business  conducted  by
Employer.

         Executive's covenants in Sections 7 and 8 are independent covenants and
the existence of any claim by Executive against Employer under this Agreement or
otherwise, will not excuse Executive's breach of any covenant in Section 7 or 8.

         If Executive's  employment  hereunder  expires or is  terminated,  this
Agreement  will continue in full force and effect as is necessary or appropriate
to enforce the covenants and agreements of Executive in Sections 7 and 8.

         9.3  REPRESENTATIONS AND WARRANTIES BY THE EXECUTIVE

         Executive  represents  and warrants to Employer  that the execution and
delivery by Executive of this Agreement do not, and the performance by Executive
of  Executive's  obligations  hereunder  will not, with or without the giving of
notice  or the  passage  of time,  or both:  (a)  violate

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any  judgment,  writ,  injunction,   or  order  of  any  court,  arbitrator,  or
governmental agency applicable to Executive; or (b) conflict with, result in the
breach of any  provisions  of or the  termination  of, or  constitute  a default
under,  any agreement to which  Executive is a party or by which Executive is or
may be bound.

         9.4  OBLIGATIONS CONTINGENT ON PERFORMANCE

         The obligations of Employer hereunder,  including its obligation to pay
the   compensation   provided  for  herein,   are  contingent  upon  Executive's
performance of Executive's obligations hereunder.

         9.5  WAIVER

         The rights and remedies of the parties to this Agreement are cumulative
and not  alternative.  Neither  the  failure  nor any delay by  either  party in
exercising any right, power, or privilege under this Agreement will operate as a
waiver of such right, power, or privilege,  and no single or partial exercise of
any such right,  power, or privilege will preclude any other or further exercise
of such right, power, or privilege or the exercise of any other right, power, or
privilege.  To the maximum extent  permitted by applicable  law, (a) no claim or
right arising out of this Agreement can be discharged by one party,  in whole or
in part,  by a waiver or  renunciation  of the claim or right  unless in writing
signed by the other  party;  (b) no waiver  that may be given by a party will be
applicable  except in the specific  instance  for which it is given;  and (c) no
notice to or demand on one party will be deemed to be a waiver of any obligation
of such party or of the right of the party  giving such notice or demand to take
further action without notice or demand as provided in this Agreement.

         9.6  BINDING EFFECT; DELEGATION OF DUTIES PROHIBITED

         This  Agreement  shall  inure to the  benefit  of, and shall be binding
upon, the parties hereto and their respective  successors,  assigns,  heirs, and
legal  representatives,  including  any entity with which  Employer may merge or
consolidate  or to  which  all  or  substantially  all  of  its  assets  may  be
transferred.  The duties and covenants of Executive under this Agreement,  being
personal, may not be delegated.

         9.7  NOTICES

         All notices,  consents,  waivers,  and other  communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt),  (b) sent by facsimile
(with  written  confirmation  of  receipt),  provided  that a copy is  mailed by
registered  mail,  return  receipt  requested,  or  (c)  when  received  by  the
addressee,  if  sent  by a  nationally  recognized  overnight  delivery  service
(receipt  requested),  in each case to the  appropriate  addresses and facsimile
numbers set forth below (or to such other  addresses and facsimile  numbers as a
party may designate by notice to the other parties):

         If to Executive:

         Steve Thomson
         121 NW 97th St.
         Seattle, WA 98117
         Telephone No.: (206) 789-3004

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or to such  other  addresses  and  faxes as the  parties  may from  time to time
designate in writing.

         If to Employer:

         Chief Executive Officer
         LION, Inc.
         4700-42nd Ave. SW, Suite 430
         Seattle, WA 98116
         Telephone No.: (206) 577-1440

or to such other  addresses and telephone  numbers as the Employer may from time
to time designate in writing.

         9.8  ENTIRE AGREEMENT; AMENDMENTS

         This Agreement  contains the entire agreement  between the parties with
respect to the subject  matter hereof and  supersedes  all prior  agreements and
understandings,  oral or written, between the parties hereto with respect to the
subject  matter hereof,  provided,  however,  that any prior or  contemporaneous
agreements   between  the  parties  concerning   confidentiality,   intellectual
property, inventions,  non-competition,  and/or non-solicitation shall remain in
full force and effect if and to the extent that they provide greater  protection
to Employer.  This Agreement may not be amended orally, but only by an agreement
in writing signed by the parties hereto.

         9.9  ARBITRATION

         Except when injunctive relief is sought by Employer pursuant to Section
9.1,  Employer  and  Executive  shall  settle any and all  claims,  disputes  or
controversies   arising  out  of  or  relating  to  Executive's   candidacy  for
employment, employment and/or cessation of employment with Employer, exclusively
by final and binding arbitration before a single neutral Arbitrator. Such claims
include claims under federal,  state and local statutory or common law; wrongful
termination;  claims for wages, including,  but not limited to, claims under the
Fair  Labor  Standards  Act,   Washington  Minimum  Wage  Act,  or  other  state
equivalent;  breach of public policy;  claims of  discrimination  or harassment,
including, but not limited to, claims under the Age Discrimination in Employment
Act,  Title VII of the Civil  Rights Act of 1964,  the Civil Rights Act of 1991,
the Americans with Disabilities Act, the Washington Law Against  Discrimination,
and any other  state or local  discrimination  laws.  The  arbitration  shall be
submitted to the American Arbitration Association,  and it shall be conducted in
Seattle,  Washington  in  accordance  with  the  Commercial  Dispute  Resolution
Procedures then in effect.  Judgment upon the award rendered may be entered only
in King County Superior Court.

         9.10  GOVERNING LAW

         This  Agreement will be governed by the laws of the State of Washington
without regard to conflicts of laws principles.

         9.11  JURISDICTION

         Any action or proceeding  seeking to enforce any provision of, or based
on any right arising out of, this Agreement may be brought against either of the
parties in the courts of the State of  Washington,  County of King,  and each of
the parties  consents to the jurisdiction of such courts (and of the appropriate
appellate  courts) in any such action or proceeding  and waives any

                                       10

<PAGE>

objection to venue laid therein. Process in any action or proceeding referred to
in the preceding sentence may be served on either party anywhere in the world.

         9.12  SECTION HEADINGS, CONSTRUCTION

         The headings of Sections in this Agreement are provided for convenience
only and will not affect its construction or  interpretation.  All references to
"Section" or "Sections" refer to the  corresponding  Section or Sections of this
Agreement unless otherwise  specified.  All words used in this Agreement will be
construed to be of such gender or number as the  circumstances  require.  Unless
otherwise expressly provided,  the word "including" does not limit the preceding
words or terms.

         9.13  SEVERABILITY

         If any provision of this Agreement is held invalid or  unenforceable by
any court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.

         9.14  DRAFTSMANSHIP

         There shall be no presumption of  draftsmanship  in the  preparation or
execution of this Agreement.

         9.15  COUNTERPARTS

         This  Agreement  may be executed in one or more  counterparts,  each of
which will be deemed to be an original copy of this  Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.

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

EMPLOYER:                                EXECUTIVE:

-------------------------------          ---------------------------------------
David Stedman                            Steve Thomson
Interim Chief Executive Officer

                                       11Exhibit 4.1

FORM OF FIXED RATE SENIOR NOTE 

	
REGISTERED		 
		
REGISTERED	
	
No. FXR-1		 
		
U.S. $	
	 		 
		
CUSIP: 61750V170	

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

MORGAN STANLEY

SENIOR GLOBAL
MEDIUM-TERM NOTE, SERIES F 

PERFORMANCE LEVERAGED UPSIDE SECURITIES (“PLUS”) 

PLUS DUE JUNE 20, 2008

 MANDATORILY
EXCHANGEABLE

FOR
AN AMOUNT PAYABLE IN U.S. DOLLARS

BASED ON THE VALUE OF THE NASDAQ-100 INDEX® 

	ORIGINAL
        ISSUE DATE: 	INITIAL
        REDEMPTION

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

         “Maturity Date” below.
	 INTEREST
    ACCRUAL

       DATE: N/A	INITIAL
        REDEMPTION

         PERCENTAGE: N/A	INTEREST
        PAYMENT

         DATE(S): N/A	OPTIONAL
        REPAYMENT

         DATE(S): N/A
	SPECIFIED
        CURRENCY:

         U.S. dollars	ANNUAL
        REDEMPTION

         PERCENTAGE

           REDUCTION: N/A	INTEREST
        PAYMENT

         PERIOD: N/A	APPLICABILITY
        OF

         MODIFIED

           PAYMENT UPON

             ACCELERATION OR

               REDEMPTION: See

                 “Alternate Exchange

                   Calculation in
                the Case of an

                     Event of Default” below.
	IF
        SPECIFIED

         CURRENCY OTHER

           THAN U.S. DOLLARS,

             OPTION TO ELECT

               PAYMENT IN U.S.

                 DOLLARS: N/A	REDEMPTION
        NOTICE

         PERIOD: N/A	APPLICABILITY
        OF

         ANNUAL INTEREST

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

         AGENT: N/A	TAX
        REDEMPTION AND

         PAYMENT OF

           ADDITIONAL

             AMOUNTS: NO	PRICE
        APPLICABLE

         UPON OPTIONAL

           REPAYMENT: N/A	ORIGINAL
        YIELD TO

         MATURITY: N/A
	OTHER
        PROVISIONS:
      

       See below.	IF
        YES, STATE INITIAL

         OFFERING DATE: N/A	 	 

	Stated Principal Amount	 	$10
	 	 	 
	Underlying Index	 	NASDAQ-100 Index®
	 	 	 
	Underlying Index Publisher 	 	The Nasdaq Stock Market, Inc.
	 	 	 
	Initial Index Value

    Pricing Date
	 	 
	 	 	 
	Denominations

Bull Market or Bear Market PLUS
		 		$10 and integral
      multiples thereof

    Bull Market PLUS
	

2 

	
Maximum Payment at Maturity		 		
$
      per Stated Principal Amount	
	 	 	 
	
Minimum Payment at Maturity	 		 			
	
   if Bear Market PLUS		 		
N/A			
	 	 	 
	Leverage Factor

Index Valuation Date(s)
		 		             %

June 18, 2008.

If there is only one Index Valuation Date, the Final Index Value shall be determined on that Index Valuation Date. If there are multiple Index Valuation Dates, then the Final Average Index Value shall be determined on the last
Index Valuation Date, which is referred to as the “Final Index Valuation Date.”

If a Market Disruption Event with respect to the Underlying Index occurs on any scheduled Index Valuation Date, or if any such Index Valuation Date is not an Index Business Day, the Index Closing Value for such date shall be
determined on the immediately succeeding Index Business Day on which no Market Disruption Event shall have occurred; provided that the Final Index Value or the Final Average Index Value, as
applicable, shall not be determined on a date later than the fifth scheduled Index Business Day after the scheduled Index Valuation Date or Final Index Valuation Date, as applicable, 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 Index Closing Value of the Underlying Index on such date in accordance with the formula for calculating such 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 Underlying Index.
	
	 	 	 
	Maturity Date
		 		June 20, 2008, subject to extension if the scheduled Index Valuation Date or Final Index Valuation Date, as applicable, is postponed in accordance with the definition thereof. If the scheduled Index
Valuation Date or Final Index Valuation Date, as applicable, is postponed so that it falls less than two scheduled
	

3 

			 		Trading Days prior to the scheduled Maturity Date, the Maturity Date shall be the second scheduled Trading Day following the Index Valuation Date or Final Index Valuation Date, as applicable, as
postponed. See “Index Valuation Date(s).”

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

1. For a Bull Market PLUS, (i) if the Final Index Value, or Final Average Index Value, as applicable, is greater than the Initial Index Value, the lesser of (a) the
Stated Principal Amount plus the Leveraged Upside
	

4 

	
		 
		Payment and (b) the Maximum Payment at Maturity or (ii) if the Final Index Value or Final Average Index Value, as applicable, is less than or equal to the Initial Index Value, the Stated Principal
Amount times the Index Performance Factor.

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

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

	

Applicable only for BULL MARKET PLUS 

	             Leveraged Upside Payment
		 		The product of (i) the Stated Principal Amount and (ii) the Leverage Factor and (iii) the Index Percent Increase.
	
	 	 	 
	             Index Performance Factor
		 		A fraction, the numerator of which shall be the Final Index Value or Final Average Index Value, as applicable, and the denominator of which shall be the Initial Index Value.
	

Applicable only for BEAR MARKET PLUS 

	             Enhanced Downside Payment
		 		The product of (i) the Stated Principal Amount and (ii) the Leverage Factor and (iii) the Index Percent Decrease.
	
	 	 	 
	             Upside Reduction Amount
		 		The product of (i) the Stated Principal Amount and (ii) the Index Percent Increase.
	

5

	             Index Percent Decrease
		 		A fraction, the numerator of which shall be the Initial Index Value minus the Final Index Value or Final Average Index Value, as applicable, and the denominator of which shall be the Initial Index
Value.
	
	 	 	 
	Applicable for all PLUS	 	 
	 	 	 
	Index Percent Increase
	 		A fraction, the numerator of which shall be the Final Index Value or Final Average Index Value, as applicable, minus the Initial Index Value and the denominator of which shall be the Initial Index
Value.
	
	 	 	 
	Final Index Value
		 		For PLUS with a single Index Valuation Date, the Index Closing Value of the Underlying Index on the Index Valuation Date, as determined by the Calculation Agent; and

for PLUS with multiple Index Valuation Dates, the arithmetic average of the Index Closing Values of the Underlying Index on the Index Valuation Dates, as calculated by the Calculation Agent, which is referred to as the
“Final Average Index Value.”
	
	 	 	 
	Index Closing Value
		 		The Index Closing Value on any Index Business Day shall equal the closing value of the Underlying Index or any Successor Index (as defined under “Discontinuance of the Underlying Index; Alteration
of Method of Calculation” below) published at the regular weekday close of trading on that Index Business Day, as determined by the Calculation Agent. In certain circumstances, the Index Closing Value shall be based on the alternate calculation
of the Underlying Index described under “Discontinuance of the Underlying Index; Alteration of Method of Calculation.”
	
	 	 	 
	Price Source
		 		Bloomberg page “NDX,” which shall be used by the Calculation Agent to determine the Index Closing Value of the Underlying Index.

If such service or any successor service no longer displays the Index Closing Value of the Underlying Index, then the Calculation Agent shall designate an alternate source of such Index Closing Value, which shall be the
publisher of the Underlying Index, unless the Calculation Agent, in its sole discretion, determines that an alternate service has become the market standard for transactions related to such index.
	

6 

	Trading Day
		 		A day, as determined by the Calculation Agent, on which trading is generally conducted on the New York Stock Exchange LLC (“NYSE”), the American Stock Exchange LLC, The NASDAQ Stock Market
LLC, the Chicago Mercantile Exchange, the Chicago Board of Options Exchange and in the over-the-counter market for equity securities in the United States.
	
	 	 	 
	Index Business Day
		 		A day, as determined by the Calculation Agent, on which trading is generally conducted on each of the Relevant Exchange(s) for the Underlying Index, 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.
	
	 	 	 
	Relevant Exchange
		 		Relevant Exchange means the primary exchange(s) or market(s) of trading for (i) any security then included in the Underlying Index, or any Successor Index, and (ii) any futures or options contracts
related to the Underlying Index or to any security then included in the Underlying Index.
	
	 	 	 
	Calculation Agent
		 		Morgan Stanley & Co. Incorporated and its successors (“MS & Co.”).

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

All calculations with respect to the Payment at
    Maturity shall be rounded to the nearest one billionth, with five ten-billionths
    rounded upward (e.g.,
    .9876543215 would  be rounded to .987654322); all dollar amounts related
    to determination of the amount of cash payable for each Stated Principal
    Amount of this PLUS shall be rounded to the nearest ten-thousandth, with
    five one hundred-thousandths rounded upward  (e.g.,
    .76545 would be rounded up to .7655); and all dollar amounts paid on the
    aggregate number of PLUS shall be rounded to the nearest cent, with one-half
    cent rounded upward.
	
	 	 	 
	Market Disruption Event
		 		Market Disruption Event means, with respect to the Underlying Index, the occurrence or existence of any
	

7 

	
		 
		of the following events, as determined by the Calculation Agent in its sole discretion:

(i)(a) a suspension, absence or material limitation
    of trading of stocks then constituting 20 percent or more of the value of
    the Underlying Index (or the Successor Index) on the Relevant Exchanges for
    such securities for more  than two hours of trading or during the one-half
    hour period preceding the close of the principal trading session on such
    Relevant Exchange; or

(b) 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 value of the Underlying Index
(or the Successor Index) during the last one-half hour preceding the close of the principal trading session on such Relevant Exchange are materially inaccurate; or

(c) 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 Underlying Index (or the Successor Index) for
more than two hours of trading or during the one-half hour period preceding the close of the principal trading session on such market; and

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

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

	

8

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

	 		In case an event of default with respect to the PLUS shall have occurred and be continuing, the amount declared due and payable for each Stated Principal Amount of this PLUS upon any acceleration of
this PLUS shall be determined by the Calculation Agent and shall be an amount in cash equal to the Payment at Maturity calculated using the Index Closing Value as of the date of such acceleration as the Final Index Value or Final Average Index
Value, as applicable, plus, if applicable, any accrued but unpaid interest as of the date of such acceleration.
	

9 

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

	 		If the Underlying Index Publisher discontinues publication of the Underlying Index and the Underlying Index Publisher or another entity (including MS & Co.) publishes a successor or substitute index
that the Calculation Agent determines, in its sole discretion, to be comparable to the discontinued Underlying Index (such index being 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 any Index Business Day that the Index Closing Value is to be determined.

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

If the Underlying Index Publisher discontinues publication of the Underlying Index prior to, and such discontinuance is continuing on, any Index Valuation Date or the date of acceleration and the Calculation Agent determines,
in its sole discretion, that no Successor Index is available at such time, then the Calculation Agent shall determine the Index Closing Value for such Index Valuation Date or date of acceleration. The Index Closing Value shall be computed by the
Calculation Agent in accordance with the formula for and method of calculating the Underlying Index last in effect prior to such discontinuance, using the closing price (or, if trading in the relevant securities has been materially
suspended
	

10 

	
		 
		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 Index Valuation Date or date of acceleration of each security most recently constituting the Underlying Index without any rebalancing or substitution of such securities following such discontinuance.

If at any time the method of calculating the Underlying Index or a Successor Index, or the value thereof, is changed in a material respect, or if the Underlying Index or a Successor Index is in any other way modified so that
such index does not, in the opinion of the Calculation Agent, fairly represent the value of such index had such changes or modifications not been made, then, from and after such time, the Calculation Agent shall, at the close of business in New York
City on each date on which the Index Closing Value is to be determined, make such calculations and adjustments as, in the good faith judgment of the Calculation Agent, may be necessary in order to arrive at a value of a stock index comparable to the
Underlying Index or such Successor Index, as the case may be, as if such changes or modifications had not been made, and the Calculation Agent shall calculate the Final Index Value or Final Average Index Value, as applicable, with reference to the
Underlying Index or such Successor Index, as adjusted. Accordingly, if the method of calculating the Underlying Index or a Successor Index is modified so that the value of such index is a fraction of what it would have been if it had not been
modified (e.g., due to a split in the index), then the Calculation Agent shall adjust such index in order to arrive at a value of the Underlying Index or such Successor Index as if it had not been modified (e.g., as if such split had not
occurred).

	

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 maturity) and to pay interest thereon at the Interest Rate per annum specified above, from and including the Interest Accrual Date specified above
until the principal hereof is paid or duly made available for payment weekly, monthly, quarterly, semiannually or annually in arrears as specified above as the Interest Payment Period on each Interest Payment Date (as specified above), commencing on
the Interest Payment Date next succeeding the Interest Accrual Date specified above, and at maturity (or on any redemption or repayment date); provided,
however, that if the Interest Accrual Date occurs between a Record Date, as defined below, and the next succeeding Interest Payment Date, interest payments will commence on the second Interest Payment Date succeeding
the Interest Accrual Date to the registered holder of this Note on the Record Date with respect to such second Interest Payment Date; and provided, further, that if this Note is subject to
“Annual Interest Payments,” interest payments shall be made annually in arrears and the term “Interest Payment Date” shall be deemed to mean the first day of March in
each year. 

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

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

12 

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

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

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

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

13 

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: 	Authorized Signatory

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

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 Trustee to JPMorgan Chase Bank, N.A. (formerly known as JPMorgan Chase Bank)), as Trustee
(the “Trustee,” which term includes any successor trustee under the Senior Indenture) (as may be amended or supplemented from time to time, the “Senior Indenture”), to which Senior Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities of
the Issuer, the Trustee and holders of the Notes and the terms upon which the Notes are, and are to be, authenticated and delivered. The Issuer has appointed The Bank of New York (as successor to JPMorgan Chase Bank, N.A.) at its corporate trust
office in The City of New York as the paying agent (the “Paying Agent,” which term includes any additional or successor Paying Agent appointed by the Issuer) with respect to the
Notes. The terms of individual Notes may vary with respect to interest rates, interest rate formulas, issue dates, maturity dates, or otherwise, all as provided in the Senior Indenture. To the extent not inconsistent herewith, the terms of the
Senior Indenture are hereby incorporated by reference herein. 

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

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

16

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

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

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

17 

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

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

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

     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 

18 

premises) shall be delivered to the Trustee, the Issuer in its discretion may execute a new Note of like tenor in exchange for this Note, but, if this Note is destroyed, lost or stolen, only upon receipt of evidence satisfactory
to the Trustee and the Issuer that this Note was destroyed or lost or stolen and, if required, upon receipt also of indemnity satisfactory to each of them.  All expenses and reasonable charges associated with procuring such indemnity and with the
preparation, authentication and delivery of a new Note shall be borne by the owner of the Note mutilated, defaced, destroyed, lost or stolen. 

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

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

19 

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

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

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

     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 

20 

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; 

     (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 

21 

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

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

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

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

22 

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

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

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

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

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

23 

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

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

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

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

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

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

24 

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.
	 
	

25

     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. 

26

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.

27

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