Document:

Exhibit 4.1

                         FORM OF FIXED RATE SENIOR NOTE

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

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

<PAGE>

<TABLE>
                                                    MORGAN STANLEY
                                       SENIOR GLOBAL MEDIUM-TERM NOTE, SERIES F
                                                     (Fixed Rate)

                                            HIGH INCOME TRIGGER SECURITIES

                                               % HITS DUE MAY 20, 2007
                                               MANDATORILY EXCHANGEABLE
                                            FOR SHARES OF COMMON STOCK OF
                                          WYNN RESORTS, LIMITED (the "HITS")
<S>                           <C>                            <C>                          <C>
--------------------------------------------------------------------------------------------------------------------
ORIGINAL ISSUE DATE:          INITIAL REDEMPTION             INTEREST RATE:  % per        MATURITY DATE: See
                                 DATE: N/A                       annum                       "Maturity Date" below.
--------------------------------------------------------------------------------------------------------------------
INTEREST ACCRUAL DATE:        INITIAL REDEMPTION             INTEREST PAYMENT DATE(S):    OPTIONAL REPAYMENT
                                 PERCENTAGE: N/A                See "Interest Payment        DATE(S):  N/A
                                                                Dates" below.
--------------------------------------------------------------------------------------------------------------------
SPECIFIED CURRENCY: U.S.      ANNUAL REDEMPTION              INTEREST PAYMENT PERIOD:     APPLICABILITY OF MODIFIED
   dollars                       PERCENTAGE REDUCTION: N/A      Quarterly                    PAYMENT UPON
                                                                                             ACCELERATION OR
                                                                                             REDEMPTION: See
                                                                                             "Alternate Exchange
                                                                                             Calculation in Case of
                                                                                             an Event of Default"
                                                                                             below.
--------------------------------------------------------------------------------------------------------------------
IF SPECIFIED CURRENCY OTHER   REDEMPTION NOTICE PERIOD:      APPLICABILITY OF ANNUAL      If yes, state Issue Price:
   THAN U.S. DOLLARS, OPTION     N/A                            INTEREST PAYMENTS: N/A       N/A
   TO ELECT PAYMENT IN U.S.
   DOLLARS: N/A
--------------------------------------------------------------------------------------------------------------------
EXCHANGE RATE AGENT: N/A      TAX REDEMPTION AND PAYMENT     PRICE APPLICABLE UPON        ORIGINAL YIELD TO
                                 OF ADDITIONAL                  OPTIONAL REPAYMENT: N/A      MATURITY: N/A
                                 AMOUNTS: NO
--------------------------------------------------------------------------------------------------------------------
OTHER PROVISIONS: See below.  IF YES, STATE INITIAL
                                 OFFERING DATE: N/A
--------------------------------------------------------------------------------------------------------------------
</TABLE>

Stated Principal Amount.........  $        per HITS

Underlying Company..............  Wynn Resorts, Limited ("Wynn Resorts")

Underlying Stock................  The common stock of Wynn Resorts

Pricing Date....................

Denominations...................  $        and integral multiples thereof

                                       2
<PAGE>

Initial Share Price.............  $

Trigger Level...................      % of the Initial Share Price

Trigger Price...................  $

Acceleration Trigger Price......  $

Exchange Ratio..................          , which is equal to the Stated
                                  Principal  Amount divided by the Initial Share
                                  Price

Exchange Factor.................          , subject to adjustment upon the
                                  occurrence of certain extraordinary dividends
                                  and corporate events affecting the Underlying
                                  Stock through and including the Determination
                                  Date, as described under "Antidilution
                                  Adjustments" below.

Interest Payment Dates..........  August 20, 2006, November 20, 2006, February
                                  20, 2007 and the Maturity Date.

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

Maturity Date...................  May 20, 2007, subject to acceleration as
                                  described below in "Price Event Acceleration"
                                  and "Alternate Exchange Calculation in Case
                                  of an Event of Default" and subject to
                                  extension if the Determination Date is
                                  postponed in accordance with the following
                                  paragraph.

                                  If the Determination Date is postponed due to
                                  a Market Disruption Event or otherwise, the
                                  Maturity Date shall be postponed so that the
                                  Maturity Date shall be the second Trading Day
                                  following the Determination Date.

Determination Date..............  May 17, 2007; provided that if such date is
                                  not a Trading Day or if a Market Disruption
                                  Event occurs on such day, the Determination
                                  Date shall be the immediately succeeding
                                  Trading Day on which no Market Disruption
                                  Event occurs.

                                  In the event that the Determination Date and
                                  Maturity Date are postponed as described in
                                  the two

                                       3
<PAGE>

                                  immediately preceding paragraphs, the Issuer
                                  shall, or shall cause the Calculation Agent
                                  to, give notice of such postponement and,
                                  once it has been determined, of the date to
                                  which the Maturity Date has been rescheduled,
                                  as promptly as possible, and in no case later
                                  than 10:30 a.m. on the Trading Day
                                  immediately prior to 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) (i)
                                  to the holder of this HITS 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
                                  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 HITS receives the
                                  notice.

Record Date.....................  Notwithstanding the definition of "Record
                                  Date" on page 20 hereof, the Record Date for
                                  each Interest Payment Date, including the
                                  Interest Payment Date scheduled to occur on
                                  the Maturity Date, shall be the date 5
                                  calendar days prior to such scheduled
                                  Interest Payment Date, whether or not that
                                  date is a Business Day.

Payment at Maturity.............  Unless the maturity of the HITS has been
                                  accelerated, on the Maturity Date, upon
                                  delivery of this HITS to the Trustee, each
                                  Stated Principal Amount of this HITS shall be
                                  applied by the Issuer as payment for, and the
                                  Issuer shall deliver, either:

                                  (i) if the Trading Price of the Underlying
                                  Stock has not decreased to or below the
                                  Trigger Price at any time on any Trading Day
                                  from and including the Pricing Date to and
                                  including the Determination Date, an amount
                                  in cash equal to the Stated Principal Amount
                                  per HITS, or

                                  (ii) if the Trading Price of the Underlying
                                  Stock has decreased to or below the Trigger
                                  Price at any time on

                                       4
<PAGE>

                                  any Trading Day from and including the Pricing
                                  Date to and including the Determination Date,
                                  a number of shares of the Underlying Stock
                                  equal to the product of the Exchange Ratio
                                  and the Exchange Factor, each determined as
                                  of the Determination Date by the Calculation
                                  Agent. See "Exchange Factor" above and
                                  "Antidilution Adjustments" below.

                                  The number of any shares of the Underlying
                                  Stock to be delivered at maturity shall be
                                  subject to any applicable adjustments (i) to
                                  the Exchange Factor and (ii) in the Exchange
                                  Property, as defined in paragraph 5 under
                                  "Antidilution Adjustments" below, to be
                                  delivered instead of, or in addition to, such
                                  Underlying Stock as a result of any corporate
                                  event described under "Antidilution
                                  Adjustments" below, in each case, required to
                                  be made up to the close of business on the
                                  Determination Date.

                                  The Issuer shall, or shall cause the
                                  Calculation Agent to, provide written notice
                                  to the Trustee at its New York Office and to
                                  the Depositary, on which notice the Trustee
                                  and Depositary may conclusively rely, on or
                                  prior to 10:30 a.m. on the Trading Day
                                  immediately prior to 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), of
                                  the amount of cash or Underlying Stock (or
                                  the amount of Exchange Property), as
                                  applicable, to be delivered with respect to
                                  each Stated Principal Amount of this HITS
                                  and, in the event of a delivery of the
                                  Underlying Stock, of the amount of any cash
                                  to be paid in lieu of any fractional share of
                                  the Underlying Stock (or of any other
                                  securities included in Exchange Property, if
                                  applicable); provided that, if the Maturity
                                  Date of this HITS is accelerated because of a
                                  Price Event Acceleration (as defined below)
                                  or because of an Event of Default
                                  Acceleration (as defined in "Alternate
                                  Exchange Calculation in Case of an Event of
                                  Default" below), the Issuer shall, or shall
                                  cause the Calculation Agent to, give notice
                                  of such acceleration and of the amount of
                                  cash or Underlying Stock (or any Exchange
                                  Property) payable in connection therewith as
                                  promptly as possible and in no event later
                                  than (A) in the case of

                                       5
<PAGE>

                                  an Event of Default Acceleration, two Trading
                                  Days after the date of such acceleration (but
                                  if such second Trading Day is not a Business
                                  Day, prior to the close of business on the
                                  Business Day preceding such second Trading
                                  Day) and (B) in the case of a Price Event
                                  Acceleration, 10:30 a.m. on the Trading Day
                                  immediately prior to the date of acceleration
                                  (but if such Trading Day is not a Business
                                  Day, prior to the close of business on the
                                  Business Day preceding the date of
                                  acceleration), (i) to the holder of this HITS
                                  by mailing notice of such acceleration by
                                  first class mail, postage prepaid, to the
                                  holder's last address as it shall appear upon
                                  the registry books, and (ii) to the Trustee
                                  by telephone or facsimile confirmed by
                                  mailing such notice to the Trustee by first
                                  class mail, postage prepaid, at its New York
                                  office and (iii) to the Depositary by
                                  telephone or facsimile confirmed by mailing
                                  such notice to the Depositary by first class
                                  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 HITS
                                  receives the notice. If the maturity of this
                                  HITS is accelerated in the manner described
                                  above, no interest on the amounts payable
                                  with respect to this HITS shall accrue for
                                  the period from and after such accelerated
                                  maturity date; provided that the Issuer has
                                  deposited with the Trustee the Underlying
                                  Stock, the Exchange Property or any cash due
                                  with respect to such acceleration by such
                                  accelerated maturity date.

                                  The Issuer shall, or shall cause the
                                  Calculation Agent to, deliver any such cash
                                  or shares of Underlying Stock (or any
                                  Exchange Property), as applicable, and cash
                                  in respect of interest and any fractional
                                  shares of Underlying Stock (or any Exchange
                                  Property) and cash otherwise due upon any
                                  acceleration described above to the Trustee
                                  for delivery to the holder of this HITS. The
                                  Calculation Agent shall determine the
                                  Exchange Factor applicable at the maturity of
                                  this HITS.

                                  If this HITS is not surrendered for exchange
                                  at maturity or upon acceleration, it shall be
                                  deemed to be no longer Outstanding under, and
                                  as defined in, the Senior Indenture, except
                                  with respect to the holder's

                                       6
<PAGE>

                                  right to receive the Underlying Stock (and,
                                  if applicable, any Exchange Property) and any
                                  cash in respect of interest and any
                                  fractional shares of Underlying Stock (or any
                                  Exchange Property) and any other cash due at
                                  maturity as described in the preceding
                                  paragraph under this heading.

                                  References to payment "per HITS" refer to
                                  each Stated Principal Amount of this HITS.

Price Event Acceleration........  If on any two consecutive Trading Days during
                                  the period prior to and ending on the third
                                  Business Day immediately preceding the
                                  Maturity Date, the product of the Closing
                                  Price per share of Underlying Stock, as
                                  determined by the Calculation Agent, and the
                                  Exchange Factor is less than the Acceleration
                                  Trigger Price, the Maturity Date of this HITS
                                  shall be deemed to be accelerated to the
                                  third Business Day immediately following such
                                  second Trading Day (the "date of
                                  acceleration"). Upon such acceleration, the
                                  holder of this HITS shall receive per Stated
                                  Principal Amount of this HITS on the date of
                                  acceleration:

                                      (i) a number of shares of Underlying
                                      Stock equal to the product of the
                                      Exchange Ratio and the Exchange Factor,
                                      as of such date of acceleration; and

                                      (ii)accrued but unpaid interest to but
                                      excluding the date of acceleration plus
                                      an amount of cash, as determined by the
                                      Calculation Agent, equal to the sum of
                                      the present values of the remaining
                                      scheduled payments of interest on this
                                      HITS (excluding any portion of such
                                      payments of interest accrued to the date
                                      of acceleration) discounted to the date
                                      of acceleration based on the comparable
                                      yield that the Issuer would pay on a
                                      non-interest bearing, senior unsecured
                                      debt obligation of the Issuer having a
                                      maturity equal to the term of each such
                                      remaining scheduled payment, as
                                      determined by the Calculation Agent.

                                  The holder of this HITS shall not be entitled
                                  to receive the return of each Stated
                                  Principal Amount of this HITS upon a Price
                                  Event Acceleration.

                                       7
<PAGE>

No Fractional Shares............  Upon delivery of this HITS to the Trustee at
                                  maturity (including as a result of
                                  acceleration other than an acceleration
                                  resulting from an Event of Default), and if
                                  applicable, the Issuer shall deliver the
                                  aggregate number of shares of Underlying
                                  Stock due with respect to this HITS, as
                                  described above, but the Issuer shall pay
                                  cash in lieu of delivering any fractional
                                  share of Underlying Stock in an amount equal
                                  to the corresponding fractional Closing Price
                                  of such fraction of a share of Underlying
                                  Stock as determined by the Calculation Agent
                                  as of the Determination Date.

Closing Price...................  The Closing Price for one share of Underlying
                                  Stock (or one unit of any other security for
                                  which a Closing Price must be determined) on
                                  any Trading Day (as defined below) means:

                                      (i) if the Underlying Stock (or any such
                                      other security) is listed or admitted to
                                      trading on a national securities
                                      exchange, the last reported sale price,
                                      regular way, of the principal trading
                                      session on such day on the principal
                                      United States securities exchange
                                      registered under the Securities Exchange
                                      Act of 1934, as amended (the "Exchange
                                      Act"), on which the Underlying Stock (or
                                      any such other security) is listed or
                                      admitted to trading,

                                      (ii) if the Underlying Stock (or any such
                                      other security) is a security of the
                                      Nasdaq National Market (and provided that
                                      the Nasdaq National Market is not then a
                                      national securities exchange), the Nasdaq
                                      official closing price published by The
                                      Nasdaq Stock Market, Inc. on such day, or

                                      (iii) if the Underlying Stock (or any
                                      such other security) is neither listed or
                                      admitted to trading on any national
                                      securities exchange nor a security of the
                                      Nasdaq National Market but is included in
                                      the OTC Bulletin Board Service (the "OTC
                                      Bulletin Board") operated by the National
                                      Association of Securities Dealers, Inc.,
                                      the last reported sale price of the
                                      principal trading session on the OTC
                                      Bulletin Board on such day.

                                       8
<PAGE>

                                  If the Underlying Stock (or any such other
                                  security) is listed or admitted to trading on
                                  any national securities exchange or is a
                                  security of the Nasdaq National Market but
                                  the last reported sale price or Nasdaq
                                  official closing price, as applicable, is not
                                  available pursuant to the preceding sentence,
                                  then the Closing Price for one share of
                                  Underlying Stock (or one unit of any such
                                  other security) on any Trading Day shall mean
                                  the last reported sale price of the principal
                                  trading session on the over-the-counter
                                  market as reported on the Nasdaq National
                                  Market or the OTC Bulletin Board on such day.
                                  If, because of a Market Disruption Event (as
                                  defined below) or otherwise, the last
                                  reported sale price or Nasdaq official
                                  closing price, as applicable, for the
                                  Underlying Stock (or any such other security)
                                  is not available pursuant to either of the
                                  two preceding sentences, then the Closing
                                  Price for any Trading Day shall be the mean,
                                  as determined by the Calculation Agent, of
                                  the bid prices for the Underlying Stock (or
                                  any such other security) for such Trading Day
                                  obtained from as many recognized dealers in
                                  such security, but not exceeding three, as
                                  shall make such bid prices available to the
                                  Calculation Agent. Bids of MS & Co. or any of
                                  its affiliates may be included in the
                                  calculation of such mean, but only to the
                                  extent that any such bid is the highest of
                                  the bids obtained. The term "security of the
                                  Nasdaq National Market" shall include a
                                  security included in any successor to such
                                  system, and the term "OTC Bulletin Board
                                  Service" shall include any successor service
                                  thereto.

Intraday Price..................  The Intraday Price for one share of the
                                  Underlying Stock (or one unit of any other
                                  security for which an Intraday Price must be
                                  determined) at any time during any Trading
                                  Day (including at the close) means:

                                     (i) if the Underlying Stock (or any such
                                     other security) is listed or admitted to
                                     trading on a national securities exchange,
                                     the most recently reported sale price,
                                     regular way, at such time during the
                                     principal trading session on such day on
                                     the principal United States securities
                                     exchange registered under the Exchange Act
                                     on which the

                                       9
<PAGE>

                                     Underlying Stock (or any such other
                                     security) is listed or admitted to trading,

                                     (ii) if the Underlying Stock (or any such
                                     other security) is a security of the
                                     Nasdaq National Market (and provided that
                                     the Nasdaq National Market is not then a
                                     national securities exchange), the most
                                     recently reported sale price at such time
                                     quoted by The Nasdaq Stock Market, Inc. on
                                     such day, or

                                     (iii) if the Underlying Stock (or any such
                                     other security) is neither listed or
                                     admitted to trading on any national
                                     securities exchange nor a security of the
                                     Nasdaq National Market but is included in
                                     the OTC Bulletin Board, the most recently
                                     reported sale price at such time during
                                     the principal trading session on the OTC
                                     Bulletin Board on such day.

Trading Price...................  Trading Price means the product of (i) the
                                  Intraday Price of one share of the Underlying
                                  Stock and (ii) the Exchange Factor, each as
                                  determined by the Calculation Agent at any
                                  time on any Trading Day.

Trading Day.....................  A day, as determined by the Calculation
                                  Agent, on which trading is generally
                                  conducted on the New York Stock Exchange,
                                  Inc. ("NYSE"), the American Stock Exchange
                                  LLC, the Nasdaq National Market, the Chicago
                                  Mercantile Exchange and the Chicago Board of
                                  Options Exchange, and in the over-the-counter
                                  market for equity securities in the United
                                  States and, if the principal trading market
                                  for the Underlying Stock is outside the
                                  United States, in such principal trading
                                  market.

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

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

                                      10
<PAGE>

                                  All calculations with respect to the Exchange
                                  Ratio and the Exchange Factor for this HITS
                                  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), and all dollar amounts
                                  paid to the holder of this HITS in the
                                  aggregate related to interest payments or the
                                  payment at maturity resulting from such
                                  calculations shall be rounded to the nearest
                                  cent with one-half cent rounded upward.

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

                                  1. If the Underlying Stock is subject to a
                                  stock split or reverse stock split, then once
                                  such split has become effective, the Exchange
                                  Factor shall be adjusted to equal the product
                                  of the prior Exchange Factor and the number
                                  of shares issued in such stock split or
                                  reverse stock split with respect to one share
                                  of the Underlying Stock.

                                  2. If the Underlying Stock is subject (i) to
                                  a stock dividend (issuance of additional
                                  shares of the Underlying Stock) that is given
                                  ratably to all holders of shares of the
                                  Underlying Stock or (ii) to a distribution of
                                  the Underlying Stock as a result of the
                                  triggering of any provision of the corporate
                                  charter of the Underlying Company, then once
                                  the dividend has become effective and the
                                  Underlying Stock is trading ex-dividend, the
                                  Exchange Factor shall be adjusted so that the
                                  new Exchange Factor shall equal the prior
                                  Exchange Factor plus the product of (i) the
                                  number of shares issued with respect to one
                                  share of the Underlying Stock and (ii) the
                                  prior Exchange Factor.

                                  3. If the Underlying Company issues rights or
                                  warrants to all holders of the Underlying
                                  Stock to subscribe for or purchase the
                                  Underlying Stock at an exercise price per
                                  share less than the Closing Price of the
                                  Underlying Stock on both (i) the date the
                                  exercise price of such rights or warrants is
                                  determined and (ii) the expiration date of
                                  such rights or warrants, and if the
                                  expiration date of such rights or warrants
                                  precedes the maturity of this HITS, then the
                                  Exchange Factor shall be adjusted to equal
                                  the product of the prior Exchange

                                      11
<PAGE>

                                  Factor and a fraction, the numerator of which
                                  shall be the number of shares of the
                                  Underlying Stock outstanding immediately
                                  prior to the issuance of such rights or
                                  warrants plus the number of additional shares
                                  of the Underlying Stock offered for
                                  subscription or purchase pursuant to such
                                  rights or warrants and the denominator of
                                  which shall be the number of shares of the
                                  Underlying Stock outstanding immediately
                                  prior to the issuance of such rights or
                                  warrants plus the number of additional shares
                                  of the Underlying Stock which the aggregate
                                  offering price of the total number of shares
                                  of the Underlying Stock so offered for
                                  subscription or purchase pursuant to such
                                  rights or warrants would purchase at the
                                  Closing Price on the expiration date of such
                                  rights or warrants, which shall be determined
                                  by multiplying such total number of shares
                                  offered by the exercise price of such rights
                                  or warrants and dividing the product so
                                  obtained by such Closing Price.

                                  4. There shall be no adjustments to the
                                  Exchange Factor to reflect cash dividends or
                                  other distributions paid with respect to the
                                  Underlying Stock other than distributions
                                  described in paragraph 2, paragraph 3 and
                                  clauses (i), (iv) and (v) of paragraph 5
                                  below and Extraordinary Dividends as
                                  described below. A cash dividend or other
                                  distribution with respect to the Underlying
                                  Stock shall be deemed to be an "Extraordinary
                                  Dividend" if such cash dividend or
                                  distribution (a) is defined by the Underlying
                                  Company as an extraordinary or special
                                  dividend or distribution, or (b) exceeds the
                                  immediately preceding non-Extraordinary
                                  Dividend for the Underlying Stock by an
                                  amount equal to at least 5% of the Closing
                                  Price of the Underlying Stock (as adjusted
                                  for any subsequent corporate event requiring
                                  an adjustment hereunder, such as a stock
                                  split or reverse stock split) on the Trading
                                  Day preceding the ex-dividend date (that is,
                                  the day on and after which transactions in
                                  the Underlying Stock on the primary U.S.
                                  organized securities exchange or trading
                                  system on which the Underlying Stock is
                                  traded or trading system no longer carry the
                                  right to receive that cash dividend or that
                                  cash distribution) for the payment of such
                                  Extraordinary Dividend. If an Extraordinary
                                  Dividend

                                      12
<PAGE>

                                  occurs with respect to the Underlying Stock,
                                  the Exchange Factor with respect to the
                                  Underlying Stock shall be adjusted on the
                                  ex-dividend date with respect to such
                                  Extraordinary Dividend so that the new
                                  Exchange Factor shall equal the product of
                                  (i) the then current Exchange Factor and (ii)
                                  a fraction, the numerator of which is the
                                  Closing Price on the Trading Day preceding
                                  the ex-dividend date, and the denominator of
                                  which is the amount by which the Closing
                                  Price on the Trading Day preceding the
                                  ex-dividend date exceeds the Extraordinary
                                  Dividend Amount. The "Extraordinary Dividend
                                  Amount" with respect to an Extraordinary
                                  Dividend for the Underlying Stock shall equal
                                  (i) in the case of cash dividends or other
                                  distributions that constitute regular
                                  dividends, the amount per share of such
                                  Extraordinary Dividend minus the amount per
                                  share of the immediately preceding
                                  non-Extraordinary Dividend for the Underlying
                                  Stock or (ii) in the case of cash dividends
                                  or other distributions that do not constitute
                                  regular dividends, the amount per share of
                                  such Extraordinary Dividend. To the extent an
                                  Extraordinary Dividend is not paid in cash,
                                  the value of the non-cash component shall be
                                  determined by the Calculation Agent, whose
                                  determination shall be conclusive. A
                                  distribution on the Underlying Stock
                                  described in clause (i), (iv) or (v) of
                                  paragraph 5 below that also constitutes an
                                  Extraordinary Dividend shall cause an
                                  adjustment to the Exchange Factor pursuant
                                  only to clause (i), (iv) or (v) of paragraph
                                  5, as applicable.

                                  5. If (i) there occurs any reclassification
                                  or change of the Underlying Stock, including,
                                  without limitation, as a result of the
                                  issuance of any tracking stock by the
                                  Underlying Company, (ii) the Underlying
                                  Company or any surviving entity or subsequent
                                  surviving entity of the Underlying Company
                                  (an "Underlying Company Successor") has been
                                  subject to a merger, combination or
                                  consolidation and is not the surviving
                                  entity, (iii) any statutory exchange of
                                  securities of the Underlying Company or any
                                  Underlying Company Successor with another
                                  corporation occurs (other than pursuant to
                                  clause (ii) above), (iv) the Underlying
                                  Company is

                                      13
<PAGE>

                                  liquidated, (v) the Underlying Company issues
                                  to all of its shareholders equity securities
                                  of an issuer other than the Underlying
                                  Company (other than in a transaction
                                  described in clause (ii), (iii) or (iv)
                                  above) (a "Spin-off Event") or (vi) a tender
                                  or exchange offer or going-private
                                  transaction is consummated for all the
                                  outstanding shares of the Underlying Stock
                                  (any such event in clauses (i) through (vi),
                                  a "Reorganization Event"), the method of
                                  determining the amount payable upon exchange
                                  at maturity for each HITS shall be adjusted
                                  to provide that holders shall be entitled to
                                  receive at maturity, in respect of the stated
                                  principal amount of each HITS either:

                                      (a) if (x) the trading price of the
                                      Underlying Stock at any time on any
                                      Trading Day from and including the
                                      Pricing Date to and including the
                                      effective date of the Reorganization
                                      Event, or (y) the Exchange Property Value
                                      (as defined below) at any time on any
                                      Trading Day from and including the
                                      effective date of the Reorganization
                                      Event to and including the Determination
                                      Date has not decreased to or below the
                                      Trigger Price, and amount of cash equal
                                      to the stated principal amount of each
                                      HITS, or

                                      (b) if (x) the trading price of the
                                      Underlying Stock at any time on any
                                      Trading Day from and including the
                                      Pricing Date to and including the
                                      effective date of the Reorganization
                                      Event, or (y) the Exchange Property Value
                                      (as defined below) at any time on any
                                      Trading Day from and including the
                                      effective date of the Reorganization
                                      Event to and including the Determination
                                      Date has decreased to or below the
                                      Trigger Price, securities, cash or any
                                      other assets distributed to holders of
                                      the Underlying Stock in or as a result of
                                      any such Reorganization Event, including
                                      (A) in the case of the issuance of
                                      tracking stock, the reclassified share of
                                      the Underlying Stock, (B) in the case of
                                      a Spin-off Event, the share of the
                                      Underlying Stock with respect to which
                                      the spun-off security was issued, and (C)
                                      in the case of any other Reorganization
                                      Event where the Underlying Stock
                                      continues to be held by the holders
                                      receiving such distribution, the
                                      Underlying Stock (collectively, the

                                      14
<PAGE>

                                      "Exchange Property"), in an amount equal
                                      to the amount of Exchange Property
                                      delivered with respect to a number of
                                      shares of the Underlying Stock equal to
                                      the Exchange Ratio times the Exchange
                                      Factor each determined at the time of the
                                      Reorganization Event.

                                  If Exchange Property consists of more than
                                  one type of property, the Issuer shall
                                  deliver to the Depositary, as holder of the
                                  HITS, at maturity a pro rata share of each
                                  such type of Exchange Property. If Exchange
                                  Property includes a cash component, holders
                                  shall not receive any interest accrued on
                                  such cash component. In the event Exchange
                                  Property consists of securities, such
                                  securities shall, in turn, be subject to the
                                  antidilution adjustments set forth in
                                  paragraphs 1 through 5.

                                  For purposes of determining whether or not
                                  the Exchange Property Value has decreased to
                                  or below the Trigger Level at any time on any
                                  Trading Day from and including the time of
                                  the Reorganization Event to and including the
                                  Determination Date, "Exchange Property Value"
                                  means (i) for any cash received in any
                                  Reorganization Event, the value, as
                                  determined by the Calculation Agent, as of
                                  the date of receipt, of such cash received
                                  for one share of the Underlying Stock, as
                                  adjusted by the Exchange Factor as the time
                                  of such Reorganization Event, (ii) for any
                                  property other than cash or securities
                                  received in any such Reorganization Event,
                                  the market value, as determined by the
                                  Calculation Agent in its sole discretion, as
                                  of the date of receipt, of such Exchange
                                  Property received for one share of the
                                  Underlying Stock, as adjusted by the Exchange
                                  Factor at the time of such Reorganization
                                  Event and (iii) for any security received in
                                  any such Reorganization Event, an amount
                                  equal to the Intraday Price, as of the time
                                  at which the Exchange Property Value is
                                  determined, per share of such security
                                  multiplied by the quantity of such security
                                  received for each share of the Underlying
                                  Stock, as adjusted by the Exchange Factor at
                                  the time of such Reorganization Event.

                                      15
<PAGE>

                                  For purposes of paragraph 5 above, in the
                                  case of a consummated tender or exchange
                                  offer or going-private transaction involving
                                  consideration of particular types, Exchange
                                  Property shall be deemed to include the
                                  amount of cash or other property delivered by
                                  the offeror in the tender or exchange offer
                                  (in an amount determined on the basis of the
                                  rate of exchange in such tender or exchange
                                  offer or going-private transaction). In the
                                  event of a tender or exchange offer or a
                                  going-private transaction with respect to
                                  Exchange Property in which an offeree may
                                  elect to receive cash or other property,
                                  Exchange Property shall be deemed to include
                                  the kind and amount of cash and other
                                  property received by offerees who elect to
                                  receive cash.

                                  Following the occurrence of any
                                  Reorganization Event referred to in paragraph
                                  5 above, (i) references to the "Underlying
                                  Stock" under "No Fractional Shares," "Price
                                  Event Acceleration" and "Alternate Exchange
                                  Calculation in Case of an Event of Default"
                                  shall be deemed to also refer to any other
                                  security received by holders of the
                                  Underlying Stock in any such Reorganization
                                  Event, and (ii) all other references in this
                                  HITS to "Underlying Stock" shall be deemed to
                                  refer to the Exchange Property into which
                                  this HITS is thereafter exchangeable and
                                  references to a "share" or "shares" of the
                                  Underlying Stock shall be deemed to refer to
                                  the applicable unit or units of such Exchange
                                  Property, unless the context otherwise
                                  requires.

                                  No adjustment to the Exchange Factor shall be
                                  required unless such adjustment would require
                                  a change of at least 0.1% in the Exchange
                                  Factor then in effect. The Exchange Factor
                                  resulting from any of the adjustments
                                  specified above shall be rounded to the
                                  nearest one hundred-thousandth, with five
                                  one-millionths rounded upward. Adjustments to
                                  the Exchange Factor shall be made up to the
                                  close of business on the Determination Date.

                                  No adjustments to the Exchange Factor or
                                  method of calculating the Exchange Factor
                                  shall be required other than as specified
                                  above.

                                      16
<PAGE>

                                  The Calculation Agent shall be solely
                                  responsible for the determination and
                                  calculation of any adjustments to the
                                  Exchange Factor or method of calculating the
                                  Exchange Factor and of any related
                                  determinations and calculations with respect
                                  to any distributions of stock, other
                                  securities or other property or assets
                                  (including cash) in connection with any
                                  corporate event described in paragraphs 1
                                  through 5 above, and its determinations and
                                  calculations with respect thereto shall be
                                  conclusive in the absence of manifest error.

                                  The Calculation Agent shall provide
                                  information as to any adjustments to the
                                  Exchange Factor or to the method of
                                  calculating the amount payable at maturity of
                                  this HITS made pursuant to paragraph 5 above
                                  upon written request by any holder of this
                                  HITS.

Market Disruption Event.........  Market Disruption Event means, with respect to
                                  the Underlying Stock:

                                      (i) a suspension, absence or material
                                      limitation of trading of the Underlying
                                      Stock on the primary market for the
                                      Underlying Stock for more than two hours
                                      of trading or during the one-half hour
                                      period preceding the close of the
                                      principal trading session in such market;
                                      or a breakdown or failure in the price
                                      and trade reporting systems of the
                                      primary market for the Underlying Stock
                                      as a result of which the reported trading
                                      prices for the Underlying Stock during
                                      the last one-half hour preceding the
                                      close of the principal trading session in
                                      such market are materially inaccurate; or
                                      the suspension, absence or material
                                      limitation of trading on the primary
                                      market for trading in options contracts
                                      related to the Underlying Stock, if
                                      available, during the one-half hour
                                      period preceding the close of the
                                      principal trading session in the
                                      applicable market, in each case as
                                      determined by the Calculation Agent in
                                      its sole discretion; and

                                      (ii)a determination by the Calculation
                                      Agent in its sole discretion that any
                                      event described in clause (i) above
                                      materially interfered with the ability of
                                      the Issuer or any of its affiliates to
                                      unwind or adjust

                                      17
<PAGE>

                                      all or a material portion of the hedge
                                      with respect to the HITS.

                                  For purposes of determining whether a Market
                                  Disruption Event has occurred: (1) a
                                  limitation on the hours or number of days of
                                  trading shall not constitute a Market
                                  Disruption Event if it results from an
                                  announced change in the regular business
                                  hours of the relevant exchange, (2) a
                                  decision to permanently discontinue trading
                                  in the relevant options contract shall not
                                  constitute a Market Disruption Event, (3)
                                  limitations pursuant to NYSE Rule 80A (or any
                                  applicable rule or regulation enacted or
                                  promulgated by the NYSE, any other
                                  self-regulatory organization or the
                                  Securities and Exchange Commission of scope
                                  similar to NYSE Rule 80A as determined by the
                                  Calculation Agent) on trading during
                                  significant market fluctuations shall
                                  constitute a suspension, absence or material
                                  limitation of trading, (4) a suspension of
                                  trading in options contracts on the
                                  Underlying Stock by the primary securities
                                  market trading in such options, if available,
                                  by reason of (x) a price change exceeding
                                  limits set by such securities exchange or
                                  market, (y) an imbalance of orders relating
                                  to such contracts or (z) a disparity in bid
                                  and ask quotes relating to such contracts
                                  shall constitute a suspension, absence or
                                  material limitation of trading in options
                                  contracts related to the Underlying Stock and
                                  (5) a suspension, absence or material
                                  limitation of trading on the primary
                                  securities market on which options contracts
                                  related to the Underlying Stock are traded
                                  shall not include any time when such
                                  securities market is itself closed for
                                  trading under ordinary circumstances.

Alternate Exchange Calculation
  in Case of an Event of
  Default.......................  In case an Event of Default with respect to
                                  the HITS shall have occurred and be
                                  continuing, the amount declared due and
                                  payable per each Stated Principal Amount of
                                  this HITS upon any acceleration of this HITS
                                  (an "Event of Default Acceleration") shall be
                                  determined by the Calculation Agent and shall
                                  be an amount in cash equal to either (i) the
                                  Stated Principal Amount of this HITS plus
                                  accrued but unpaid interest

                                      18
<PAGE>

                                  to but excluding the date of such
                                  acceleration or (ii) if the Trading Price of
                                  the Underlying Stock has decreased to or
                                  below the Trigger Price at any time on any
                                  Trading Day from and including the Pricing
                                  Date to and including the date of such
                                  acceleration, (x) the value, as determined
                                  based on the Closing Price of the Underlying
                                  Stock on the date of such acceleration, of a
                                  number of shares of the Underlying Stock at
                                  the Exchange Ratio multiplied by the Exchange
                                  Factor as of the date of acceleration and (y)
                                  accrued but unpaid interest to but excluding
                                  the date of such acceleration.

Treatment of HITS for
  United States Federal
  Income Tax Purposes...........  The Issuer, by its sale of this HITS, and the
                                  holder of this HITS (and any successor holder
                                  of, or holder of a beneficial interest in,
                                  this HITS), by its respective purchase
                                  hereof, agree (in the absence of an
                                  administrative determination or judicial
                                  ruling to the contrary) to characterize each
                                  Stated Principal Amount of this HITS for all
                                  tax purposes as a unit consisting of (i) an
                                  option (the "Option") granted by the holder
                                  to enter into a forward contract (the
                                  "Forward Contract"), pursuant to which
                                  Forward Contract the holder of this HITS will
                                  be required to purchase from us the
                                  Underlying Stock, for an amount equal to the
                                  Stated Principal Amount (the "Forward Price")
                                  at maturity or, alternatively, upon an
                                  earlier redemption of this HITS and (ii) a
                                  deposit with the Issuer of a fixed amount of
                                  cash, equal to the issue price per each
                                  Stated Principal Amount of this HITS, to
                                  secure the holder's obligation to purchase
                                  the Underlying Stock pursuant to the Forward
                                  Contract (the "Deposit"). The Issuer has
                                  determined that the Deposit bears a quarterly
                                  compounded yield of   % per annum, and the
                                  remainder of the interest payments on this
                                  HITS (   % per annum) is attributable to
                                  premiums on the Option. Notwithstanding the
                                  foregoing, any interest payments on this HITS
                                  made to non-U.S. investors will generally be
                                  withheld upon at a rate of 30%.

                                      19
<PAGE>

     Morgan Stanley, a Delaware corporation (together with its successors and
assigns, the "Issuer"), for value received, hereby promises to pay to CEDE &
CO., or registered assignees, the amount of cash or Underlying Stock (or the
amount of Exchange Property), as applicable, as determined in accordance with
the provisions set forth under "Payment at Maturity" above, due with respect to
the principal sum of U.S. $        (UNITED STATES DOLLARS                     )
on the Maturity Date specified above (except to the extent redeemed or repaid
prior to maturity) and to pay interest thereon at the Interest Rate per annum
specified above, from and including the Interest Accrual Date specified above
until the principal hereof is paid or duly made available for payment weekly,
monthly, quarterly, semiannually or annually in arrears as specified above as
the Interest Payment Period on each Interest Payment Date (as specified above),
commencing on the Interest Payment Date next succeeding the Interest Accrual
Date specified above, and at maturity (or on any redemption or repayment date);
provided, however, that if the Interest Accrual Date occurs between a Record
Date, as defined below, and the next succeeding Interest Payment Date, interest
payments will commence on the second Interest Payment Date succeeding the
Interest Accrual Date to the registered holder of this Note on the Record Date
with respect to such second Interest Payment Date; and provided, further, that
if this Note is subject to "Annual Interest Payments," interest payments shall
be made annually in arrears and the term "Interest Payment Date" shall be
deemed to mean the first day of March in each year.

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

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

                                      20
<PAGE>

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

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

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

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

                                      21
<PAGE>

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.

                                      22
<PAGE>

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

DATED:                                          MORGAN STANLEY

                                                By:
                                                    ----------------------------
                                                    Name:
                                                    Title:

TRUSTEE'S CERTIFICATE
OF AUTHENTICATION

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

JPMORGAN CHASE BANK, N.A.,
   as Trustee

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

                                      23
<PAGE>

                          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. If the face hereof indicates that this
Note is subject to "Modified Payment upon Acceleration or Redemption", the
amount of principal payable upon redemption will be limited to the aggregate
principal amount hereof multiplied by the sum of the Issue Price specified on
the face hereof (expressed as a percentage of the aggregate principal amount)
plus the original issue discount accrued from the Interest Accrual Date to the
date of redemption (expressed as a percentage of the aggregate principal
amount), with the amount of original issue discount accrued being calculated
using a constant yield method (as described below). Notice of redemption shall
be mailed to the registered holders of the Notes designated for redemption at
their addresses as the same shall appear on the Note register not less than 30
nor more than 60 calendar days prior to the date fixed for redemption or within
the Redemption Notice Period specified on the face hereof, subject to all the
conditions and provisions of the Senior Indenture. In the event of redemption
of this Note in

                                      24
<PAGE>

part only, a new Note or Notes for the amount of the unredeemed portion hereof
shall be issued in the name of the holder hereof upon the cancellation hereof.

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

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

     In the case where the Interest Payment Date or the Maturity Date (or any
redemption or repayment date) does not fall on a Business Day, payment of
interest, premium, if any, or principal otherwise payable on such date need not
be made on such date, but may be made on the

                                      25
<PAGE>

next succeeding Business Day with the same force and effect as if made on the
Interest Payment Date or on the Maturity Date (or any redemption or repayment
date), and no interest on such payment shall accrue for the period from and
after the Interest Payment Date or the Maturity Date (or any redemption or
repayment date) to such next succeeding Business Day.

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

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

     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

                                      26
<PAGE>

Issuer and the Trustee and executed by the registered holder in person or by
the holder's attorney duly authorized in writing. The date of registration of
any Note delivered upon any exchange or transfer of Notes shall be such that no
gain or loss of interest results from such exchange or transfer.

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

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

     If the face hereof indicates that this Note is subject to "Modified
Payment upon Acceleration or Redemption," then (i) if the principal hereof is
declared to be due and payable as described in the preceding paragraph, the
amount of principal due and payable with respect to this Note shall be limited
to the aggregate principal amount hereof multiplied by the sum of the

                                      27
<PAGE>

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

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

     If the face hereof indicates that this Note is subject to "Tax Redemption
and Payment of Additional Amounts," this Note may be redeemed, as a whole, at
the option of the Issuer at any time prior to maturity, upon the giving of a
notice of redemption as described below, at a redemption price equal to 100% of
the principal amount hereof, together with accrued interest to the date fixed
for redemption (except that if this Note is subject to "Modified Payment upon
Acceleration or Redemption," the amount of principal so payable will be limited
to the aggregate principal amount hereof multiplied by the sum of the Issue
Price specified on the face hereof (expressed as a percentage of the aggregate
principal amount) plus the original issue discount accrued from the Interest
Accrual Date to the date of redemption (expressed as a percentage of the
aggregate principal amount), with the amount of original issue discount accrued
being calculated using a constant yield method (as described above)), if the
Issuer determines that, as a result of any change in or amendment to the laws
(including a holding, judgment or as ordered by a court of competent
jurisdiction), or any regulations or rulings promulgated thereunder, of the
United States or of any political subdivision or taxing authority thereof or
therein affecting taxation, or any change in official position regarding the
application or interpretation of such laws, regulations or rulings, which
change or amendment occurs, becomes effective or, in the case of a change in
official position, is announced on or after the Initial Offering Date hereof,
the Issuer has or will become obligated to pay Additional Amounts, as defined
below, with respect to this Note as described below. Prior to the giving of any
notice of redemption pursuant to this paragraph, the Issuer shall deliver to
the Trustee (i) a certificate stating that the Issuer is entitled to effect
such redemption and setting forth a statement of facts showing that the
conditions precedent to the right of the Issuer to so redeem have occurred, and
(ii) an opinion of

                                      28
<PAGE>

independent legal counsel satisfactory to the Trustee to such effect based on
such statement of facts; provided that no such notice of redemption shall be
given earlier than 60 calendar days prior to the earliest date on which the
Issuer would be obligated to pay such Additional Amounts if a payment in
respect of this Note were then due.

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

     If the face hereof indicates that this Note is subject to "Tax Redemption
and Payment of Additional Amounts," the Issuer will, subject to certain
exceptions and limitations set forth below, pay such additional amounts (the
"Additional Amounts") to the holder of this Note who is a U.S. Alien as may be
necessary in order that every net payment of the principal of and interest on
this Note and any other amounts payable on this Note, after withholding or
deduction 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;

                                      29
<PAGE>

     (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).

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

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

                                      30
<PAGE>

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

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

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

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

     So long as this Note shall be outstanding, the Issuer will cause to be
maintained an office or agency for the payment of the principal of and premium,
if any, and interest on this Note as

                                      31
<PAGE>

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

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

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

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

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

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

                                      32
<PAGE>

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

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

                                      33
<PAGE>

                                 ABBREVIATIONS

     The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

          TEN COM - as tenants in common

          TEN ENT - as tenants by the entireties

          JT TEN  - as joint tenants with right of survivorship and not as
                    tenants in common

     UNIF GIFT MIN ACT - ______________________Custodian________________________
                                (Minor)                          (Cust)

     Under Uniform Gifts to Minors Act ______________________________
                                                  (State)

     Additional abbreviations may also be used though not in the above list.

                            -----------------------

                                      34
<PAGE>

     FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto

--------------------------------------------
[PLEASE INSERT SOCIAL SECURITY OR OTHER
     IDENTIFYING NUMBER OF ASSIGNEE]

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
   [PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE]

the within Note and all rights thereunder, hereby irrevocably constituting and
appointing such person attorney to transfer such note on the books of the
Issuer, with full power of substitution in the premises.

Dated:_______________________

NOTICE:  The signature to this assignment must correspond with the name as
         written upon the face of the within Note in every particular without
         alteration or enlargement or any change whatsoever.

                                      35
<PAGE>

                           OPTION TO ELECT REPAYMENT

     The undersigned hereby irrevocably requests and instructs the Issuer to
repay the within Note (or portion thereof specified below) pursuant to its
terms at a price equal to the principal amount thereof, together with interest
to the Optional Repayment Date, to the undersigned at

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
        (Please print or typewrite name and address of the undersigned)

     If less than the entire principal amount of the within Note is to be
repaid, specify the portion thereof which the holder elects to have repaid:
_________________; and specify the denomination or denominations (which shall
not be less than the minimum authorized denomination) of the Notes to be issued
to the holder for the portion of the within Note not being repaid (in the
absence of any such specification, one such Note will be issued for the portion
not being repaid): __________________.

Dated:________________________        __________________________________________
                                      NOTICE: The signature on this Option to
                                      Elect Repayment must correspond with the
                                      name as written upon the face of the
                                      within instrument in every particular
                                      without alteration or enlargement.

                                      36<PAGE>

                                                                   EXHIBIT 10.72

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT")
OR ANY APPLICABLE STATE SECURITIES LAWS. IT MAY NOT BE CONVERTED, SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN
EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

                                CONVERTIBLE NOTE

$125,000.00                                        King of Prussia, Pennsylvania

FOR VALUE RECEIVED, the undersigned, SEDONA CORPORATION, a Pennsylvania
Corporation ("Maker"), promises to pay to David R. Vey ("Holder"), with the
address of 11822 Justice Avenue Suite B-6 Baton Rouge, Louisiana 70816, the
principal sum of One Hundred Twenty-Five Thousand Dollars ($125,000.00),
together with interest thereon at the rate of eight percent (8%) per annum of
the principal sum of the convertible note until the earlier of Maturity or the
date upon which the unpaid balance shall be paid in full (the or this "Note").

         1. Definitions. The following definitions are applicable to the words,
phrases or terms used in this Note.

                  (a)      The term "Average Closing Price" shall mean the
                           average of the closing sales price of a share of the
                           Maker's common stock as reported by the Principal
                           Market.

                  (b)      The term "Common Stock" shall mean the Maker's common
                           stock, par value $0.001 per share.

                  (c)      The term "Holder" shall mean and include all
                           successors and assigns of any owner or holder of this
                           Note.

                  (d)      The term "Maker" shall mean and include all makers,
                           co-makers and other parties signing on the face of
                           this Note and their successors and assigns, and the
                           use of the plural number shall include the singular,
                           and vice versa.

                  (e)      The term "Maturity" shall mean the date on which this
                           Note shall be due and payable in full, which date
                           shall be May 23, 2006, unless theretofore converted.

                                      -1-
<PAGE>

                  (f)      The term "Principal Market" shall mean the American
                           Stock Exchange, the New York Stock Exchange, the
                           Nasdaq National Market, the Nasdaq Small Cap Market
                           or the OTC Bulletin Board, whichever is at the time
                           the principal trading exchange or market for the
                           Common Stock, based upon share volume.

         2. Terms of Payment. The Note shall be paid in full, as to principal
and any unpaid interest, on or before Maturity. Such Maturity may be extended by
mutual consent of the Holder and the Maker. Holder shall have the right to
convert the principal balance of the Note and accrued interest into Common Stock
at any time. Unless otherwise designated in writing, mailed or delivered to
Maker, the place for payment of the indebtedness evidenced by this Note shall be
the Holder's principal address as noted above. Payments received on this Note
shall be applied first to accrued interest, and the balance to principal.

         3. Interest. Interest shall be paid semi-annually in arrears. Interest
may be paid in cash or, at the election of the Maker, in shares of common stock
valued at the market price based on the average closing price for the five (5)
trading days prior to the date that each semi-annual interest payment becomes
due.

         4. Security. This note shall be secured by the existing Security
Agreement dated March 2003, by the Maker in favor of the Holder.

         5. Events of Default. The following shall constitute an Event of
Default:

                  (a) In the event Maker shall fail (i) to pay any sums due
hereunder when due, or (ii) to observe or perform any term, condition, covenant,
representation or warranty set forth herein, when due or required, or within any
period of time permitted thereunder for cure of any such default or
non-performance.

         6. Acceleration of Maturity. Upon the happening of any Event of
Default, the unpaid principal and interest due Holder shall, at the option of
the Holder, become immediately due and payable.

         7. Limitation on Interest. In no contingency, whether by reason of
acceleration of the Maturity of this Note or otherwise, shall the interest
contracted for, charged or received by Holder exceed the maximum amount
permissible under applicable law. If, from any circumstance whatsoever, interest
would otherwise be payable to Holder in excess of the maximum lawful amount, the
interest payable to Holder shall be reduced to the maximum amount permitted
under applicable law; and, if from any circumstance the Holder shall ever
receive anything of value deemed interest by applicable law in excess of the
maximum lawful amount, an amount equal to any excessive interest shall be
applied to the reduction of the principal of this Note and not to the payment of
interest, or if such excessive interest exceeds the unpaid balance of principal
of the Note such excess shall be refunded to Maker. All interest paid or agreed

                                      -2-
<PAGE>

to be paid to Holder shall, to the extent permitted by applicable law, be
amortized, pro-rated, allocated, and spread throughout the full period until
payment in full of the principal of the Note (including the period of any
renewal or extension thereof) so that interest thereon for such full period
shall not exceed the maximum amount permitted by applicable law.

         8. Remedies; Nonwaiver. Failure of Holder to exercise any right or
remedy available to Holder upon the occurrence of an Event of Default hereunder
shall not constitute a waiver on the part of Holder of the right to exercise any
such right or remedy for that Event of Default or any subsequent Event of
Default. The exercise of any remedy by Holder shall not constitute an election
of any such remedy to the exclusion of any other remedies afforded Holder at law
or in equity, all such remedies being nonexclusive and cumulative. If an Event
of Default occurs under this Note and this Note is referred to an attorney at
law for collection, Maker agrees to pay all costs incurred by Holder incident to
collection, including but not limited to reasonable attorney fees (such fees not
to exceed ten percent (10%) of the then outstanding principal balance of the
Note), enforceable as a contract of indemnity, plus all court costs and other
expenses incurred at or prior to trial and in connection with any and all
appeals.

         9. Waivers. The Maker, endorsers, sureties and guarantors hereof, if
any, severally (i) waive presentment, protest and demand, (ii) waive notice of
protest, demand, dishonor and nonpayment of this Note, and (iii) expressly agree
that this Note may be renewed in whole or in part, or any nonpayment hereunder
may be extended, or a new note of different form may be substituted for this
Note or changes may be made in consideration of the extension of the Maturity
date hereof, or any combination thereof, from time to time, but, in any singular
event or any combination of such events, neither Maker nor any endorser, surety
or guarantor will be released from liability by reason of the occurrence of any
such event, nor shall Holder hereof be deemed by the occurrence of any such
event to have waived or surrendered, either in whole or in part, any right it
otherwise might have.

         10. Option to Convert Note Into Stock.

                  (a) Holder shall have the sole right and option to convert
(the "Conversion Right") the unpaid principal balance of this Note, together
with all accrued and unpaid interest, into shares of Maker's voting common stock
(the "Shares") having all rights inherent in common stock under the Maker's
Articles of Incorporation and Bylaws in effect as of the date hereof (the
"Option"). The number Shares to be paid on conversion of the full principal
balance shall be 568,181. The number of Shares to be paid on conversion of the
accrued and unpaid interest shall be determined by dividing the amount of the
accrued and unpaid interest by the average closing price for the five (5)
trading days prior to the conversion date.

                  (b) Maker shall file a registration statement to register for
resale under the Securities Act of 1933, as amended (the "Securities Act") in a
timely manner for all Shares that may be issued under this Note.

                                      -3-
<PAGE>

11.      Conversion.

                  (a) The Holder may elect in writing to convert all or
designated part of the principal amount of the Notes at any time before the Note
is paid in full. Before the Holder shall be entitled to convert this Note into
Shares, the Holder shall surrender this Note, duly endorsed, at the office of
the Maker, and shall give written notice to the Maker at its principal corporate
office of the election to convert the same and shall state therein the name or
names in which the certificate or certificates for the Shares are to be issued
(the "Notice of Conversion").

                  (b) The Maker shall have one (1) business day from its receipt
of the Notice of Conversion to elect to prepay the Note by notifying Holder in
writing of such election and, within five (5) business days thereafter,
delivering to Holder the payment set forth in Paragraph 12 below. In the event
that Maker prepays the Note, Holder's right to convert the Note shall terminate,
and his Notice of Conversion shall not be effective.

                  (c) In the event that the Maker does not prepay as set forth
in subparagraph (b), it shall promptly issue and deliver to the Holder, or to
such persons at the address specified by the Holder, a certificate or
certificates for the Shares to which the Holder is entitled. Such conversion
shall be deemed to have been made immediately prior to the close of business on
the date of surrender of this Note, and the persons entitled to receive the
Shares issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such Shares as of such date. No fractional shares
shall be issued upon conversion of this Note, and the number of Shares to be
issued shall be rounded down to the nearest whole share. If the conversion is
not canceled by prepayment, the outstanding portion of the principal balance
designated by the Holder will be converted into Shares at $0.22 per share, and
accrued and unpaid interest will be converted into Shares at the market price
based on the average closing price for the five (5) trading days prior to the
conversion date.

         12. Prepayment. The Maker may prepay any part of or the entire
principal balance of the Note plus interest in cash at any time without penalty,
subject to the right of the Holder to convert the Note into Shares as set forth
below. Prior to prepaying, the Maker shall provide Holder with written notice of
prepayment (the "Prepayment Notice"). The Holder shall have five (5) business
days thereafter in which to elect to convert all of the Note by complying with
subparagraph 11(a), above, in which event the Note shall be converted as set
forth in subparagraph 11(c), above, and subparagraph 11(b) shall not apply. If
Holder does not elect to convert after receipt of the Prepayment Notice, he
shall lose his right to convert as well his right to accrue additional interest
on the Note following the date of the Prepayment Notice, in which event his sole
right under the Note will be to deliver the Note to Maker for prepayment.

         13. Redemption. In the event the Maker receives an investment (in the
form of debt, equity, a convertible instrument, or any combination thereof) of
$1.0 million or more from a party other than the Holder, during the life of this
Note, the Holder may elect in writing to redeem the outstanding Note for cash.

                                      -4-
<PAGE>

The redemption price shall be the unpaid principal balance and the accrued and
unpaid interest. Maker shall pay such redemption price promptly upon receipt of
the notice of redemption together with this Note.

         14. Controlling Law. This Note shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania (other than its
conflict of laws principles) and the provisions of applicable federal law.

         15. Shareholder Status. Nothing contained in this Note shall be
construed as conferring upon the Holder the right to vote or to receive
dividends or to consent or to receive notice as a shareholder in respect of any
meeting of shareholders for the election of directors of the Maker or of any
other matter, or any rights whatsoever as a shareholder of the Maker prior to
conversion hereof.

         16. Notices. Any notice required or permitted under this Note shall be
in writing and shall be deemed to have been given on the date of delivery, if
personally delivered or delivered by courier, overnight express or other method
of verified delivery, to the party to whom notice is to be given, and addressed
to the addressee at the address of the addressee set forth herein, or the most
recent address, specified by written notice, given to the sender pursuant to
this paragraph.

          EFFECTIVE as of the 23rd day of May, 2005.

Maker's Address:                                 MAKER:
1003 W. 9th Avenue, 2nd Floor                    SEDONA CORPORATION
King of Prussia, PA  19406

                                                 By:
                                                     ---------------------------
                                                     Marco A. Emrich
                                                     Chief Executive Officer

                                                 By:
                                                     ---------------------------
                                                     Anita M. Primo
                                                     Chief Financial Officer

                                                 Date:  12-06-05

                                      -5-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00102-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00102-of-00352.parquet"}]]