Document:

FORM OF FLOATING RATE SENIOR NOTE 

	
          REGISTERED
	     	 
		
          U.S. $
	     
	
          No. FLR-1
	     	 
		
          CUSIP:
	     

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

	 	Exhibit 4.1

	 
	
          MORGAN STANLEY
	     
	
          SENIOR GLOBAL MEDIUM-TERM NOTES, SERIES F
	     
	
          (Floating Rate)
	     
	 
	
          CAPITAL PROTECTED NOTE DUE JULY 20, 2010
	     
	
          BASED ON THE VALUE OF A BASKET OF THREE INDICES
	     
	 

	
          BASE RATE: None

		
ORIGINAL ISSUE DATE:

		
MATURITY DATE: See “Maturity Date” below.

	
          INDEX MATURITY: N/A

		
        INTEREST
	   ACCRUAL DATE: N/A

		
       INTEREST PAYMENT DATE(S): N/A

	
          SPREAD
		(PLUS OR MINUS): N/A
 	
          INITIAL INTEREST RATE: N/A
		
          INTEREST PAYMENT PERIOD: N/A
	
	
          SPREAD MULTIPLIER: N/A
	
	
          INITIAL INTEREST RESET DATE: N/A
	
	
          INTEREST RESET PERIOD: N/A
	

	
          REPORTING SERVICE: N/A
	
	
          MAXIMUM INTEREST RATE: N/A
	
	
          INTEREST RESET DATE(S): N/A
	

	
          INDEX CURRENCY: N/A
	
	
          MINIMUM INTEREST RATE: N/A
	
	
          CALCULATION AGENT: See “Calculation
          Agent” below.

	
	
          EXCHANGE RATE AGENT: N/A
	
	
          INITIAL REDEMPTION DATE: N/A
	
	
          SPECIFIED
		CURRENCY: U.S. dollars
 
	 

		INITIAL REDEMPTION PERCENTAGE:
	          N/A 

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

		DESIGNATED CMT TELERATE
          PAGE: N/A

	 	OPTIONAL REPAYMENT
          DATE(S): N/A
	DESIGNATED CMT MATURITY
          INDEX: N/A 

	 	REDEMPTION NOTICE
          PERIOD: N/A
	 
	 	TAX REDEMPTION AND
          PAYMENT OF ADDITIONAL AMOUNTS: NO 
	 
	 	IF YES, STATE INITIAL
          OFFERING DATE: N/A 
	OTHER PROVISIONS:
          See below. 

	 	 	 
	Denominations 	 	$
	 	 	 
	Stated Principal Amount 	 	$
	 	 	 
	Pricing Date 	 	 

2 

	Basket Setting
          Date	 	With respect
                    to the S&P 500 Index, the Pricing Date. With respect
                    to the Dow Jones EURO STOXX 50 Index and the Nikkei 225 Index,
                    the Index Business Day immediately following the Pricing
          Date.
	 	 	 
	Maturity Date	 	July 20, 2010,
                    subject to extension in accordance with the following paragraph
                    in the event of a Market Disruption Event on the Determination
          Date. 
               If, due to a Market Disruption
                         Event or otherwise, the Determination Date with respect
                         to any Underlying Index is postponed so that it falls
                         less than two scheduled Trading Days prior to the scheduled
                         Maturity Date, the Maturity Date shall be the second
                         scheduled Trading Day following the Determination Date
                         with respect to any Underlying Index so postponed. See “Determination
                         Date” below. 

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

	 	 	 
	Underlying Indices	 	The Underlying Indices
                    and their respective Percentage Weightings, Initial Index
                    Closing Values and Multipliers are set forth in the table
          below. 
	 	 	 

	

		 
		
          Bloomberg
	     	 
		
          Percentage
	     	 
		
          Initial Index
	     	 
		

		
	
          Basket Indices
	     	 
		
          Page
	     	 
		
          Weighting
	     	 
		
          Closing Value
	     	 
		
          Multiplier
	     	 
	

		
		

		
		

		
		

		
		

		 
	
          Dow Jones EURO STOXX 50 Index:
		 
		
          SX5E
		 
		
          33.33%
		 
		

		 
		

		
	
          S&P 500 Index:
		 
		
          SPX
		 
		
          33.33%
		 
		

		 
		

		
	
          Nikkei 225 Index:
		 
		
          NKY
		 
		
          33.33%
		 
		

		 
		

		

3

     

     

	 	 	References
                    to Underlying Indices shall include any Successor Indices
                    (as defined under “Discontinuance of any Underlying
                    Index; Alteration of Method of Calculation” below),
          unless the context requires otherwise. 
	 	 	 
	Payment at
          Maturity	 	At maturity,
                         upon delivery of this Note to the Trustee, the Issuer
                         shall pay with respect to each Stated Principal Amount
                         of this Note an amount in cash equal to the Stated Principal
                         Amount of this Note plus the Supplemental Redemption
                         Amount, if any. 

                The Issuer shall, or shall cause
                         the Calculation Agent to, (i) provide written notice
                         to the Trustee at its New York office, on which notice
                         the Trustee may conclusively rely, and to the Depositary
                         of the Payment at Maturity on or prior to 10:30 a.m.
                         on the Trading Day preceding the Maturity Date (but
                         if such Trading Day is not a Business Day, prior to
                         the close of business on the Business Day preceding
                         the Maturity Date) and (ii) deliver the aggregate cash
                         amount due with respect to this Note to the Trustee
                         for delivery to the holder of this Note on the Maturity
          Date.

	 	 	 
	Supplemental
          Redemption Amount 	 	The
                    Supplemental Redemption Amount shall be equal to (i) the
                    Stated Principal Amount times (ii)
                    the Participation Rate times (iii) the Index Percent
                    Change; provided that the Supplemental Redemption
                    Amount shall not be less than zero. The Calculation Agent
                    shall calculate the Supplemental Redemption Amount on the
          Determination Date.
	 	 	 
	Index Percent Change	 	The Index Percent Change
                    is a fraction, the numerator of which shall be the Final
                    Index Value minus the
                    Initial Index Value and the denominator of which shall be
                    the Initial Index Value. The Index Percent Change is described
          by the following formula:
	 	 	 
	 	 	

	Participation Rate	 	     %

4 

	Basket Closing
          Value 	 	The Basket
                    Closing Value on the Determination Date shall equal the sum
                    of the products of the Index Closing Value of each Underlying
                    Index on the Determination Date and the relevant Multiplier.
                    In certain circumstances, the Basket Closing Value shall
                    be based on the alternate calculation of the Underlying Indices
                    described under “Discontinuance of any Underlying Index;
          Alteration of Method of Calculation.”
	 	 	 
	Initial Index
          Value	 	 
	 	 	 
	Final Index
          Value	 	The Basket
          Closing Value on the Determination Date. 
	 	 	 
	Index Closing Value	 	The Index Closing Value
                         of any Underlying Index on any Index Business Day shall
                         equal the closing value of such Underlying Index or
                         any Successor Index (as defined under “Discontinuance
                         of any Underlying Index; Alteration of Method of Calculation” below)
                         as displayed on the applicable Bloomberg Page at the
                         regular weekday close of trading on that Index Business
                         Day. In certain circumstances, the Index Closing Value
                         of the Underlying Index shall be based on the alternate
                         calculation of the Underlying Index described under “Discontinuance
                         of any Underlying Index; Alteration of Method of Calculation.” 

                In this Note, references to an
                         Underlying Index shall include any Successor Index of
          such Underlying Index, unless the context requires otherwise. 

	 	 	 
	Bloomberg Page	 	The display page so designated
                    by Bloomberg Financial Markets (“Bloomberg”), as
                    noted under “Underlying Indices” above, or any
                    other display page that may replace that display page on
                    Bloomberg and any successor service thereto. If Bloomberg
                    or any successor service no longer displays the Index Closing
                    Value of any of the Underlying Indices, then the Calculation
                    Agent shall designate an alternate source of such Index Closing
                    Value, which shall be the publisher of such index, unless
                    the Calculation Agent, in its sole discretion, determines
                    that an alternate service has become the market standard
          for transactions related to such index. 

5 

	Determination
          Date 	 	The Determination
                         Date shall be July 15, 2010, subject to adjustment for non-Index
                         Business Days or Market Disruption Events with respect to
               an Underlying Index as described in the following paragraph. 

               If a Market
                              Disruption Event with respect to an Underlying
                         Index occurs on the scheduled Determination Date or
                         if such Determination Date is not an Index Business
                         Day, the Index Closing Value for such Determination
                         Date will be determined on the immediately succeeding
                         Index Business Day on which no Market Disruption Event
                         shall have occurred; provided
                              that a Market Disruption Event
                              with respect to any particular Underlying Index will not
                              be a Market Disruption Event with respect to any other Underlying
          Index.

	 	 	 
	Trading Day	 	A day, as
                    determined by the Calculation Agent, on which trading is
          generally conducted on the Relevant Exchange(s). 
	 	 	 
	Index Business
          Day	 	Any Trading
                    Day other than a Saturday or Sunday on which the Underlying
          Indices (or Successor Indices) are calculated.
	 	 	 
	Market Disruption Event	 	Market Disruption Event
                         means, with respect to any Underlying Index, the occurrence
                         or existence of any of the following events, as determined
                         by the Calculation Agent in its sole discretion: 

                (i) a suspension, absence or material
                         limitation of trading of stocks then constituting 20
                         percent or more of the level of any Underlying Index
                         (or the relevant successor index) on the Relevant Exchange(s)
                         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(s); 

                (ii) a breakdown or failure in
                         the price and trade reporting systems of any Relevant
                         Exchange as a result of which the reported trading prices
                         for stocks then constituting 20 percent or more of the
                         level of any Underlying Index (or the relevant successor
                         index) during the last one-half hour preceding the close
                         of the principal trading session on such Relevant Exchange(s)
          are materially inaccurate; and 

6 

	 	 	(iii) 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 an Underlying Index (or the relevant 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. 

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

                For purposes of determining whether
                         a Market Disruption Event has occurred: (1) a limitation
                         on the hours or number of days of trading will 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 will 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 will constitute a suspension, absence
                         or material limitation of trading, (4) a suspension
                         of trading in futures or options contracts or exchange
                         traded funds on an 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 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 will constitute
                         a suspension, absence or material limitation of trading
          in futures or options

7 

	 	 	contracts
                    or exchange traded funds related to an Underlying Index and
                    (5) a “suspension, absence or material limitation of
                    trading” on any Relevant Exchange or on the primary
                    market on which futures or options contracts or exchange
                    traded funds related to an Underlying Index are traded will
                    not include any time when such market is itself closed for
          trading under ordinary circumstances.
	 	 	 
	Relevant Exchange	 	Relevant Exchange
                    means the primary exchange(s) or market(s) of trading for
                    (i) any security then included in any 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 any Underlying Index.
	 	 	 
	Alternate
          Exchange Calculation 	 	 
	   in Case of an Event of
          Default	 	If an event of default
                         with respect to this Note shall have occurred and be
                         continuing, the Calculation Agent will determine the
                         amount declared due and payable for each Stated Principal
                         Amount of this Note upon any acceleration of this Note
                         (the “Acceleration Amount”), which shall be
                         equal to such Stated Principal Amount (the “Acceleration
                         Amount”), plus the Supplemental Redemption Amount,
                         if any, determined as though the Basket Closing Value
                         for the Determination Date (if scheduled to occur on
                         or after the date of such acceleration) was the Basket
                         Closing Value on the date of acceleration. 

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

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

                All determinations made by the
                         Calculation Agent shall be at the sole discretion of
                         the Calculation Agent and shall, in the absence of manifest
          error, be

8 

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

                All calculations with respect
                         to the Basket Closing Value on the Determination Date,
                         the Final Index Value and the Supplemental Redemption
                         Amount, if any, shall be made by the Calculation Agent
                         and shall be rounded to the nearest one hundred-thousandth,
                         with five one-millionths rounded upward (e.g.,
                         .876545 would be rounded to .87655); all dollar amounts
                         related to determination of the amount of cash payable
                         per Note shall be rounded to the nearest ten-thousandth,
                         with five one hundred-thousandths rounded upward (e.g.,
                         .76545 would be rounded up to .7655); and all dollar
                         amounts paid on the aggregate principal amount of this
                         Note shall be rounded to the nearest cent, with one-half
          cent rounded upward. 

	 	 	 
	Discontinuance
          of any Underlying 

            Index; Alteration of Method of 	 	 
	  Calculation	 	If the
                         publication of any Underlying Index is discontinued
                         and a successor or substitute index that MS & Co.,
                         as 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”) is published, then any subsequent Index
                         Closing Value shall be determined by reference to the
                         value of such Successor Index at the regular official
                         weekday close of the principal trading session of the
                         Relevant Exchange or market for the Successor Index
                         on the date that any Index Closing Value is to be determined. 

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

                If the publication of an Underlying
                         Index is discontinued prior to, and such discontinuance
                         is continuing on, the date that any Index Closing Value
                         is to be determined and MS & Co., as the Calculation
                         Agent, determines, in its sole discretion, that no Successor
                         Index is available at such time, then the Calculation
                         Agent shall determine the relevant Index Closing Value
          for such date in accordance with the 

9 

	 	 	formula
                         for calculating such Underlying Index last in effect
                         prior to such discontinuance, 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 or limitation) at the close of the principal
                         trading session of the Relevant Exchange on such date
                         of each security most recently comprising such Underlying
                         Index on the Relevant Exchange. 

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

10 

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

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

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

     11

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

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

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

          If the holder elects to receive all or a portion of payments of principal of, premium, if any, and interest on this Note, if denominated in a Specified Currency other than U.S. dollars, in U.S.
dollars, the Exchange Rate Agent (as defined on the reverse hereof) will convert such payments into U.S. dollars. In the event of such an election, payment in respect of this Note will be based upon the exchange rate as determined by the Exchange
Rate Agent based on the highest bid quotation in The City of New York received by such Exchange Rate Agent at approximately 11:00 a.m., New York City time, on the second Business Day preceding the applicable payment

     12

     date from three recognized foreign exchange dealers (one of which may be the Exchange Rate Agent unless such Exchange Rate Agent is an affiliate of the Issuer) for the purchase by the quoting dealer of the Specified Currency for
U.S. dollars for settlement on such payment date in the amount of the Specified Currency payable in the absence of such an election to such holder and at which the applicable dealer commits to execute a contract. If such bid quotations are not
available, such payment will be made in the Specified Currency. All currency exchange costs will be borne by the holder of this Note by deductions from such payments. 

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

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

     13

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

	 DATED: 	 	 MORGAN STANLEY 
	 	 	 	 	 
	 	 	By:	 
	 	 	 	

	 	 	 	Name:	 
	 	 	 	Title:	 

TRUSTEE’S CERTIFICATE

    OF AUTHENTICATION

  This is one of the Notes referred

    to in the within-mentioned

    Senior
Indenture.

  	 JPMORGAN CHASE
      BANK, N.A., 
	        as
      Trustee 
	 	 	 
	By:	 
	 	

	 	Authorized Officer 

 

     14

     

     

               FORM OF REVERSE OF SECURITY

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

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

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

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

     15

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

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

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

          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 

     16

     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 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). 

     17

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

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

     18

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

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

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

     19

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

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

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

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

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

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

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

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

     20

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

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

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

     

     

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

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

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

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

     21

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

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

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

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

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

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

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

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

          Determination of Federal Funds (Open) Rate.
     If the Base Rate specified on the face hereof is the “Federal Funds (Open)
Rate”, for any Interest Determination Date, the Federal Funds (Open)
Rate with respect to this Note shall be the rate on that date for U.S. dollar
federal funds

     22

     as published in H.15(519) under the heading “Federal Funds (Open)” as
     displayed on Moneyline Telerate, or any successor service, on page 5 or
any other page as may replace page 5 on that service, (“Telerate Page 5”). 

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

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

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

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

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

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

     23

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

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

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

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

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

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

     24

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

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

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

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

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

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

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

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

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

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

     25

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

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

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

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

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

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

     

     

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

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

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

     26

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

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

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

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

          (iii) If
     the information set forth above is not provided by 3:00 p.m., New York City
     time, on the related Calculation Date, then the Calculation Agent shall
     determine the CMT Rate to be a yield to maturity, based on the arithmetic
     mean of the secondary market closing offer side prices as of approximately
     3:30 p.m., New York City time, on the Interest Determination Date, reported,
     according to their written records, by three leading primary U.S. government
     securities dealers (“Reference Dealers”) in The City of
     New York, which may include the initial dealer or its affiliates, selected
     by the Calculation Agent as described in the following sentence. The Calculation
     Agent shall select five reference dealers (after consultation with the Issuer)
     and shall eliminate the highest quotation or, in the event of equality,
     one of the highest, and the lowest quotation or, in the event of equality,
     one of the lowest, for the most recently issued direct noncallable fixed
     rate obligations of the United States (“Treasury Notes”)
     with an original maturity of approximately the Designated CMT Maturity Index,
     a remaining term to maturity of no more than 1 year shorter than that Designated
     CMT Maturity Index and in a principal amount that is representative for
     a single transaction in the securities in that market at that time. If two
     Treasury Notes with an original maturity as described above have remaining
     terms to maturity equally close to the Designated CMT Maturity Index, the
     quotes for the Treasury Note with the shorter remaining term to maturity
shall be used. 

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

     27

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

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

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

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

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

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

          Unless otherwise indicated on the face hereof, interest payments on this Note shall be the amount of interest accrued from and including the Interest Accrual Date or from and including the last date
to which interest has been paid or duly provided for to but excluding the Interest Payment Dates or the Maturity Date (or any earlier redemption or repayment date), as the case may be. Accrued interest hereon shall be an amount calculated by
multiplying the face amount hereof by an accrued interest factor. Such accrued interest factor shall be computed by adding the interest factor calculated for each day in the period for which interest is being paid. The interest factor for each such
date shall be computed by dividing the interest rate applicable to such day (i) by 360 if the Base Rate is CD Rate, Commercial Paper Rate, EURIBOR, Federal Funds Rate, Federal Funds (Open) Rate, Prime Rate or LIBOR (except if the Index Currency is
pounds sterling); (ii) by 365 if the Base Rate is LIBOR and the Index Currency is pounds sterling; or (iii) by the actual number of days in the year if the Base Rate is the Treasury Rate or the CMT Rate. All percentages resulting from any
calculation of the rate of interest on this Note will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point with (.000005% being rounded up to .00001%) and all U.S. dollar amounts used in or resulting from such
calculation on this Note will be rounded to the nearest cent, with one-half cent rounded 

     28

     upward. All Japanese Yen amounts used in or resulting from such calculations will be rounded downwards to the next lower whole Japanese Yen amount. All amounts denominated in any other currency used in or resulting from such
calculations will be rounded to the nearest two decimal places in such currency, with .005 being rounded up to .01. The interest rate in effect on any Interest Reset Date will be the applicable rate as reset on such date. The interest rate
applicable to any other day is the interest rate from the immediately preceding Interest Reset Date (or, if none, the Initial Interest Rate). 

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

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

          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 

     29

     transfer of Notes shall be such that no gain or loss of interest results from such exchange or transfer. 

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

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

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

     30

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

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

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

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

          So long as this Note shall be outstanding, the Issuer will cause to be maintained an office or agency for the payment of the principal of and premium, if any, and interest on this Note as herein
provided in the Borough of Manhattan, The City of New York, and an office or agency in said Borough of Manhattan for the registration, transfer and exchange as aforesaid of the Notes. The Issuer may designate other agencies for the payment of said
principal, premium and interest 

     31

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

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

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

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

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

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

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

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

     32

     

     

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.

	 	 	 	 
	 	 	 
	 
		 		

33

          

 

      

    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.

34

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.

 

     35EXHIBIT 10.1

AMENDMENT NO. 2

  Dated as of July 21, 2006

to

RECEIVABLES SALE AGREEMENT

and

RECEIVABLES FUNDING
  AGREEMENT

  Dated as of July 29, 2004 

       THIS AMENDMENT
  NO. 2 (this “Amendment”) is entered into as of July 21, 2006 by and among INGRAM FUNDING INC., a Delaware corporation (the “Borrower”), INGRAM MICRO INC., a Delaware
corporation (“Ingram Micro”), individually, as originator and as servicer (in such capacity, the “Servicer”), and GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation (the “Lender”)
as parties to the Sale Agreement and/or the Funding Agreement, as applicable,
each as referred to below. Capitalized terms used in this Amendment which are
not otherwise defined herein shall have the meanings given such terms in Annex
X to the Funding Agreement and the Sale Agreement. 

RECITALS:

       WHEREAS, Ingram
  Micro, individually and as an originator, and the Borrower are parties to that
  certain Receivables Sale Agreement, dated as of July 29, 2004, as amended by
Amendment No. 1 thereto, dated as of March 22, 2006 (the “Sale Agreement”); 

       WHEREAS, the
  Borrower, the Servicer and the Lender are parties to that certain Receivables
  Funding Agreement, dated as of July 29, 2004, as amended by Amendment No. 1
thereto, dated as of March 22, 2006 (the “Funding Agreement”); 

       WHEREAS, many
  of the defined terms used in the Sale Agreement and Funding Agreement are set
forth in Annex X attached thereto (“Annex X”); and 

       WHEREAS, Annex
  5.02(a) to the Funding Agreement (“Annex 5.02(a)”) calls for the
delivery of certain financial information; 

       WHEREAS, the parties hereto desire to amend Annex X, Annex 5.02(a), the Funding Agreement and the Sale Agreement on the terms set forth herein; 

       NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Ingram Micro, the Borrower and the Lender hereby agree as follows. 

        Section 1. Amendments. As of the Effective Date (as hereafter defined), and subject to the satisfaction of the
    conditions precedent set forth in Section 2 hereof, the parties hereto agree as follows: 

        1.1 The Sale Agreement is hereby amended by deleting the proviso to the third sentence of Section 2.01(c) . 

        1.2 The Funding Agreement is hereby amended as follows: 

  
           (a)
          Section 2.02(c) is hereby amended by deleting “July 29,
      2006” in the third line and replacing it with “the Final Advance
      Date”,
      by deleting “$600,000,000” in the fourth line and replacing it
      with “$650,000,000” and
      by deleting “and (ii) prior
      to any such increase being effective, the Borrower shall pay to the Lender
      a fee in an amount equal to the product of (x) the amount by which the
      Commitment is being increased and (y) the percentage specified as the Commitment
      Increase Fee Percentage in the Fee Letter” as well as the “(i)” at
      the beginning of the phrase immediately preceding such deleted text. 

          (b) Section 5.03(g) is amended by adding the following new sentence at the end thereof: 

    
      “It is agreed that the Borrower is permitted to participate in the consolidated cash management system maintained by the Parent as contemplated by (and in compliance with the requirements of) clause (c) of Article XV of the
      Borrower’s Amended and Restated Certificate of Incorporation, and
      that doing so does not constitute a lending transaction or advance of credit
      prohibited by this subsection (g).” 

          (c) Section 5.03 (h) is amended by adding the following new sentences at the end thereof: 

  

  
    “The Borrower will not permit the sum of
    (i) the aggregate principal amount of all Subordinated Loans from all Originators
    and (ii) the aggregate principal amount of all Advances outstanding on any
    date to exceed an amount equal to the aggregate Outstanding Balance of the
    Transferred Receivables on such date. It is agreed that the Borrower may
    incur Subordinated Loans pursuant to the Subordinated Notes to evidence dividends
    or other distributions of capital payable that have been declared in compliance
    with Section 5.03(g); provided that
    the Borrower shall give 15 days’ prior notice to the Lender of its intention
    to incur Subordinated Loans for such purpose, and such notice shall specify
    the amount of the dividend or other distribution of capital, and the total
  amount of Subordinated Loans that would be outstanding 

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    after giving effect thereto (assuming no other
    increase or decrease in the principal amount of the Subordinated Loans between
    the date of such notice and the payment thereof).” 

  
          (d) Section 5.03 is further amended by adding a new subsection (l) at the end thereof reading as follows: 

          (l) The Borrower shall not at any time permit its equity capital to be less than $35,000,000. 

  

  
    1.3 Annex X is hereby amended as follows: 

  
    
            (a) The definition of “Commitment” is
      amended by deleting “Five
      Hundred Million ($500,000,000)” and replacing it with “Five Hundred
      Fifty Million ($550,000,000)”. 

          (b) The
        definition of “Final Advance Date” is amended by deleting “March 31, 2008” and replacing it with “July 30,
      2010”. 

          (c) The
        definition of “Unused Commitment Fee” is amended by deleting “0.375%” in clause (ii) and replacing it with
“0.25%” . 

  

  
    1.4 Annex 5.02(a) is hereby amended by re-lettering subsection (c) through (e) as subsections (d) through (f) and inserting the following as subsection (c): 

  
    
       “(c) Quarterly Financials of the Borrower. As soon as available, and in any event within sixty (60) days after the end of each fiscal quarter (other than the last
      quarter of such fiscal year), financial information regarding the Borrower, consisting of its unaudited balance sheet as of the close of such fiscal quarter and the related statements of income and cash flows for that portion of the fiscal year
      ending as of the close of such fiscal quarter, all prepared in accordance with GAAP, subject to normal year-end audit adjustments and the absence of footnotes. Such financial information shall be accompanied by the certification of the president,
      chief financial officer or treasurer of the Borrower that (A) such financial information presents fairly in accordance with GAAP the financial position and results of operations of the Borrower, in each case as at the end of such quarter and for the
      period then ended (subject to (i) the qualifications referred to at the end of the immediately preceding sentence and (ii) any residual effect of the matters referred to in Section 9 of Amendment No. 2 to this Agreement dated as of July 21, 2006),
      (B) any other information presented is true, correct and complete in all material respects and (C) as of the date of the financials, there was no 

  

  3

  
    
      Incipient Termination Event or Termination
      Event in existence as of such time or, if an Incipient Termination Event
      or Termination Event shall have occurred and be continuing, describing
      the nature thereof and all efforts the Borrower has taken or proposes to
      take with respect thereto.”

  

        Section 2. Conditions of Effectiveness of this Amendment.
        This Amendment shall become effective as of the date hereof (the “Effective Date”)
  when, and only when: 

  
          2.1 The
        Lender shall have received counterparts of this Amendment and the Amendment
        to the Fee Letter, dated as of July 21, 2006 (the “Fee
      Letter Amendment”), duly executed by each of the parties hereto.

          2.2 The Lender shall have received written reaffirmation of the July 29, 2004 true sale/non-consolidation opinion from counsel to Ingram Micro
      and the Borrower, in form and substance satisfactory to the Lender.

          2.3 The Borrower shall have executed and delivered to the Lender a new Revolving Note, dated as of the Effective Date, or a date no earlier
      than five days before the Effective Date, in the amount of $650,000,000. 

          2.4 Each of the following conditions shall have been satisfied: 

    
            (a) each representation and warranty by the Borrower contained in the Sale Agreement and the Funding Agreement (each as amended hereby) and in
        each other Related Document shall be true and correct in all material respects as of the date hereof, except to the extent that such representation or warranty expressly relates solely to an earlier date; 

            (b) no
        Incipient Termination Event or Termination Event hereunder
        or any “Event of Default” under (and as defined in) the Credit
        Agreement (as in effect on the date hereof) shall have occurred and be
        continuing or would result after giving effect to any of the transactions
        contemplated on the date hereof; 

            (c) each representation and warranty by Ingram Micro contained in the Sale Agreement (as amended hereby) and in each other Related Document
        shall be true and correct as of the date hereof, except to the extent that such representation or warranty expressly relates solely to an earlier date; and 

    

  

  4

  
    
            (d) the Borrower shall pay to the Lender the Extension Fee (as defined in the Fee Letter). 

    

  

        Section 3. Representations and Warranties.
        Each of Ingram Micro and the Borrower hereby represents and warrants
        that this Amendment and each of the Sale Agreement and the Funding Agreement,
        each as amended hereby, constitute legal, valid and binding obligations
        of such Person and are enforceable against such Person in accordance
        with their respective terms subject to (i) applicable bankruptcy, insolvency,
        reorganization, moratorium and other similar laws affecting the enforcement
        of creditors’ rights generally, from time to time in effect and
        (ii) general principles of equity (whether enforcement is sought by a
  proceeding in equity or at law). 

  
         Section 4. Reference to and Effect on Related Documents. 

  
          4.1 Upon the effectiveness of this Amendment pursuant to Section 2 hereof, on and
      after the Effective Date, each reference to the Funding Agreement, Sale Agreement, Annex X and Annex 5.02(a) in any of the Related Documents shall mean and be a reference to the Funding Agreement, the Sale Agreement, Annex X and Annex 5.02(a), as
      amended hereby. 

          4.2 Except as specifically set forth above, the Sale Agreement, the Funding Agreement, Annex X and Annex 5.02(a), and all other documents,
      instruments and agreements executed and/or delivered in connection therewith, shall remain in full force and effect, and are hereby ratified and confirmed. 

          4.3 The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any
      right, power or remedy of the Borrower or the Lender nor constitute a waiver of any provision of any of the Related Documents, or any other documents, instruments and agreements executed and/or delivered in connection therewith. 

  

        Section 5. Headings. Section headings in this Amendment are included herein for convenience of reference only
  and shall not constitute a part of this Amendment for any other purpose. 

        Section 6. Counterparts. This Amendment may be executed by one or more of the parties to this Amendment on any
  number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 

        Section 7. Entire Agreement. This Amendment, taken together with the Sale Agreement, the Funding Agreement,
  the Fee Letter and all of the other Related Documents, embodies the entire agreement and 

  5

  
    understanding of the parties hereto and supersedes all prior agreements and understandings, written and oral, relating to the subject matter hereof. 

        Section 8. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the
    State of New York applicable to contracts made and performed in such State and any applicable laws of the United States of America. 

  
    Section 9. Waiver.
    The Lender hereby waives any Termination Event (including
    any Event of Servicer Termination or any Purchase Termination Event) resulting
    from (a) the books and records, reports and financial statements of the Borrower
    having reflected the amount of  Transferred Receivables as an amount equal to
    the amount of the Net Receivables Balance and (b) the aggregate principal amount
    of the Subordinated Loans having exceeded the limitation set forth in the proviso
    to Section 2.01(c) of the Sale Agreement  (as in effect prior to giving effect
    to this Amendment), it being understood and agreed that such waiver is effective
    only for and in respect of periods prior to the date hereof and are one-time
    waivers only. Nothing herein shall obligate the  Lenders to grant any future
    waivers or consents. 

        Section 10. No Course of Dealing. The Lender has entered into this Amendment on the express understanding with
    the Borrower and Ingram Micro that in entering into this Amendment, it is not establishing any course of dealing with the Borrower and Ingram Micro. The rights of the Lender to require strict performance with all the terms and conditions of the Sale
    Agreement and the Funding Agreement, as amended by this Amendment and the other Related Documents, shall not in any way be impaired by the execution of this Amendment. The Lender shall not be obligated in any manner to execute any further amendments
    or waivers, and if such waivers or amendments are requested in the future, assuming the terms and conditions thereof are acceptable to them, the Lender may require the payment of fees in connection therewith. 

  [Remainder of page intentionally left blank.]

  6

       IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year first above written. 

  	 INGRAM MICRO INC., individually, as
      an 
	 Originator and as the Servicer 
	 	 	 
	By:	/s/ Kevin M. Murai
	 	

	 	Name:	 Kevin
      M. Murai 
	 	Title:	 President
      and Chief Operating Officer 

  

  

  	 INGRAM FUNDING INC., as Borrower 
	 	 	 
	By:	 /s/ Kevin M. Murai 
	 	

	 	Name:	Kevin M. Murai
	 	Title:	President

  

  

  	 GENERAL ELECTRIC CAPITAL 
	 CORPORATION, as Lender 
	 	 	 
	By:	/s/ Eugene Seip 
	 	

	 	Name:	Eugene
      Seip 
	 	Title:	Duly Authorized Signatory

  

  

  Signature Page

to

Amendment No. 2

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