Document:

exv10w2

	 	 	 	 	 

Exhibit 10.2

EMPLOYMENT AGREEMENT

     This Employment Agreement (the “Agreement”) is made and entered into effective as of
December 18, 2008 (the “Effective Date”), by and between Dot Hill Systems Corp., a
Delaware corporation (the “Company”), and Hanif Jamal (the “Executive”). The Company and
the Executive are hereinafter collectively referred to as the “Parties”, and individually referred
to as a “Party”. This Agreement shall replace and supersede that certain Change of Control
Agreement between Executive and the Company entered into on July 14, 2006 (the “Prior Agreement”).

Recitals

     A. The Company desires assurance of the continued association and services of the Executive in
order to retain the Executive’s experience, skills, abilities, background and knowledge, and is
willing to engage the Executive’s services on the terms and conditions set forth in this Agreement.

     B. The Executive desires to continue to be in the employ of the Company, and is willing to accept
such continued employment on the terms and conditions set forth in this Agreement.

     C. The Company and the Executive desire to amend and restate the Prior Agreement in their entirety
as set forth herein, effective as of the date set forth above, and to set forth the terms and
conditions of Executive’s continued employment with the Company.

Agreement

     In consideration of the foregoing Recitals and the mutual promises and covenants herein contained,
and for other good and valuable consideration, the Parties, intending to be legally bound, agree as
follows:

1. Employment.

     1.1 Term. The Company hereby employs the Executive, and the Executive hereby accepts
employment by the Company, upon the terms and conditions set forth in this Agreement, until the
termination of the Executive’s employment in accordance with Section 4 below, as applicable (the
“Term”). The Executive shall be employed at will, meaning that either the Company or the Executive
may terminate this agreement and Executive’s employment at anytime, for any reason or no reason,
with or without cause, without liability to the other save for wages earned through the effective
date of termination.

     1.2 Title. The Executive shall have the title of Senior Vice President & Chief Financial
Officer (“CFO”) of the Company and shall serve in such other capacity or capacities as the Board of
Directors of the Company (the “Board”) or the Company’s Chief Executive Officer may from time to
time prescribe with Executive’s consent.

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     1.3 Duties. The Executive shall do and perform all services, acts or things necessary or
advisable to manage and conduct the business of the Company and which are normally associated with
the position of CFO, consistent with the bylaws of the Company and as required by the Board and the
Chief Executive Officer.

     1.4 Policies and Practices. The employment relationship between the Parties shall be governed
by the policies and practices established from time to time by the Company and the Board.

     1.5 Location. Unless the Parties otherwise agree in writing, during the term of this
Agreement, the Executive shall perform the services Executive is required to perform pursuant to
this Agreement at the Company’s offices, located in Carlsbad, California, or, with the consent of
the Company and Executive, at any other place at which the Company maintains an office; provided,
however, that the Company may from time to time require the Executive to travel temporarily to
other locations in connection with the Company’s business.

2. Loyal And Conscientious Performance; Noncompetition. 

     2.1 Loyalty. During the Executive’s employment by the Company, the Executive shall devote
Executive’s full business energies, interest, abilities and productive time to the proper and
efficient performance of Executive’s duties under this Agreement. Notwithstanding the
foregoing, Executive may engage in personal, investment, civic, and charitable activities to the
extent they do not unreasonably interfere with Executive’s performance of his duties under this
Agreement or violate paragraphs 2.2 or 2.3 of this Agreement.

     2.2 Covenant not to Compete. Except with the prior written consent of the Board, the
Executive will not, during the Term of this Agreement engage in competition with the Company and/or
any of its Affiliates, either directly or indirectly, in any manner or capacity, as adviser,
principal, agent, affiliate, promoter, partner, officer, director, employee, stockholder, owner,
co-owner, consultant, or member of any association or otherwise, in any phase of the business of
developing, manufacturing and marketing of products or services which are in the same field of use
or which otherwise compete with the products or services or proposed products or services of the
Company and/or any of its Affiliates. For purposes of this Agreement, “Affiliate” means, with
respect to any specific entity, any other entity that, directly or indirectly, through one or more
intermediaries, controls, is controlled by or is under common control with such specified entity.
Ownership by the Executive, as a passive investment, of less than two percent (2%) of the
outstanding shares of a capital stock of any corporation with one or more classes of its capital
stock listed on a national or foreign securities exchange or publicly traded on the Nasdaq Stock
Market or in the over-the-counter market shall not constitute a breach of this paragraph.

     2.3 Agreement not to Participate in Company’s Competitors. During the Term the Executive
agrees not to acquire, assume or participate in, directly or indirectly, any position, investment
or interest known by Executive to be adverse or antagonistic to the Company, its business or
prospects, financial or otherwise or in any company, person or entity that is, directly or
indirectly, in competition with the business of the Company or any of its Affiliates. Ownership by
the Executive, as a passive investment, of less than two percent (2%) of the

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outstanding shares of capital stock of any corporation with one or more classes of its capital
stock listed on a national or foreign securities exchange or publicly traded on the Nasdaq
Stock Market or in the over-the-counter market shall not constitute a breach of this paragraph.

3. Compensation Of The Executive. 

     3.1 Base Salary. The Company shall pay the Executive a base salary of Two Hundred Seventy
Thousand dollars ($270,000) per year, less payroll deductions and all required withholdings payable
in regular periodic payments in accordance with Company policy (the “Base Salary”). Such Base
Salary shall be prorated for any partial year of employment on the basis of a 365-day fiscal year.

     3.2 Annual Discretionary Bonus. In addition to the Executive’s Base Salary, the Executive
will be eligible to receive an annual bonus pursuant to the Company’s Executive Compensation Plan.
The bonus amount the Executive will actually receive, if any, shall be determined in the sole and
absolute discretion of the Compensation Committee of the Board by evaluating the Executive’s and
the Company’s performance against milestones and targets established by the Compensation Committee
in its sole and absolute discretion and set forth in the Executive Compensation Plan. The good
faith determinations of the Compensation Committee with respect to the amount or payment of any
bonus shall be final and binding. Any bonus that is earned by the Executive under the Executive
Compensation Plan, or any other bonus plan approved by the Compensation Committee, shall be paid to
the Executive during the Company’s fiscal year immediately following the fiscal year for which such
bonus was earned.

     3.3 Changes to Compensation. The Executive’s compensation may be changed from time to time by
mutual agreement of the Executive and the Company.

     3.4 Employment Taxes. All of the Executive’s compensation shall be subject to customary
withholding taxes and any other employment taxes as are commonly required to be collected or
withheld by the Company.

     3.5 Benefits. The Executive shall, in accordance with Company policy and the terms of the
applicable plan documents, be eligible to participate in benefits under any executive benefit plan
or arrangement that may be in effect from time to time and is made generally available to the
Company’s executive or key management employees, including but not limited to paid vacation and
medical insurance, provided that, the Executive shall receive not less than four (4) weeks paid
vacation per year.

     3.6 Stock Awards. The Company may grant the Executive stock awards to purchase the
Company’s common stock at such times and on such terms as may be decided from time to time by the
Board, in its sole discretion.

4. Termination. 

     4.1 Termination. If the Executive’s employment is terminated for any reason (either by the
Company, by the Executive, or due to the Executive’s death or disability), then the Company shall
pay to Executive or Executive’s heirs the Executive’s Base Salary, any bonus awarded under
Section 3.2 not previously paid, and any accrued and unused vacation benefits,

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each as earned through the date of termination at the rate then in effect, less standard
deductions and withholdings, and the Company shall thereafter have no further obligations to the
Executive and/or the Executive’s heirs under this Agreement.

5. Change of Control Bonus

     5.1 Change of Control Bonus Benefits. In the event that Executive continues in employment
with the Company through the effective date of a Change of Control, the Company shall provide the
Executive with the following benefits hereunder:

          (a) A lump sum cash payment equal to 125% of the Executive’s annual Base Salary (the “Change
of Control Cash Bonus”). For purposes of calculating the bonus amount to be paid pursuant this
Section 5.1(a), the Company shall use the Executive’s annual Base Salary as in effect immediately
prior to the Change of Control. Such payment shall be subject to standard deductions and
withholdings and paid in accordance with the Company’s regular payroll policies and practices in
the first payroll period following the effective date of the Change of Control; and

          (b) As of immediately prior to the Change of Control, the vesting of all unvested Company
equity awards granted to Executive shall accelerate immediately such that all equity awards will be
immediately fully vested and exercisable, if applicable.

     5.2 Change of Control. For purposes of this Agreement, “Change of Control” means: (i) a
dissolution or liquidation of the Company; (ii) any sale or transfer of all or substantially all of
the assets of the Company; (ii) any merger, consolidation or similar transaction in which the
holders of the Company’s outstanding voting securities immediately prior to such transaction do not
hold, immediately following such transaction, securities representing fifty percent (50%) or more
of the combined voting power of the outstanding securities of the surviving entity; or (iv) the
acquisition by any person (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), in a single transaction or series
of related transactions, of beneficial ownership (within the meaning of Rule 13d-3 or any successor
rule or regulation promulgated under the Exchange Act) of securities representing fifty percent
(50%) or more of the combined voting power of the then-outstanding securities of the Company,
excluding in any case shares of capital stock of the Company purchased from the Company in a
transaction the principal purpose of which is to raise capital for the Company.

     5.3 Parachute Payment. If any payment or benefit the Executive would receive pursuant to a
Change of Control or otherwise (“Payment”) would (i) constitute a “parachute payment” within the
meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax
imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment shall be either (x) the
largest portion of the Payment that would result in no portion of the Payment being subject to the
Excise Tax or (y) the full Payment, whichever amount, after taking into account all applicable
federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the
highest applicable marginal rate), results in the Executive’s receipt, on an after-tax basis, of
the greater amount of the Payment notwithstanding that all or some portion of the Payment may be
subject to the Excise Tax. If a reduction in payments or

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benefits constituting “parachute payments” is necessary pursuant to the preceding sentence,
reduction shall occur in the following order: reduction of cash payments; cancellation of
accelerated vesting of stock awards; reduction of employee benefits. In the event that
acceleration of vesting of stock award compensation is to be reduced, such acceleration of vesting
shall be cancelled in the reverse order of the date of grant of the Executive’s stock awards.

     The accounting firm engaged by the Company for general audit purposes as of the day prior to
the effective date of the Change of Control shall perform the foregoing calculations. If the
accounting firm so engaged by the Company is serving as accountant or auditor for the individual,
entity or group effecting the Change of Control, then the Company shall appoint a nationally
recognized accounting firm to make the determinations required hereunder. The Company shall bear
all expenses with respect to the determinations by such accounting firm required to be made
hereunder.

     The accounting firm engaged to make the determinations hereunder shall provide its calculations,
together with detailed supporting documentation, to Executive and the Company within fifteen (15)
calendar days after the date on which the Executive’s right to a Payment is triggered (if requested
at that time by the Executive or the Company) or such other time as requested by Executive or the
Company. If the accounting firm determines that no Excise Tax is payable with respect to a
Payment, either before or after the application of the Reduced Amount, it shall furnish the
Executive and the Company with an opinion reasonably acceptable to Executive that no Excise Tax
will be imposed with respect to such Payment. Any good faith determinations of the accounting firm
made hereunder shall be final, binding and conclusive upon the Executive and the Company, except as
set forth below.

     If, notwithstanding any reduction described in this Section 5.3, the IRS determines that the
Executive is liable for the Excise Tax as a result of the receipt of the payment of benefits as
described above, then the Executive shall be obligated to pay back to the Company, within thirty
(30) days after a final IRS determination or in the event that the Executive challenges the final
IRS determination, a final judicial determination, a portion of the payment equal to the “Repayment
Amount.” The Repayment Amount with respect to the payment of benefits shall be the smallest such
amount, if any, as shall be required to be paid to the Company so that the Executive’s net
after-tax proceeds with respect to any payment of benefits (after taking into account the payment
of the Excise Tax and all other applicable taxes imposed on such payment) shall be maximized. The
Repayment Amount with respect to the payment of benefits shall be zero if a Repayment Amount of
more than zero would not result in the Executive’s net after-tax proceeds with respect to the
payment of such benefits being maximized. If the Excise Tax is not eliminated pursuant to this
paragraph, the Executive shall pay the Excise Tax.

     Notwithstanding any other provision of this Section 5.3, if (i) there is a reduction in the payment
of benefits as described in this section, (ii) the IRS later determines that the Executive is
liable for the Excise Tax, the payment of which would result in the maximization of the Executive’s
net after-tax proceeds (calculated as if the Executive’s benefits had not previously been reduced),
and (iii) the Executive pays the Excise Tax, then the Company shall pay to the Executive those
benefits which were reduced pursuant to this section contemporaneously or as

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soon as
administratively possible after the Executive pays the Excise Tax so that the Executive’s net
after-tax proceeds with respect to the payment of benefits is maximized.

6. Exclusive Benefits. 

     The Executive acknowledges and agrees that, except as expressly provided herein and except for
benefits due to the Executive (or the Executive’s dependants) under the terms of the Executive’s
benefit plans, he is not entitled to receive any additional compensation from the Company,
including but not limited to salary, bonus payments, or severance payments.

7. Confidential And Proprietary Information; Nonsolicitation. 

     7.1 As a condition of employment the Executive agrees to execute and abide by the Confidential
Information and Inventions Agreement between Executive and the Company dated July 5, 2006.

     7.2 While employed by the Company and for one (1) year thereafter, the Executive agrees that
in order to protect the Company’s Confidential Information (as defined in the Executive’s
Confidential Information and Inventions Agreement) from unauthorized use, that the Executive will
not without the consent of the Company, either directly or through others, solicit or attempt to
solicit, engage or hire (a) any employee, consultant or independent contractor of the Company to
terminate his or her relationship with the Company in order to become an employee, consultant or
independent contractor to or for any other person or business entity; or (b) the business of any
customer, supplier, service provider, vendor or distributor of the Company which, at the time of
termination or one (1) year immediately prior thereto, was doing business with the Company or
listed on Company’s customer, supplier, service provider, vendor or distributor list.

8. Assignment of Inventions.

     The Executive hereby assigns to the Company any and all right, title, and interest in any invention
which he has developed during the period which the Executive has acted as a consultant to the
Company or has been employed by the Company which (i) relates to the Company’s business or
anticipated research or development, (ii) resulted from any work performed for the Company by the
Executive, or (iii) was developed by Executive using the Company’s facilities or resources.

9. Assignment And Binding Effect. 

     This Agreement shall be binding upon and inure to the benefit of the Executive and the Executive’s
heirs, executors, personal representatives, assigns, administrators and legal representatives.
Because of the unique and personal nature of the Executive’s duties under this Agreement, neither
this Agreement nor any rights or obligations under this Agreement shall be assignable by the
Executive. This Agreement shall be binding upon and inure to the benefit of the Company and its
successors, assigns and legal representatives.

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10. Choice Of Law. 

     This Agreement is made in Carlsbad, California. This Agreement shall be construed and interpreted
in accordance with the internal laws of the State of California (without giving effect to
principles of conflicts of law).

11. Integration. 

     This Agreement contains the complete, final and exclusive agreement of the Parties relating to the
terms and conditions of the Executive’s employment and the termination of the Executive’s
employment, and supersedes all prior and contemporaneous oral and written employment agreements or
arrangements between the Parties and between the Executive and the Company, including but not
limited to the Prior Agreement. To the extent this Agreement conflicts with the Confidential
Information and Inventions Agreement between Executive and the Company dated July 5, 2006, the
Confidential Information and Inventions Agreement controls.

12. Amendment. 

     This Agreement cannot be amended or modified except by a written agreement signed by the Executive
and the Chairman of the Board (if not the Executive) or other representative specifically
authorized by the Board to execute any such amendment or modification to this Agreement on behalf
of the Company.

13. Survival of Certain Provisions. 

     Sections 3.4, 6 through 11, 13 through 17, 19 and 22 shall survive the termination of this
Agreement.

14. Waiver. 

     No term, covenant or condition of this Agreement or any breach thereof shall be deemed waived,
except with the written consent of the Party against whom the wavier is claimed, and any waiver or
any such term, covenant, condition or breach shall not be deemed to be a waiver of any preceding or
succeeding breach of the same or any other term, covenant, condition or breach.

15. Severability. 

     The finding by a court of competent jurisdiction of the unenforceability, invalidity or illegality
of any provision of this Agreement shall not render any other provision of this Agreement
unenforceable, invalid or illegal. Such court shall have the authority to modify or replace the
invalid or unenforceable term or provision with a valid and enforceable term or provision which
most accurately represents the Parties’ intention with respect to the invalid or unenforceable term
or provision. Any such invalid or unenforceable term or provision shall be revised to the minimum
extent necessary to make any such term or provision valid or enforceable in accordance with the
Parties’ intentions with respect to such term or provision.

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16. Interpretation; Construction. 

     The headings set forth in this Agreement are for convenience of reference only and shall not be
used in interpreting this Agreement. This Agreement has been drafted by legal counsel representing
the Company, but the Executive has been encouraged to consult with, and has
consulted with, the Executive’s own independent counsel and tax advisors with respect to the terms
of this Agreement. The Parties acknowledge that each Party and its counsel has reviewed and
revised, or had an opportunity to review and revise, this Agreement, and the normal rule of
construction to the effect that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of this Agreement.

17. Representations And Warranties. 

     The Executive represents and warrants that the Executive is not restricted or prohibited,
contractually or otherwise, from entering into and performing each of the terms and covenants
contained in this Agreement, and that Executive’s execution and performance of this Agreement will
not violate or breach any other agreements between the Executive and any other person or entity.

18. Counterparts; Facsimile. 

     This Agreement may be executed in two counterparts, each of which shall be deemed an original, all
of which together shall contribute one and the same instrument. Facsimile signatures shall be
treated the same as original signatures.

19. Arbitration. 

     To ensure the rapid and economical resolution of disputes that may arise in connection with the
Executive’s employment with the Company, the Executive and the Company agree that any and all
disputes, claims, or causes of action, in law or equity, arising from or relating to Executive’s
employment, or the termination of that employment, will be resolved, to the fullest extent
permitted by law, by final, binding and confidential arbitration in San Diego, California conducted
by the Judicial Arbitration and Mediation Services/Endispute, Inc. (“JAMS”), or its successors,
under the then current rules of JAMS for employment disputes; provided that the arbitrator shall:
(a) have the authority to compel adequate discovery for the resolution of the dispute and to award
such relief as would otherwise be permitted by law; and (b) issue a written arbitration decision
including the arbitrator’s essential findings and conclusions and a statement of the award. Both
the Executive and the Company shall be entitled to all rights and remedies that either the
Executive or the Company would be entitled to pursue in a court of law. Nothing in this Agreement
is intended to prevent either the Executive or the Company from obtaining injunctive relief in
court to prevent irreparable harm pending the conclusion of any such arbitration. Notwithstanding
the foregoing, Executive and the Company each have the right to resolve any issue or dispute
involving confidential, proprietary or trade secret information, or intellectual property rights or
the non-solicitation provision hereunder, by Court action instead of arbitration.

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20. Trade Secrets Of Others. 

     It is the understanding of both the Company and the Executive that the Executive shall not divulge
to the Company and/or its subsidiaries any confidential information or trade secrets belonging to
others, including the Executive’s former employers. Consistent with the foregoing, the Executive
shall not provide to the Company and/or its Affiliates, any documents or copies of documents
containing such information.

21. Advertising Waiver. 

     During the Term the Executive agrees to permit the Company and/or its Affiliates, and persons or
other organizations authorized by the Company and/or its Affiliates, to use, publish and distribute
advertising or sales promotional literature concerning the products and/or services of the Company
and/or its Affiliates, or the machinery and equipment used in the provision thereof, in which the
Executive’s name and/or pictures of the Executive taken in the course of the Executive’s provision
of services to the Company and/or its Affiliates, appear. The Executive hereby waives and releases
any claim or right the Executive may otherwise have arising out of such use, publication or
distribution.

22. Specific Enforcement.

     If necessary and where appropriate, the Company shall have the right to enforce the provisions
of Sections 2.2, 2.3, 7, 8 and 20 of this Agreement by injunction, specific performance or other
equitable relief without bond and without prejudice to any other rights and remedies the Company
may have for a breach of such Sections of this Agreement.

     In Witness Whereof, the Parties have executed this Agreement as of the date first
above written.

	 	 	 	 	 	 	 
	Executive

	 	 
	 	Dot Hill Systems Corp.
	 	 
	 
	 	 	 	 	 	 
	/s/ Hanif Jamal
	 	 	 	/s/ Dana Kammersgard	 	 
	 

	 	 	 	 	 	 
	Hanif Jamal

	 	 	 	Dana Kammersgard, Chief Executive
Officer and President	 	 

[Signature Page to Employment Agreement]

-9-Exhibit
      4.1

              

      

       

      

       

      
        	
                 
      

              	
                FORM
      OF FIXED RATE SENIOR NOTE

              

      

       

      
        	
                REGISTERED

              	
                REGISTERED

              
	
                No.
      FXR-1

              	
                U.S.
      $

              
	 
      	
                CUSIP:
      617483797

              

      

       

      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

      

      BUFFERED
PERFORMANCE LEVERAGED UPSIDE SECURITY (“BUFFERED PLUS”)

      BASED
ON THE VALUE OF THE S&P 500® INDEX
DUE DECEMBER 20, 2010

       

      
        	
                ORIGINAL
      ISSUE DATE:

                 

              	
                INITIAL
      REDEMPTION DATE: N/A

              	
                INTEREST
      RATE: None

              	
                MATURITY
      DATE: See “Maturity Date” below.

              
	
                INTEREST
      ACCRUAL DATE: N/A

              	
                INITIAL
      REDEMPTION PERCENTAGE: N/A

              	
                INTEREST
      PAYMENT DATE(S): N/A

              	
                OPTIONAL
      REPAYMENT DATE(S):  N/A

              
	
                SPECIFIED
      CURRENCY: U.S. dollars

              	
                ANNUAL
      REDEMPTION PERCENTAGE REDUCTION: N/A

              	
                INTEREST
      PAYMENT PERIOD: N/A

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

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

              	
                REDEMPTION
      NOTICE PERIOD: N/A

              	
                APPLICABILITY
      OF ANNUAL INTEREST PAYMENTS: N/A

              	
                If
      yes, state Issue Price: N/A

              
	
                EXCHANGE
      RATE AGENT: N/A

              	
                TAX
      REDEMPTION AND PAYMENT OF ADDITIONAL AMOUNTS: NO

              	
                PRICE
      APPLICABLE UPON OPTIONAL REPAYMENT: N/A

              	
                ORIGINAL
      YIELD TO MATURITY: N/A

              
	
                OTHER
      PROVISIONS: See below

              	
                IF
      YES, STATE INITIAL OFFERING DATE: N/A

              	 
      	 
      

      

       

       

      
        	
                Stated
      Principal Amount

              	 
      	
                $10

              
	 	 	 
	
                Underlying
      Index

              	 
      	
                S&P
      500®
      Index

                 

              
	
                Underlying
      Index Publisher

              	 
      	
                Standard
      & Poor’s, a Division of The McGraw-Hill Companies, Inc., and any
      successor thereof

              
	 	 	 
	
                Initial
      Index Value

              	 
      	 
      
	 	 	 
	
                Pricing
      Date

              	 
      	 
      
	 	 	 
	
                Denominations

              	 
      	
                $10
      and integral multiples thereof

              
	 	 	 
	
                Maximum
      Payment at Maturity

              	 
      	 
      
	 	 	 
	
                Buffer
      Amount

              	 
      	
                   %

              
	 	 	 
	
                Leverage
      Factor

              	 
      	
                   %

              

      

       

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      
        	 	 	 
	
                Valuation
      Date

              	 
      	
                December
      16, 2010.

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

              
	 	 	 
	 
      	 
      	
                If a
      Market Disruption Event with respect to the Underlying Index occurs on any
      scheduled Valuation Date, or if any such 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 Valuation Date or Final 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

              	 
      	
                December
      20, 2010, subject to extension as follows.

              
	 	 	 
	 
      	 
      	
                If
      the scheduled Maturity Date is not a Business Day, then the Maturity Date
      shall be the next succeeding Business Day immediately following the
      scheduled Maturity Date.  If the Valuation Date or Final
      Valuation Date, as applicable, is postponed so that it falls less than two
      scheduled Index Business Days prior to the scheduled Maturity Date, the
      Maturity Date shall be the second scheduled Index Business Day following
      the Valuation Date or Final Valuation Date, as applicable, as
      postponed.  See “Valuation
Date”.

              

      

      

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      
        	 
      	 
      	
                In
      the event that the Maturity Date of this Buffered PLUS is postponed due to
      postponement of the Valuation Date or the Final 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 Buffered 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 Buffered 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 Valuation Date or Final 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
      Valuation Date or Final Valuation Date, as applicable, for determining the
      Final Index Value or Final Average Index Value, as
    applicable.

              
	 	 	 
	
                Payment
      at Maturity

              	 
      	
                At
      maturity, upon delivery of this Buffered PLUS to the Trustee, the Issuer
      shall pay with respect to each Buffered PLUS an amount in cash (as
      determined by the Calculation Agent) equal
to:

              

      

       

      
        	 	
                •

              	
                if the Final Index Value is
      greater than the Initial Index Value, the lesser of (a) the Stated
      Principal Amount plus the Leveraged
      Upside Payment and (b) the Maximum Payment at Maturity,
  or

              
	 	 	 
	 	
                •

              	
                if the Final Index Value is
      less than or equal to the Initial Index Value but has decreased from the
      Initial Index Value by an amount less than or equal to the Buffer
      Amount, the Stated Principal Amount,
or

              

      

       

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      
        	 	
                •

              	
                if the Final Index Value is
      less than the Initial Index Value and has decreased from the Initial Index
      Value by an amount greater than the Buffer
  Amount,

              

      

       

      
        	 
      	 
      	
                ($10
      x the Index Performance Factor) + $1.00

              
	 	 	 
	 
      	 
      	
                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 the Stated Principal Amount of each Buffered
      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 Buffered PLUS
      to the Trustee for delivery to the Depositary, as holder of this Buffered
      PLUS, on the Maturity Date.

              
	 	 	 
	
                Leveraged
      Upside Payment

              	 
      	
                The
      Leveraged Upside Payment is described by the following
      formula:

              

      

       

      
        	
                Leveraged
      Upside Payment

              	
                =

              	
                Stated
      Principal Amount

              	
                x

              	
                Leverage
      Factor

              	
                x

              	
                Index
      Percent Increase

              

      

       

      
        	
                Index
      Percent Increase

              	 
      	
                A
      fraction, the numerator of which shall be the Final Index Value less the Initial Index
      Value and the denominator of which shall be the Initial Index Value, which
      shall be determined by the Calculation Agent, and is described by the
      following formula:

              

      

       

      
        	
                Index
      Percent Increase

              	
                =

              	
                (Final
      Index Value – Initial Index Value)

              
	
                Initial
      Index Value

              

      

      

      
        	
                Index
      Performance Factor

              	 
      	
                A
      fraction, the numerator of which shall be the Final Index Value and the
      denominator of which shall be the Initial Index Value, which shall be
      determined by the Calculation Agent, and is described by the following
      formula:

              

      

       

      
        	
                Index
      Performance Factor

              	
                =

              	
                Final
      Index Value

              
	
                Initial
      Index Value

              

      

       

      
        	
                Final
      Index Value

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

              

      

       

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      
        	
                Index
      Closing Value

              	 
      	
                The
      Index Closing Value means, on any Index Business Day, the closing level 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
      below under “Discontinuance of the Underlying Index; Alteration of Method
      of Calculation.”

              
	 	 	 
	
                Trading
      Day

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

              
	 	 	 
	
                Index
      Business Day

              	 
      	
                Index
      Business Day means, with respect to the Underlying Index, a day, as
      determined by the Calculation Agent, on which trading is generally
      conducted on each Relevant Exchange, other than a day on which trading on
      any Relevant Exchange is scheduled to close prior to the time of the
      posting of its regular final weekday closing price.

              
	 	 	 
	
                Relevant
      Exchange

              	 
      	
                Relevant
      Exchange means, with respect to the Underlying Index, the primary
      exchange(s) or market(s) of trading for (i) any security then included in
      such Underlying Index, or any Successor Index, and (ii) any futures or
      options contracts related to such Underlying Index or to any security then
      included in such 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
      Buffered PLUS, the Trustee and the Issuer.

              
	 	 	 
	 
      	 
      	
                All
      calculations with respect to the Payment at Maturity shall be made by the
      Calculation Agent and shall be rounded to the nearest one billionth, with
      five ten-

              

      

       

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      
        	 	 	billionths
      rounded upward (e.g., .9876543215 would be rounded to .987654322); all
      dollar amounts related to determination of the amount of cash payable per
      Buffered 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 Buffered
      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 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
      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
      Issuer’s ability or the ability of any of the Issuer’s affiliates to
      unwind or adjust all or a material portion of the hedge position with
      respect to this Buffered PLUS.

              

      

       

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      
        	 	 	 
	 
      	 
      	
                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.

              
	 	 	 
	 
      	 
      	
                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, 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.

              

      

       

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      
        	 	 	 
	
                Alternate
      Exchange Calculation

              	 
      	 
      
	
                in
      Case of an Event of Default

              	 
      	
                In
      case an event of default with respect to this Buffered PLUS shall have
      occurred and be continuing, the amount declared due and payable per
      Buffered PLUS upon any acceleration of this Buffered PLUS shall be
      determined by the Calculation Agent and shall be an amount in cash equal
      to the Payment at Maturity calculated as if the Index Closing Value for
      each Valuation Date scheduled to occur on or after such date of
      acceleration were the Index Closing Value on the date of
      acceleration, plus, if applicable,
      any accrued but unpaid interest as of the date of such acceleration.

              
	 	 	 
	 
      	 
      	
                If
      the maturity of this Buffered 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 this Buffered PLUS as
      promptly as possible and in no event later than two Business Days after
      the date of acceleration (or promptly thereafter).

              
	 	 	 
	
                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 this
      Buffered PLUS, within three Trading Days of such
  selection.

              
	 	 	 
	 
      	 
      	
                If
      the Underlying Index Publisher discontinues publication of the Underlying
      Index prior to, and such 

              

      

       

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      
        	 	 	discontinuance
      is continuing on, any 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 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 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 Valuation Date or date of acceleration of
      each security most recently constituting such 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 Successor
      Index, or the value thereof, is changed in a material respect, or if such
      Underlying Index or Successor Index is in any other way modified so that
      such index does not, in the opinion of the Calculation Agent, fairly
      represent the value of the Underlying Index or Successor Index had such
      changes or modifications not been made, then, from and after such time,
      the Calculation Agent shall, at the close of business in New York City on
      each date on which the Index Closing Value is to be determined, make such
      calculations and adjustments as, in the good faith judgment of the
      Calculation Agent, may be necessary in order to arrive at a value of a
      stock index comparable to the Underlying Index or 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 Successor Index, as adjusted.  Accordingly, if the method of
      calculating the Underlying Index or 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 Successor 

              

      

       

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      
        	 	 	
                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.
$10,000,000 (or the equivalent in a Specified Currency) or more in aggregate
principal amount of Notes having the same Interest 

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

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

       

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

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

       

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

       

      
        	
                DATED:

              	
                MORGAN
      STANLEY

              	 
	 	 	 
	 	 	 
	 
      	
                By:

              	 
      	 
	 
      	
                Name:

              	 
	 
      	
                Title:

              	 

      

      

       

      
        	
                TRUSTEE’S
      CERTIFICATE OF AUTHENTICATION

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

              	 
	 	 
	
                THE
      BANK OF NEW YORK MELLON, as Trustee

              	 
	 	 
	 	 
	
                By:

              	 
      	 
	
                Authorized
      Signatory

              	 

      

      

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

       

      FORM OF
REVERSE OF SECURITY

       

      This Note
is one of a duly authorized issue of Senior Global Medium-Term Notes, Series F
(the “Notes”) of the
Issuer.  The Notes are issuable under a Senior Indenture, dated as of
November 1, 2004, between the Issuer and The Bank of New York Mellon, 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 Mellon (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 Financial Industry Regulatory
Authority, 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.

       

       

      

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

       

       

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

       

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

       

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

       

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

       

      payment of
this Note, the principal amount hereof shall equal the amount of principal due
and payable with respect to this Note, calculated as set forth in clause (i)
above.

       

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

       

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

       

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

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      (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 

       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

       

      combined
voting power of all classes of stock entitled to vote of the Issuer or as a
direct or indirect subsidiary of the Issuer; or

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

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