<SUBMISSION>
<ACCESSION-NUMBER>0000950103-06-002858
<TYPE>424B2
<PUBLIC-DOCUMENT-COUNT>2
<FILING-DATE>20061222
<DATE-OF-FILING-DATE-CHANGE>20061222
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>MORGAN STANLEY
<CIK>0000895421
<ASSIGNED-SIC>6211
<IRS-NUMBER>363145972
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1130
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>424B2
<ACT>33
<FILE-NUMBER>333-131266
<FILM-NUMBER>061295819
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>1585 BROADWAY
<CITY>NEW YORK
<STATE>NY
<ZIP>10036
<PHONE>212-761-4000
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>1585 BROADWAY
<CITY>NEW YORK
<STATE>NY
<ZIP>10036
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>MORGAN STANLEY DEAN WITTER & CO
<DATE-CHANGED>19980326
</FORMER-COMPANY>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>DEAN WITTER DISCOVER & CO
<DATE-CHANGED>19960315
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>424B2
<SEQUENCE>1
<FILENAME>dp04200_424b2.htm
<TEXT>
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<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td valign="top">&nbsp;</td>
    <td align="right" valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td width="50%" valign="top"><i><font face="serif">PROSPECTUS SUPPLEMENT</font></i></td>
    <td width="50%" align="right" valign="top"><i><font face="serif">Filed Pursuant to Rule 424(b)(2)</font></i></td>
  </tr>
  <tr>
    <td width="50%" valign="top"><i><font face="serif">(To Prospectus dated January 25, 2006)</font></i></td>
    <td width="50%" align="right" valign="top"><i><font face="serif">Registration Statement No. 333-131266 </font></i></td>
  </tr>
</table>

<table border=0 width=100% cellspacing=0 cellpadding=0>
  <tr valign="bottom">
    <td align=center><img src="ms_logo.jpg"></td>
  </tr>
  <tr valign="bottom">
    <td align=center width=100%><b><i><font size=2 face="serif">GLOBAL MEDIUM-TERM
            NOTES, SERIES F</font></i></b> </td>
  </tr>
  <tr valign="bottom">
    <td align=center width=100%><i><font size=2 face="serif">Senior Fixed Rate
          Notes</font></i> </td>
  </tr>
  <tr>
    <td colspan=1 width=100%><hr width="30%" size=1 noshade>
    </td>
  </tr>
  <tr valign="bottom">
    <td align=center width=100%><b><i><font size=5 face="serif">Reverse Convertible
            Securities</font></i></b> </td>
  </tr>
  <tr valign="bottom">
    <td align=center width=100%><b><i><font size=5 face="serif">(&#147;RevCons</font></i></b><b><i><sup><font size=5 face="serif">SM</font></sup></i></b><b><i><font size=5 face="serif">&#148;</font></i></b><b><i><font size=5 face="serif">)</font></i></b> </td>
  </tr>
  <tr>
    <td colspan=1 width=100%><hr width="30%" size=1 noshade>
    </td>
  </tr>
</table>
<P align="left"> <I><FONT size=2 face="serif">We, Morgan Stanley, may offer from
      time to time reverse convertible securities, which we refer to as RevCons</FONT></I><I><SUP><FONT size=2 face="serif">SM</FONT></SUP></I><I><FONT size=2 face="serif">,
      that pay at maturity either an amount in U.S. dollars or shares of common
      stock of an underlying company not affiliated with us. The specific terms
      of any such RevCons that we offer, including the name of the underlying
      company, will be included in a pricing supplement. We may offer, and describe
      the terms for, more than one RevCons through a single pricing supplement.
      If the terms described in the applicable pricing supplement are inconsistent
      with those described herein or in the accompanying prospectus, the terms
      described in the applicable pricing supplement will prevail. The RevCons
      will have the following general terms: </FONT></I></P>
<table width="100%"  border="0" cellpadding="0" cellspacing="0">
  <tr valign="top">
    <td>&#149;</td>
    <td width="44%"><i><font size=2 face="serif">The RevCons do not guarantee
          any return of</font></i> <i><font size=2 face="serif">principal at
          maturity.</font></i></td>
    <td width="2%">&nbsp;</td>
    <td width="5%">&#149;</td>
    <td width="44%"><i><font size=2 face="serif">The RevCons will pay a coupon
          at a fixed rate per</font></i> <i><font size=2 face="serif">annum on
          the principal amount of each RevCons,</font></i> <i><font size=2 face="serif">specified
          in the applicable pricing supplement, on the</font></i> <i><font size=2 face="serif">interest
          payment dates specified in the applicable</font></i> <i><font size=2 face="serif">pricing
          supplement.</font></i></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td width="44%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="5%">&nbsp;</td>
    <td width="44%">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="5%" rowspan="4">&#149;</td>
    <td width="44%" rowspan="4"><i><font size=2 face="serif">At maturity, you
          will receive either an amount in cash</font></i> <i><font size=2 face="serif">equal
          to the principal amount of each RevCons or, if</font></i> <i><font size=2 face="serif">the
          closing price of the underlying stock at maturity</font></i> <i><font size=2 face="serif">is
          less than its initial share price </font></i><b><i><font size=2 face="serif">and </font></i></b><i><font size=2 face="serif">its
          trading price</font></i> <i><font size=2
face="serif">has decreased, at any time, to or below the trigger</font></i> <i><font size=2 face="serif">price
          specified in the applicable pricing supplement,</font></i> <i><font size=2 face="serif">shares
          of common stock of the underlying company at</font></i> <i><font size=2 face="serif">the
          applicable exchange ratio in exchange for each</font></i> <i><font size=2 face="serif">RevCons,
          or the cash value of such common stock.</font></i></td>
    <td width="2%">&nbsp;</td>
    <td width="5%">&#149;</td>
    <td width="44%"><p><i><font size=2 face="serif">The RevCons will be senior
            unsecured obligations of</font></i> <i><font size=2 face="serif">ours.</font></i></p></td>
  </tr>
  <tr valign="top">
    <td width="2%">&nbsp;</td>
    <td width="5%">&nbsp;</td>
    <td width="44%">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="2%">&nbsp;</td>
    <td width="5%">&#149;</td>
    <td width="44%"><p><i><font size=2 face="serif">The RevCons will be held
            in global form by The</font></i> <i><font size=2 face="serif">Depository
            Trust Company, unless the pricing</font></i> <i><font size=2 face="serif">supplement
            provides otherwise.</font></i></p></td>
  </tr>
  <tr valign="top">
    <td width="2%">&nbsp;</td>
    <td width="5%">&nbsp;</td>
    <td width="44%">&nbsp;</td>
  </tr>
</table>
<P align="left"> <I><FONT size=2 face="serif">The applicable pricing supplement
      will describe the specific terms of the </FONT></I><I><FONT size=2 face="serif">RevCons</FONT></I><I><FONT size=2 face="serif">,
      including any changes to the terms specified in this prospectus supplement.
      See &#147;Description of RevCons&#148; on S-12. </FONT></I></P>
<hr align=center width=15% size=1 noshade>
<P align="left"> <B><I><FONT face="serif">Investing in the RevCons involves risks
        not associated with an investment in ordinary debt securities. See &#147;Risk
        Factors&#148; beginning on S-8. </FONT></I></B></P>
<hr align=center width=15% size=1 noshade>
<P align="left"> <I><FONT size=2 face="serif">The Securities and Exchange Commission
      and state securities regulators have not approved or disapproved these
      securities, or determined if this prospectus supplement or the accompanying
      prospectus is truthful or complete. Any representation to the contrary
      is a criminal offense. </FONT></I></P>
<P align="left"> <I><FONT size=2 face="serif">Morgan Stanley &amp; Co. Incorporated
      and Morgan Stanley DW Inc., our wholly owned subsidiaries, have agreed
      to use reasonable efforts to solicit offers to purchase these securities
      as our agents. The agents may also purchase these securities as principal
      at prices to be agreed upon at the time of sale. The agents may resell
      any securities they purchase as principal at prevailing market prices,
      or at other prices, as the agents determine. </FONT></I></P>
<P align="left"> <I><FONT size=2 face="serif">Morgan Stanley &amp; Co. Incorporated
      and Morgan Stanley DW Inc. may use this prospectus supplement and the accompanying
      prospectus in connection with offers and sales of the securities in market-making
      transactions.</FONT></I></P>
<hr align=center width=15% size=1 noshade>
<P align="center"> <B><I><FONT size=5 face="serif">MORGAN STANLEY</FONT></I></B></P>
<P align="left"> <I><FONT size=2 face="serif">December 22, 2006</FONT></I></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="center"> <B><FONT size=2 face="serif">TABLE OF CONTENTS </FONT></B></P>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
  <TR valign="bottom">
    <TD align=left width=35%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=8%><B><U><FONT size=2 face="serif">Page</FONT></U></B> </TD>
    <TD  width=10%>&nbsp;</TD>
    <TD align=left width=35%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=8%><B><U><FONT size=2 face="serif">Page</FONT></U></B> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=35%><B><FONT size=2 face="serif">Prospectus Supplement</FONT></B> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=8%>&nbsp;</TD>
    <TD  width=10%>&nbsp;</TD>
    <TD align=left width=35%><B><FONT size=2 face="serif">Prospectus</FONT></B> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=8%>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align=left>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=35%><FONT size=2 face="serif">Summary</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=8%><FONT size=2 face="serif">S-3</FONT> </TD>
    <TD  width=10%>&nbsp;</TD>
    <TD align=left width=35%><FONT size=2 face="serif">Summary</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=8%><FONT size=2 face="serif">3</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=35%><FONT size=2 face="serif">Hypothetical Payments
        on the RevCons</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=8%><FONT size=2 face="serif">S-7</FONT> </TD>
    <TD  width=10%>&nbsp;</TD>
    <TD align=left width=35%><FONT size=2 face="serif">Foreign Currency Risks</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=8%><FONT size=2 face="serif">7</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=35%><FONT size=2 face="serif">Risk Factors</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=8%><FONT size=2 face="serif">S-8</FONT> </TD>
    <TD  width=10%>&nbsp;</TD>
    <TD align=left width=35%><FONT size=2 face="serif">Where You Can Find More
        Information</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=8%><FONT size=2 face="serif">9</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=35%><FONT size=2 face="serif">Description of RevCons</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=8%><FONT size=2 face="serif">S-12</FONT> </TD>
    <TD  width=10%>&nbsp;</TD>
    <TD align=left width=35%><FONT size=2 face="serif">Consolidated Ratios of
        Earnings to Fixed</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=8%>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=35%><FONT size=2 face="serif">Underlying Company and
        Stock &#150; Public</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=8%>&nbsp;</TD>
    <TD  width=10%>&nbsp;</TD>
    <TD align=left width=35%>&nbsp; &nbsp;<FONT size=2 face="serif">Charges and
        Earnings to Fixed Charges</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=8%>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=35%>&nbsp; &nbsp;<FONT size=2 face="serif">Information</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=8%><FONT size=2 face="serif">S-22</FONT> </TD>
    <TD  width=10%>&nbsp;</TD>
    <TD align=left width=35%>&nbsp; &nbsp;<FONT size=2 face="serif">and Preferred
        Stock Dividends</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=8%><FONT size=2 face="serif">11</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=35%><FONT size=2 face="serif">Use of Proceeds and Hedging</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=8%><FONT size=2 face="serif">S-22</FONT> </TD>
    <TD  width=10%>&nbsp;</TD>
    <TD align=left width=35%><FONT size=2 face="serif">Morgan Stanley</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=8%><FONT size=2 face="serif">12</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=35%><FONT size=2 face="serif">Securities Offered on
        A Global Basis</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=8%><FONT size=2 face="serif">S-23</FONT> </TD>
    <TD  width=10%>&nbsp;</TD>
    <TD align=left width=35%><FONT size=2 face="serif">Use of Proceeds</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=8%><FONT size=2 face="serif">13</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=35%><FONT size=2 face="serif">ERISA</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=8%><FONT size=2 face="serif">S-23</FONT> </TD>
    <TD  width=10%>&nbsp;</TD>
    <TD align=left width=35%><FONT size=2 face="serif">Description of Debt Securities</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=8%><FONT size=2 face="serif">13</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=35%><FONT size=2 face="serif">United States Federal
        Taxation</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=8%><FONT size=2 face="serif">S-24</FONT> </TD>
    <TD  width=10%>&nbsp;</TD>
    <TD align=left width=35%><FONT size=2 face="serif">Description of Units</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=8%><FONT size=2 face="serif">39</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=35%><FONT size=2 face="serif">Plan of Distribution</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=8%><FONT size=2 face="serif">S-32</FONT> </TD>
    <TD  width=10%>&nbsp;</TD>
    <TD align=left width=35%><FONT size=2 face="serif">Description of Warrants</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=8%><FONT size=2 face="serif">44</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=35%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=8%>&nbsp;</TD>
    <TD  width=10%>&nbsp;</TD>
    <TD align=left width=35%><FONT size=2 face="serif">Description of Purchase
        Contracts</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=8%><FONT size=2 face="serif">47</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=35%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=8%>&nbsp;</TD>
    <TD  width=10%>&nbsp;</TD>
    <TD align=left width=35%><FONT size=2 face="serif">Description of Capital
        Stock</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=8%><FONT size=2 face="serif">48</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=35%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=8%>&nbsp;</TD>
    <TD  width=10%>&nbsp;</TD>
    <TD align=left width=35%><FONT size=2 face="serif">Forms of Securities</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=8%><FONT size=2 face="serif">59</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=35%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=8%>&nbsp;</TD>
    <TD  width=10%>&nbsp;</TD>
    <TD align=left width=35%><FONT size=2 face="serif">Securities Offered on
        a Global Basis through</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=8%>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=35%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=8%>&nbsp;</TD>
    <TD  width=10%>&nbsp;</TD>
    <TD align=left width=35%>&nbsp; &nbsp;<FONT size=2 face="serif">the Depositary</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=8%><FONT size=2 face="serif">63</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=35%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=8%>&nbsp;</TD>
    <TD  width=10%>&nbsp;</TD>
    <TD align=left width=35%><FONT size=2 face="serif">United States Federal
        Taxation</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=8%><FONT size=2 face="serif">67</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=35%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=8%>&nbsp;</TD>
    <TD  width=10%>&nbsp;</TD>
    <TD align=left width=35%><FONT size=2 face="serif">Plan of Distribution</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=8%><FONT size=2 face="serif">71</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=35%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=8%>&nbsp;</TD>
    <TD  width=10%>&nbsp;</TD>
    <TD align=left width=35%><FONT size=2 face="serif">Legal Matters</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=8%><FONT size=2 face="serif">73</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=35%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=8%>&nbsp;</TD>
    <TD  width=10%>&nbsp;</TD>
    <TD align=left width=35%><FONT size=2 face="serif">Experts</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=8%><FONT size=2 face="serif">73</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=35%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=8%>&nbsp;</TD>
    <TD  width=10%>&nbsp;</TD>
    <TD align=left width=35%><FONT size=2 face="serif">ERISA Matters for Pension
        Plans and</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=8%>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=35%>&nbsp;</TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=left width=8%>&nbsp;</TD>
    <TD  width=10%>&nbsp;</TD>
    <TD align=left width=35%>&nbsp; &nbsp;<FONT size=2 face="serif">Insurance
        Companies</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=right width=8%><FONT size=2 face="serif">74</FONT> </TD>
  </TR>
</TABLE>
<P align="left"> <B><FONT size=2 face="serif">You should rely only on the information
      contained or incorporated by reference in this prospectus supplement, the
      prospectus and the applicable pricing supplement. We have not authorized
      anyone else to provide you with different or additional information. We
      are offering to sell these securities and seeking offers to buy these securities
      only in jurisdictions where offers and sales are permitted. As used in
      this prospectus supplement, the &#147;Company,&#148;
  &#147;we,&#148; &#147;us,&#148; and &#147;our&#148; refer to Morgan Stanley. </FONT></B></P>
<P align="center"> <FONT size=2 face="serif">S-2</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="center"> <B><FONT size=2 face="serif">SUMMARY </FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">The
      following summary describes the RevCons offered under this program in general
      terms only. You should read the summary together with the more detailed
      information contained in this prospectus supplement, in the accompanying
      prospectus and in the applicable pricing supplement. We may also prepare
      free writing prospectuses that describe particular issuances of RevCons,
      including multiple issuances of distinct RevCons. Any free writing prospectus
      should also be read in connection with this prospectus supplement and the
      accompanying prospectus. For purposes of this prospectus supplement, any
      references to an applicable pricing supplement may also refer to a free
      writing prospectus, unless the context otherwise requires. </FONT></I></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">We
      will sell these RevCons primarily in the United States, but may also sell
      them outside the United States or both in and outside of the United States
      simultaneously. The RevCons we offer under this prospectus supplement are
      among the notes we refer to as our Series F medium-term notes. We refer
      to the offering of the Series F medium-term notes as our Series F program.
      See &#147;Plan of Distribution&#148; in this prospectus supplement. </FONT></I></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">&#147;RevCons&#148; is
      a service mark of Morgan Stanley. </FONT></I></P>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
  <TR valign="top">
    <TD width=30%>&nbsp;</TD>
    <TD width=5%>&nbsp;</TD>
    <TD width=65% colspan=1><P align="center"><B><FONT size=2 face="serif">The
            RevCons</FONT></B></P></TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan=1>&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD width=30%><P><B><FONT size=2 face="serif">General terms of the RevCons</FONT></B></P></TD>
    <TD width=5%>&nbsp;</TD>
    <TD width=65% colspan=1><P><FONT size=2 face="serif">Unlike ordinary debt
          securities, the RevCons do not guarantee any return of principal at
          maturity. Instead, at the scheduled maturity date, you will receive
          either:</FONT></P></TD>
  </TR>
</TABLE>
<table width="100%"  border="0" cellpadding="0" cellspacing="0">
  <tr valign="top">
    <td width="35%">&nbsp;</td>
    <td width="5%">&nbsp;</td>
    <td width="60%">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="35%">&nbsp;</td>
    <td>&#149;</td>
    <td width="60%"><p><font size=2 face="serif">an amount in cash equal to the
          stated principal amount per RevCons; or</font></p></td>
  </tr>
  <tr valign="top">
    <td width="35%">&nbsp;</td>
    <td>&#149;</td>
    <td width="60%"><font size=2 face="serif">if the closing price of the common
        stock of the underlying company specified in</font> <font size=2 face="serif">the
        applicable pricing supplement, which we refer to as the underlying stock,
        on</font> <font size=2
face="serif">the determination date is </font><b><font size=2 face="serif">less
        than </font></b><font size=2 face="serif">the initial share price </font><b><font size=2 face="serif">AND </font></b><font size=2 face="serif">the
        trading price of</font> <font size=2 face="serif">the underlying stock </font><b><font size=2 face="serif">has </font></b><font size=2 face="serif">decreased
        to or below the specified trigger price </font><b><font size=2 face="serif">at
        any</font></b> <b><font
size=2 face="serif">time on any trading day </font></b><font size=2 face="serif">from
        and including the pricing date to and including the</font> <font size=2 face="serif">determination
        date, shares of underlying stock in exchange for each RevCons at</font> <font size=2 face="serif">the
        applicable exchange ratio, or at our option, the cash value of such underlying</font> <font size=2 face="serif">stock
        as of the determination date. The underlying stock (or the cash value</font> <font size=2
face="serif">thereof) will be worth less than the stated principal amount of
        the RevCons and</font> <font size=2 face="serif">could be zero.</font></td>
  </tr>
  <tr valign="top">
    <td width="35%">&nbsp;</td>
    <td>&nbsp;</td>
    <td width="60%">&nbsp;</td>
  </tr>
</table>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
  <TR valign="top">
    <TD width=30%><P><B><FONT size=2 face="serif">Coupon payments</FONT></B></P></TD>
    <TD width=5%>&nbsp;</TD>
    <TD width=65% colspan=1><P><FONT size=2 face="serif">The RevCons will pay
          a coupon at a fixed rate per annum on the stated principal amount of
          each RevCons on the interest payment dates, in each case as specified
          in the applicable pricing supplement. You will be entitled to receive
          all coupon payments on the stated principal amount of your RevCons
          whether we deliver cash or shares of underlying stock at maturity.</FONT></P></TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan=1>&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD><p align="left"> <b><font size=2 face="serif">Payment at maturity; no
            guaranteed return on principal </font></b></p></TD>
    <TD>&nbsp;</TD>
    <TD colspan=1><p align="left"> <font size=2 face="serif">At maturity, for
          each RevCons which you hold, you will receive either: </font></p></TD>
  </TR>
</TABLE>
<table width="100%"  border="0" cellpadding="0" cellspacing="0">
  <tr valign="top">
    <td width="35%">&nbsp;</td>
    <td width="5%">&#149;</td>
    <td width="60%"><p><FONT size=2 face="serif">an amount in cash equal to the
          stated principal amount per RevCons; or</FONT></p></td>
  </tr>
  <tr valign="top">
    <td width="35%">&nbsp;</td>
    <td>&#149;</td>
    <td width="60%"><FONT size=2 face="serif">if the closing price of the underlying
        stock on the determination date is </FONT><B><FONT size=2 face="serif">less
        than</FONT></B> <FONT size=2 face="serif">the initial share price </FONT><B><FONT size=2 face="serif">AND </FONT></B><FONT size=2 face="serif">the
        trading price of the underlying stock </FONT><B><FONT size=2 face="serif">has</FONT></B> <FONT size=2 face="serif">decreased
        to or below the trigger price </FONT><B><FONT size=2 face="serif">at
        any time on any trading day </FONT></B><FONT size=2 face="serif">from
        and</FONT> <FONT size=2 face="serif">including the pricing date to and
        including the determination date, shares of</FONT> <FONT size=2 face="serif">underlying
        stock in exchange for each RevCons at the applicable exchange ratio,</FONT> <FONT size=2 face="serif">or
        at our option, the cash value of the underlying stock as of the determination</FONT> <FONT size=2 face="serif">date.
        The underlying stock and accordingly, the cash value of the underlying</FONT> <FONT size=2 face="serif">stock,
        will be worth less than the stated principal amount of the RevCons.</FONT></td>
  </tr>
  <tr valign="top">
    <td width="35%">&nbsp;</td>
    <td>&nbsp;</td>
    <td width="60%">&nbsp;</td>
  </tr>
</table>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
  <TR valign="top">
    <TD width=30%>&nbsp;</TD>
    <TD width=5%>&nbsp;</TD>
    <TD width=65% colspan=1><P><FONT size=2 face="serif">The exchange ratio will
          be determined on the pricing date and will be equal to the stated principal
          amount of the RevCons divided by the closing price of the underlying
          stock on the pricing date. The exchange ratio will be subject to adjustment
          for certain corporate</FONT></P></TD>
  </TR>
</TABLE>
<BR>
<P align="center"> <FONT size=2 face="serif">S-3 </FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
  <TR valign="top">
    <TD width=30%></TD>
    <TD width=5%>&nbsp;</TD>
    <TD width=65% colspan=1><P><FONT size=2 face="serif">events relating to the
          underlying company by means of an exchange factor, initially set at
          1.0. You should read about those adjustments in the sections of this
          prospectus supplement called
        &#147;Risk Factors&#151;The antidilution adjustments the Calculation
        Agent is required to make do not cover every corporate event that can
        affect the underlying stock&#148; and &#147;Description of RevCons&#151;Payment
        at Maturity,&#148;
        &#147;&#151;General Terms of the RevCons &#151; Some Definitions&#148; and &#147;&#151;Antidilution
        Adjustments.&#148;</FONT></P>
      <P><FONT size=2 face="serif">You will not have the right to exchange your
          RevCons for cash or underlying stock prior to maturity.</FONT></P></TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan=1>&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD width=30%><P><B><FONT size=2 face="serif">Postponement of maturity date</FONT></B></P></TD>
    <TD width=5%>&nbsp;</TD>
    <TD width=65% colspan=1><P><FONT size=2 face="serif">If a market disruption
          event occurs on the scheduled maturity date, or that day is not a trading
          day, the maturity date of the RevCons will be postponed. See the section
          of this prospectus supplement called &#147;Description of RevCons &#151;General
          Terms of the RevCons &#151;Some Definitions.&#148;</FONT></P></TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan=1>&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD><p align="left"> <b><font size=2 face="serif">The maturity date of the
            RevCons may be accelerated </font></b></p></TD>
    <TD>&nbsp;</TD>
    <TD colspan=1><p align="left"> <font size=2 face="serif">The maturity date
          of the RevCons will be accelerated upon the occurrence of either of
          the following events:</font></p></TD>
  </TR>
</TABLE>
<table width="100%"  border="0" cellpadding="0" cellspacing="0">
  <tr valign="top">
    <td width="35%">&nbsp;</td>
    <td width="5%">&#149;</td>
    <td width="60%"><p><FONT size=2 face="serif">a price event acceleration,
          which will occur if the closing price of the underlying</FONT> <FONT size=2 face="serif">stock
          times the exchange factor on any two consecutive trading days is less
          than</FONT> <FONT size=2
face="serif">the acceleration trigger price, which will be equal to &#36;2.00,
          unless otherwise</FONT> <FONT size=2 face="serif">specified in the
          applicable pricing supplement, and</FONT></p></td>
  </tr>
  <tr valign="top">
    <td width="35%">&nbsp;</td>
    <td>&#149;</td>
    <td width="60%"><FONT size=2 face="serif">an event of default acceleration,
        which will occur if there is an event of default</FONT> <FONT size=2 face="serif">with
        respect to the RevCons.</FONT></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="35%">&nbsp;</td>
    <td colspan="2"><p align="left"> <font size=2 face="serif">The amount payable
          to you will differ depending on the reason for the acceleration.</font></p></td>
  </tr>
</table>
<table width="100%"  border="0" cellpadding="0" cellspacing="0">
  <tr valign="top">
    <td width="30%">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td width="60%">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="30%">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&#149;</td>
    <td width="60%"><font size=2 face="serif">If there is a price event acceleration,
        we will owe you (i) a number of shares of</font> <font size=2 face="serif">underlying
        stock at the exchange ratio, multiplied by the exchange factor as of
        the</font> <font size=2
face="serif">date of such acceleration, or at our option, the cash value of the
        underlying stock</font> <font size=2 face="serif">as of the date of acceleration
        and (ii) accrued but unpaid coupon to but excluding</font> <font size=2 face="serif">the
        date of acceleration plus an amount of cash determined by the Calculation</font> <font size=2 face="serif">Agent
        equal to the sum of the present values of the remaining scheduled payments</font> <font size=2 face="serif">of
        interest on the RevCons (excluding such accrued but unpaid coupon)</font> <font size=2 face="serif">discounted
        to the date of acceleration, as described in the section of this</font> <font size=2 face="serif">prospectus
        supplement called &#147;Description of RevCons &#151;Price Event</font> <font size=2 face="serif">Acceleration.&#148;</font></td>
  </tr>
  <tr valign="top">
    <td width="30%">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&#149;</td>
    <td width="60%"><font size=2 face="serif">If there is an event of default
        acceleration, we will owe you either (i) the stated</font> <font size=2 face="serif">principal
        amount of each RevCons, plus accrued and unpaid coupon to but</font> <font size=2
face="serif">excluding the date of such acceleration, or (ii) if the closing
        price of the</font> <font size=2 face="serif">underlying stock on the
        date of such acceleration is less than the initial share price</font> <font size=2 face="serif">AND
        the trading price of the underlying stock has decreased to or below the</font> <font size=2 face="serif">trigger
        price at any time on any trading day from and including the pricing date
        to</font> <font size=2 face="serif">and including the date of such acceleration,
        (x) a number of shares of underlying</font> <font size=2 face="serif">stock
        at the exchange ratio, multiplied by the exchange factor as of the date
        of</font> <font size=2 face="serif">such acceleration, or at our option,
        the cash value of the underlying stock as of the</font> <font size=2 face="serif">date
        of acceleration, and (y) accrued but unpaid coupon to but excluding the
        date</font> <font size=2 face="serif">of acceleration.</font></td>
  </tr>
  <tr valign="top">
    <td width="30%">&nbsp;</td>
    <td width="5%">&nbsp;</td>
    <td width="5%">&nbsp;</td>
    <td width="60%">&nbsp;</td>
  </tr>
</table>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
  <TR valign="top">
    <TD width=30%>&nbsp;</TD>
    <TD width=5%>&nbsp;</TD>
    <TD width=65% colspan=1><P><FONT size=2 face="serif">The amount payable to
          you per RevCons if the maturity of the RevCons is accelerated may be
          substantially less than the stated principal amount of each RevCons.</FONT></P></TD>
  </TR>
</TABLE>
<BR>
<P align="center"> <FONT size=2 face="serif">S-4 </FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
  <TR valign="top">
    <TD width=30%><P><B><FONT size=2 face="serif">The RevCons may become exchangeable
            into the common stock of a company other than the underlying company</FONT></B></P></TD>
    <TD width=5%>&nbsp;</TD>
    <TD width=65% colspan=1><P><FONT size=2 face="serif">Following certain corporate
          events relating to underlying stock, such as a stock-for- stock merger
          where the underlying company is not the surviving entity, you will
          receive at maturity cash or a number of shares of the common stock
          of a successor corporation to the underlying company, based on the
          closing price of such successor&#146;s common stock. We describe the
          specific corporate events that can lead to these adjustments in the
          section of this product supplement called &#147;Description of RevCons &#151;Antidilution
          Adjustments.&#148; You should read this section in order to understand
          these and other adjustments that may be made to your RevCons.</FONT></P></TD>
  </TR>
</TABLE>
<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr valign="top">
    <td width="30%">&nbsp;</td>
    <td width="5%">&nbsp;</td>
    <td width="5%">&nbsp;</td>
    <td width="60%">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="30%"><p align="left"> <b><font size=2 face="serif">Other terms
            of the RevCons </font></b></p></td>
    <td width="5%">&nbsp;</td>
    <td width="5%">&#149;</td>
    <td width="60%"><p><font size=2 face="serif">The RevCons will be denominated
          in U.S. dollars, unless we specify otherwise in</font> <font size=2 face="serif">the
          applicable pricing supplement.</font></p></td>
  </tr>
  <tr valign="top">
    <td width="30%">&nbsp;</td>
    <td width="5%">&nbsp;</td>
    <td width="5%">&#149;</td>
    <td width="60%"><p><font size=2 face="serif">We may from time to time, without
          your consent, create and issue additional</font> <font size=2 face="serif">RevCons
          with the same terms as RevCons previously issued so that they may</font> <font size=2 face="serif">be
          combined with the earlier issuance.</font></p></td>
  </tr>
  <tr valign="top">
    <td width="30%">&nbsp;</td>
    <td width="5%">&nbsp;</td>
    <td width="5%">&#149;</td>
    <td width="60%"><p><font size=2 face="serif">The RevCons will be held in
          global form by The Depository Trust Company,</font> <font size=2 face="serif">unless
          the pricing supplement provides otherwise.</font></p></td>
  </tr>
  <tr valign="top">
    <td width="30%">&nbsp;</td>
    <td width="5%">&nbsp;</td>
    <td width="5%">&#149;</td>
    <td width="60%"><p><font size=2 face="serif">The RevCons will not be listed
          on any securities exchange, unless we specify</font> <font size=2 face="serif">otherwise
          in the applicable pricing supplement.</font></p></td>
  </tr>
</table>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan=1>&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD width=30%><P><B><FONT size=2 face="serif">MS &amp; Co. will be the Calculation
            Agent</FONT></B></P></TD>
    <TD width=5%>&nbsp;</TD>
    <TD width=65% colspan=1><P><FONT size=2 face="serif">We have appointed our
          affiliate, Morgan Stanley &amp; Co. Incorporated, which we refer to
          as MS &amp; Co., to act as Calculation Agent for us with respect to
          the RevCons. As Calculation Agent, MS
        &amp; Co. will determine whether the trading price of the underlying
        stock has decreased to or below the trigger price, whether the closing
        price of the underlying stock on the determination date is less than
        the initial share price, the appropriate payment at maturity, the amount
        payable per RevCons in the event of a price event acceleration or an
        event of default acceleration, and any adjustment to the exchange factor
        for certain extraordinary dividends or other corporate events affecting
        underlying stock that we describe in the section of this prospectus supplement
        called &#147;Description of RevCons &#151;Antidilution Adjustments.&#148;</FONT></P></TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan=1>&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD width=30%><P><B><FONT size=2 face="serif">No affiliation with the underlying
            company</FONT></B></P></TD>
    <TD width=5%>&nbsp;</TD>
    <TD width=65% colspan=1><P><FONT size=2 face="serif">The underlying company
          is not an affiliate of ours and is not involved with any of the issuances
          of RevCons in any way. The obligations represented by the RevCons are
          obligations of Morgan Stanley and not of the underlying company.</FONT></P></TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan=1>&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD width=30%><P><B><FONT size=2 face="serif">Forms of securities</FONT></B></P></TD>
    <TD width=5%>&nbsp;</TD>
    <TD width=65% colspan=1><P><FONT size=2 face="serif">The RevCons will be
          issued in fully registered form and will be represented by a global
          security registered in the name of a nominee of The Depository Trust
          Company, as depositary, unless we indicate that they will be represented
          by certificates issued in definitive form in the applicable pricing
          supplement. We will not issue book-entry securities as certificated
          securities except under the circumstances described in &#147;Forms
          of Securities &#151; The Depositary&#148; in the prospectus, under
          which heading you may also find information on The Depository Trust
          Company&#146;s book-entry system.</FONT></P></TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan=1>&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD width=30%><P><B><FONT size=2 face="serif">Where you can find more information
            on the RevCons</FONT></B></P></TD>
    <TD width=5%>&nbsp;</TD>
    <TD width=65% colspan=1><P><B><FONT size=2 face="serif">Because this is a
            summary, it does not contain all of the information that may be important
            to you. You should read the &#147;Description of RevCons&#148; section
            in this prospectus supplement and the &#147;Description of Debt Securities&#148; section
            in the prospectus for a detailed description of the terms of the
            RevCons. You should also read about some of the risks involved in
            investing in the RevCons in the section called &#147;Risk Factors.&#148; The
            tax and accounting treatment of investments in equity-linked securities
            such as the RevCons may differ from that of investments in ordinary
            debt securities or common stock. We urge you to consult with your
            investment, legal, tax, accounting and other advisors with regard
            to</FONT></B></P></TD>
  </TR>
</TABLE>
<BR>
<P align="center"> <FONT size=2 face="serif">S-5 </FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
  <TR valign="top">
    <TD width=30%>&nbsp;</TD>
    <TD width=5%>&nbsp;</TD>
    <TD width=65% colspan=1><P><B><FONT size=2 face="serif">any proposed or actual
            investment in the RevCons.</FONT></B></P></TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan=1>&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD width=30%><P><B><FONT size=2 face="serif">How to reach us</FONT></B></P></TD>
    <TD width=5%>&nbsp;</TD>
    <TD width=65% colspan=1><P><FONT size=2 face="serif">You may contact our
          principal executive offices at 1585 Broadway, New York, New York, 10036
          (telephone number (212) 761-4000).</FONT></P></TD>
  </TR>
</TABLE>
<BR>
<P align="center"> <FONT size=2 face="serif">S-6</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="center"> <B><FONT size=2 face="serif">HYPOTHETICAL PAYMENTS ON THE
      REVCONS</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The
    following examples illustrate the payment at maturity on the RevCons for
    both a range of hypothetical closing prices for the underlying stock on a
    hypothetical determination date, which is approximately one year from the
    issue date of the RevCons, and depending on whether an intraday trading price
    of the underlying stock during the term of the RevCons has or has not decreased
    to or below the trigger price. </FONT></P>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
  <TR valign="top">
    <TD colspan="4" align=left><font size=2 face="serif">The hypothetical examples
        are based on the following hypothetical values: </font></TD>
  </TR>
  <TR valign="top">
    <TD width=5% align=center>&#149;</TD>
    <TD width=15% align=left nowrap><FONT size=2 face="serif">Stated principal
        amount:</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=78% align=left><FONT size=2 face="serif">&#36;1,000</FONT> </TD>
  </TR>
  <TR valign="top">
    <TD width=5% align=center>&#149;</TD>
    <TD width=15% align=left nowrap><FONT size=2 face="serif">Initial share price:</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=78% align=left><FONT size=2 face="serif">&#36;100 (the closing
        price of one share of underlying stock on the pricing date)</FONT> </TD>
  </TR>
  <TR valign="top">
    <TD width=5% align=center>&#149;</TD>
    <TD width=15% align=left nowrap><FONT size=2 face="serif">Exchange ratio:</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=78% align=left><FONT size=2 face="serif">10 (the &#36;1,000 stated
        principal amount per RevCons divided by the hypothetical initial share
        price)</FONT> </TD>
  </TR>
  <TR valign="top">
    <TD width=5% align=center>&#149;</TD>
    <TD width=15% align=left nowrap><FONT size=2 face="serif">Trigger price:</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=78% align=left><FONT size=2 face="serif">&#36;75 (75% of the initial
        share price)</FONT> </TD>
  </TR>
  <TR valign="top">
    <TD width=5% align=center>&#149;</TD>
    <TD width=15% align=left nowrap><FONT size=2 face="serif">Annual coupon:</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=78% align=left><FONT size=2 face="serif">9%</FONT> </TD>
  </TR>
</TABLE>
<BR>
<P align="left"> <B><FONT size=2 face="serif">TABLE 1: At maturity, </FONT></B><B><I><FONT size=2 face="serif">unless</FONT></I></B><B><FONT size=2 face="serif"> the
      closing price of the underlying stock on the determination date is </FONT></B><B><I><FONT size=2
face="serif">less than </FONT></I></B><B><FONT size=2 face="serif">the initial
      share price AND the trading price of the underlying stock </FONT></B><B><I><FONT size=2 face="serif">has</FONT></I></B><B><FONT size=2 face="serif"> decreased
      to or below the hypothetical trigger price of &#36;75 </FONT></B><B><I><FONT size=2 face="serif">at
      any time on any trading day</FONT></I></B><B><FONT size=2 face="serif"> from
      and including the pricing date to and including the determination date,
      your payment at maturity per RevCons will equal the stated principal amount
      of the RevCons in cash. This table represents the hypothetical payment
      at maturity and the total payment over the term of the RevCons (assuming
      a one-year term) on a &#36;1,000 investment in the RevCons on the basis
      that the trading price has not decreased to or below the trigger price. </FONT></B></P>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
  <TR valign="bottom">
    <TD width=23% align=center valign="bottom"><B><FONT size=1 face="serif">Hypothetical
          underlying stock closing<br>
      price at determination date</FONT></B></TD>
    <TD  width=2% valign="bottom">&nbsp;</TD>
    <TD width=23% align=center valign="bottom"><B><FONT size=1 face="serif">Value
          of cash delivery amount<br>
      at maturity per RevCons</FONT></B></TD>
    <TD  width=2% valign="bottom">&nbsp;</TD>
    <TD width=25% align=center valign="bottom"><B><FONT size=1 face="serif">Total
          quarterly coupon payments<br>
      per RevCons</FONT></B></TD>
    <TD  width=2% valign="bottom">&nbsp;</TD>
    <TD width=23% align=center valign="bottom"><B><FONT size=1 face="serif">Value
          of total payment per<br>
      RevCons</FONT></B></TD>
  </TR>
  <TR>
    <TD width="23%"><HR noshade size=1>
    </TD>
    <TD width="2%"></TD>
    <TD width="23%"><HR noshade size=1>
    </TD>
    <TD width="2%"></TD>
    <TD width="25%"><HR noshade size=1>
    </TD>
    <TD width="2%"></TD>
    <TD width="23%"><HR noshade size=1>
    </TD>
  </TR>
  <TR align="center" valign="bottom">
    <TD width=23%><FONT size=2 face="serif">&#36; 76.00</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=23%><FONT size=2 face="serif">&#36;1,000</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=25%><FONT size=2 face="serif">&#36;90</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=23%><FONT size=2 face="serif">&#36;1,090</FONT> </TD>
  </TR>
  <TR align="center" valign="bottom">
    <TD width=23%><FONT size=2 face="serif">&#36; 80.00</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=23%><FONT size=2 face="serif">&#36;1,000</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=25%><FONT size=2 face="serif">&#36;90</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=23%><FONT size=2 face="serif">&#36;1,090</FONT> </TD>
  </TR>
  <TR align="center" valign="bottom">
    <TD width=23%><FONT size=2 face="serif">&#36; 90.00</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=23%><FONT size=2 face="serif">&#36;1,000</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=25%><FONT size=2 face="serif">&#36;90</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=23%><FONT size=2 face="serif">&#36;1,090</FONT> </TD>
  </TR>
  <TR align="center" valign="bottom">
    <TD width=23%><FONT size=2 face="serif">&#36;100.00</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=23%><FONT size=2 face="serif">&#36;1,000</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=25%><FONT size=2 face="serif">&#36;90</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=23%><FONT size=2 face="serif">&#36;1,090</FONT> </TD>
  </TR>
  <TR align="center" valign="bottom">
    <TD width=23%><FONT size=2 face="serif">&#36;120.00</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=23%><FONT size=2 face="serif">&#36;1,000</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=25%><FONT size=2 face="serif">&#36;90</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=23%><FONT size=2 face="serif">&#36;1,090</FONT> </TD>
  </TR>
  <TR align="center" valign="bottom">
    <TD width=23%><FONT size=2 face="serif">&#36;140.00</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=23%><FONT size=2 face="serif">&#36;1,000</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=25%><FONT size=2 face="serif">&#36;90</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=23%><FONT size=2 face="serif">&#36;1,090</FONT> </TD>
  </TR>
  <TR align="center" valign="bottom">
    <TD width=23%><FONT size=2 face="serif">&#36;160.00</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=23%><FONT size=2 face="serif">&#36;1,000</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=25%><FONT size=2 face="serif">&#36;90</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=23%><FONT size=2 face="serif">&#36;1,090</FONT> </TD>
  </TR>
</TABLE>
<P align="left"> <B><FONT size=2 face="serif">TABLE 2: This table represents
      the hypothetical payment at maturity and the total payment over the term
      of the RevCons (assuming a one-year term) on a &#36;1,000 investment in
      the RevCons if the trading price of the underlying stock </FONT></B><B><I><FONT size=2 face="serif">has</FONT></I></B><B><FONT size=2 face="serif"> decreased
      to or below the hypothetical trigger price of &#36;75 </FONT></B><B><I><FONT size=2 face="serif">at
      any time on any trading day </FONT></I></B><B><FONT size=2 face="serif">from
      and including the pricing date to and including the determination date.
      In each of these examples, where the closing price of the underlying stock
      on the determination date is </FONT></B><B><I><FONT
size=2 face="serif">less than </FONT></I></B><B><FONT size=2 face="serif">the
      initial share price, the payment at maturity would be made by delivery
      of shares of the underlying stock, or at our option, the cash value of
      the underlying stock as of the determination date. In each of these examples,
      where the closing price on the determination date is at or above the initial
      share price, the payment at maturity will equal the stated principal amount
      in cash. </FONT></B></P>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
  <TR valign="bottom">
    <TD align=center width=23%><B><FONT size=1 face="serif">Hypothetical underlying
          stock closing<br>
      price at determination date</FONT></B></TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=center width=23%><B><FONT size=1 face="serif">Value of cash delivery
          amount<br>
      at maturity per RevCons</FONT></B></TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=center width=25%><B><FONT size=1 face="serif">Total quarterly coupon
          payments<br>
      per RevCons</FONT></B></TD>
    <TD  width=2%>&nbsp;</TD>
    <TD align=center width=23%><B><FONT size=1 face="serif">Value of total payment
          per<br>
      RevCons</FONT></B></TD>
  </TR>
  <TR>
    <TD width="23%"><HR noshade size=1>
    </TD>
    <TD width="2%"></TD>
    <TD width="23%"><HR noshade size=1>
    </TD>
    <TD width="2%"></TD>
    <TD width="25%"><HR noshade size=1>
    </TD>
    <TD width="2%"></TD>
    <TD width="23%"><HR noshade size=1>
    </TD>
  </TR>
  <TR align="center" valign="bottom">
    <TD width=23%><FONT size=2 face="serif">&#36;&nbsp;&nbsp;&nbsp; 0.00</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=23%><FONT size=2 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#36;0</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=25%><FONT size=2 face="serif">&#36;90</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=23%><FONT size=2 face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#36;90</FONT> </TD>
  </TR>
  <TR align="center" valign="bottom">
    <TD width=23%><FONT size=2 face="serif">&#36;&nbsp; 25.00</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=23%><FONT size=2 face="serif">&nbsp;&nbsp;&nbsp;&#36;250</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=25%><FONT size=2 face="serif">&#36;90</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=23%><FONT size=2 face="serif">&nbsp;&nbsp;&nbsp;&#36;340</FONT> </TD>
  </TR>
  <TR align="center" valign="bottom">
    <TD width=23%><FONT size=2 face="serif">&#36;&nbsp; 50.00</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=23%><FONT size=2 face="serif">&nbsp;&nbsp;&nbsp;&#36;500</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=25%><FONT size=2 face="serif">&#36;90</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=23%><FONT size=2 face="serif">&nbsp;&nbsp;&nbsp;&#36;590</FONT> </TD>
  </TR>
  <TR align="center" valign="bottom">
    <TD width=23%><FONT size=2 face="serif">&#36; &nbsp;75.00</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=23%><FONT size=2 face="serif">&nbsp;&nbsp;&nbsp;&#36;750</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=25%><FONT size=2 face="serif">&#36;90</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=23%><FONT size=2 face="serif">&nbsp;&nbsp;&nbsp;&#36;840</FONT> </TD>
  </TR>
  <TR align="center" valign="bottom">
    <TD width=23%><FONT size=2 face="serif">&#36;&nbsp; 91.00</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=23%><FONT size=2 face="serif">&nbsp;&nbsp;&nbsp;&#36;910</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=25%><FONT size=2 face="serif">&#36;90</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=23%><FONT size=2 face="serif">&#36;1,000</FONT> </TD>
  </TR>
  <TR align="center" valign="bottom">
    <TD width=23%><FONT size=2 face="serif">&#36;100.00</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=23%><FONT size=2 face="serif">&#36;1,000</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=25%><FONT size=2 face="serif">&#36;90</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=23%><FONT size=2 face="serif">&#36;1,090</FONT> </TD>
  </TR>
  <TR align="center" valign="bottom">
    <TD width=23%><FONT size=2 face="serif">&#36;125.00</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=23%><FONT size=2 face="serif">&#36;1,000</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=25%><FONT size=2 face="serif">&#36;90</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=23%><FONT size=2 face="serif">&#36;1,090</FONT> </TD>
  </TR>
  <TR align="center" valign="bottom">
    <TD width=23%><FONT size=2 face="serif">&#36;150.00</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=23%><FONT size=2 face="serif">&#36;1,000</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=25%><FONT size=2 face="serif">&#36;90</FONT> </TD>
    <TD  width=2%>&nbsp;</TD>
    <TD width=23%><FONT size=2 face="serif">&#36;1,090</FONT> </TD>
  </TR>
</TABLE>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif"> Because
    the trading price of the underlying stock may be subject to significant fluctuation
    over the term of the RevCons, it is not possible to present a chart or table
    illustrating the complete range of possible payouts at maturity. The examples
    of the hypothetical payout calculations above are intended to illustrate
    how the amount payable to you at maturity will depend both on (a) the closing
    price of the underlying stock on the determination date and (b) whether the
    price of the underlying stock falls to or below the trigger price from and
    including the pricing date to and including the determination date. </FONT></P>
<P align="center"> <FONT size=2 face="serif">S-7</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="center"> <B><FONT size=2 face="serif">RISK FACTORS</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The
    RevCons are not secured debt and are riskier than ordinary debt securities.
    Because the return to investors is linked to the performance of the common
    stock of the underlying company specified in the applicable pricing supplement,
    there is no guaranteed return of principal at maturity. This section describes
    the most significant risks relating to the RevCons. You should carefully
    consider whether the RevCons are suited to your particular circumstances
    before you decide to purchase them. </FONT></P>
<P align="left"> <B><FONT size=2 face="serif">The RevCons are not ordinary senior
      notes &#151; no guaranteed return of principal </FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The
    RevCons combine features of equity and debt. The terms of the RevCons differ
    from those of ordinary debt securities in that we will not pay you a fixed
    amount at maturity. Our payout to you at maturity per RevCons will either
    be (i) cash equal to the stated principal amount of each RevCons or (ii)
    if the closing price of the underlying stock on the determination date is </FONT><I><FONT size=2 face="serif">less
    than</FONT></I><FONT
size=2 face="serif"> the initial share price AND the trading price of the underlying
    stock has decreased</FONT><I><FONT size=2 face="serif"> to or below</FONT></I><FONT size=2 face="serif"> the
    trigger price over the term of the RevCons, shares of the underlying stock
    equal to the exchange ratio, or at our option, the cash value of such underlying
    stock as of the determination date. If we deliver shares of underlying stock
    at maturity in exchange for each RevCons, or pay you the cash value of those
    shares, the value of those shares will be less than the stated principal
    amount of each RevCons and could be zero.</FONT><B><FONT size=2 face="serif"> </FONT></B></P>
<P align="left"> <B><FONT size=2 face="serif">You will not participate in any
      appreciation in the value of underlying stock </FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">You
    will not participate in any appreciation in the price of the underlying stock
    over the term of the RevCons. Your return on the RevCons will be limited
    to the coupon payable on the RevCons and the maximum you can receive at maturity
    is the stated principal amount of the RevCons.</FONT></P>
<P align="left"> <B><FONT size=2 face="serif">Secondary trading may be limited</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">There
    may be little or no secondary market for the RevCons. Although we may apply
    to list certain issuances of RevCons, we may not meet the requirements for
    listing and do not expect to announce whether or not we will meet such requirements
    prior to the pricing of the RevCons. Even if there is a secondary market,
    it may not provide significant liquidity. MS &amp; Co. currently intends
    to act as a market maker for the RevCons but is not required to do so. If
    at any time MS &amp; Co. were to cease acting as a market maker, it is likely
    that there would be significantly less liquidity in the secondary market,
    in which case the price at which you would be able to sell your RevCons would
    likely be lower than if an active market existed. If the RevCons are not
    listed on any securities exchange and MS &amp; Co. were to cease acting as
    a market maker, it is likely that there would be no secondary market for
    the RevCons. </FONT></P>
<P align="left"> <B><FONT size=2 face="serif">Market price of the RevCons will
      be influenced by many unpredictable factors </FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Several
    factors, many of which are beyond our control, will influence the value of
    the RevCons in the secondary market and the price at which MS &amp; Co. may
    be willing to purchase or sell the RevCons in the secondary market. We expect
    that generally the trading price of the underlying stock on any day will
    affect the value of the RevCons more than any other single factor. Other
    factors that may influence the value of the RevCons include: </FONT></P>
<UL>
  <LI> <FONT size=2 face="serif">whether the trading price of the underlying
      stock has decreased to or below the trigger price at any time on</FONT> <FONT size=2 face="serif">any
      trading day,<br>
    <br>
    </FONT></LI>
  <LI> <FONT size=2 face="serif">the volatility (frequency and magnitude of changes
      in price) of the underlying stock,<br>
    <br>
    </FONT></LI>
  <LI> <FONT size=2 face="serif">the dividend rate on the underlying stock,<br>
    <br>
    </FONT></LI>
  <LI> <FONT size=2 face="serif">geopolitical conditions and economic, financial,
      political, regulatory or judicial events that affect stock</FONT> <FONT size=2 face="serif">markets
      generally and that may affect the underlying company and the trading price
      of the underlying</FONT> <FONT size=2 face="serif">stock,<br>
    <br>
    </FONT></LI>
  <LI> <FONT size=2 face="serif">interest and yield rates in the market,<br>
    <br>
    </FONT></LI>
  <LI> <FONT size=2 face="serif">the time remaining to the maturity of the RevCons,</FONT></LI>
</UL>
<P align="center"> <FONT size=2 face="serif">S-8</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<UL>
  <LI> <FONT size=2 face="serif">our creditworthiness, and<br>
    <br>
    </FONT></LI>
  <LI> <FONT size=2 face="serif">the occurrence of certain events affecting the
      underlying company that may or may not require an</FONT> <FONT size=2 face="serif">adjustment
      to the exchange factor.</FONT></LI>
</UL>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Some
    or all of these factors will influence the price you will receive if you
    sell your RevCons prior to maturity. For example, you may have to sell your
    RevCons at a substantial discount from the stated principal amount if the
    price of the underlying stock has declined below the initial share price,
    especially if it has decreased to or below the trigger price at any time
    after the pricing date of the RevCons. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">You
    cannot predict the future performance of underlying stock based on its historical
    performance. The trading price of the underlying stock may decrease to or
    below the trigger price and remain below the initial share price at maturity
    so that you will receive at maturity shares of underlying stock worth less
    than the stated principal amount of the RevCons. We cannot guarantee that
    the trading price of the underlying stock will stay above the trigger price
    over the life of the RevCons or that the closing price on the determination
    date of the underlying stock will be at or above the initial share price
    so that you will receive at maturity an amount equal to the stated principal
    amount of the RevCons. </FONT></P>
<P align="left"> <B><FONT size=2 face="serif">The inclusion of commissions and
      projected profit from hedging in the original issue price is likely to
      adversely affect secondary market prices </FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Assuming
    no change in market conditions or any other relevant factors, the price,
    if any, at which MS &amp; Co. is willing to purchase RevCons in secondary
    market transactions will likely be lower than the original issue price, since
    the original issue price included, and secondary market prices are likely
    to exclude, commissions paid with respect to the RevCons, as well as the
    projected profit included in the cost of hedging our obligations under the
    RevCons (even if the trading price of the underlying stock declines). In
    addition, any such prices may differ from values determined by pricing models
    used by MS &amp; Co., as a result of dealer discounts, mark-ups or other
    transaction costs. </FONT></P>
<P align="left"> <B><FONT size=2 face="serif">If the RevCons are accelerated,
      you may receive an amount worth substantially less than the stated principal
      amount of the RevCons </FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The
    maturity of the RevCons will be accelerated if there is a price event acceleration
    or an event of default acceleration. The amount payable to you if the maturity
    of the RevCons is accelerated will differ depending on the reason for the
    acceleration and may be substantially less than the stated principal amount
    of the RevCons. See &#147;Description of RevCons &#151;Price Event Acceleration&#148; and &#147;Description
    of RevCons &#151;Alternate Exchange Calculation in Case of an Event of Default.&#148; </FONT></P>
<P align="left"> <B><FONT size=2 face="serif">Morgan Stanley is not affiliated
      with the underlying company </FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The
    underlying company is not an affiliate of ours and is not involved with this
    offering in any way. Consequently, we have no ability to control the actions
    of the underlying company, including any corporate actions of the type that
    would require the Calculation Agent to adjust the payout to you at maturity.
    The underlying company has no obligation to consider your interest as an
    investor in the RevCons in taking any corporate actions that might affect
    the value of your RevCons. None of the money you pay for the RevCons will
    go to the underlying company. </FONT></P>
<P align="left"> <B><FONT size=2 face="serif">Morgan Stanley may engage in business
      with or involving the underlying company without regard to your interests </FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">We or
    our affiliates may presently or from time to time engage in business with
    the underlying company without regard to your interests, including extending
    loans to, or making equity investments in, the underlying company or providing
    advisory services to the underlying company, such as merger and acquisition
    advisory services. In the course of our business, we or our affiliates may
    acquire non-public information about the underlying company. Neither we nor
    any of our affiliates undertakes to disclose any such information to you.
    In addition, we or our affiliates from time to time have published and in
    the future may publish research reports with respect to the underlying company.
    These research reports may or may not recommend that investors buy or hold
    the underlying stock. </FONT></P>
<P align="center"> <FONT size=2 face="serif">S-9</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="left"> <B><FONT size=2 face="serif">You have no shareholder rights</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Investing
    in the RevCons is not equivalent to investing in the common stock of the
    underlying company. As an investor in the RevCons, you will not have voting
    rights or rights to receive dividends or other distributions or any other
    rights with respect to such common stock. In addition, you do not have the
    right to exchange your RevCons for common stock of the underlying company
    except at maturity if (i) the closing price on the determination date is
    less than the initial share price AND the trading price has decreased to
    or below the trigger price and (ii) we choose to deliver the underlying stock
    to you, rather than the cash value of the underlying stock as of the determination
    date. </FONT></P>
<P align="left"> <B><FONT size=2 face="serif">The RevCons may become exchangeable
      into the common stock of a company other than the underlying company </FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Following
    certain corporate events relating to the underlying stock, such as a stock-for-stock
    merger where the underlying company is not the surviving entity, you will
    receive at maturity cash or a number of shares of the common stock of a successor
    corporation to the underlying company based on the closing price of such
    successor&#146;s common stock. We describe the specific corporate events
    that can lead to these adjustments in the section of this prospectus supplement
    called &#147;Description of RevCons &#151;Antidilution Adjustments.&#148; The
    occurrence of such corporate events and the consequent adjustments may materially
    and adversely affect the market price of the RevCons. </FONT></P>
<P align="left"> <B><FONT size=2 face="serif">The antidilution adjustments the
      Calculation Agent is required to make do not cover every corporate event
      that could affect the underlying stock </FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">MS &amp; Co.,
    as Calculation Agent, will adjust the exchange factor and, thus, the trading
    price used to determine whether or not the trigger price has been reached
    and, if applicable, the number of shares of underlying stock deliverable
    at maturity for certain events affecting the underlying stock, such as stock
    splits and stock dividends, and certain other corporate actions involving
    underlying company, such as mergers. However, the Calculation Agent will
    not make an adjustment for every corporate event that could affect the underlying
    stock. For example, the Calculation Agent is not required to make any adjustments
    if the underlying company or anyone else makes a partial tender or partial
    exchange offer for the underlying stock. If an event occurs that does not
    require the Calculation Agent to adjust the amount of underlying stock payable
    at maturity, the market price of the RevCons may be materially and adversely
    affected. </FONT></P>
<P align="left"> <B><FONT size=2 face="serif">Hedging and trading activity by
      the Calculation Agent and its affiliates could adversely affect the value
      of the RevCons.</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The
    economic interests of the Calculation Agent and other of our affiliates are
    potentially adverse to your interests as an investor in the RevCons. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">As Calculation
    Agent, MS &amp; Co. will determine whether the trading price of the underlying
    stock has decreased to or below the trigger level during the term of the
    RevCons, whether the closing price of the underlying stock on the determination
    date is less than the initial share price, the appropriate payout at maturity,
    the amount payable to you in the event of a price acceleration, any adjustment
    to the exchange factor to reflect certain corporate and other events and
    the appropriate underlying security or securities which may be delivered
    at maturity following certain reorganization events. Determinations made
    by MS &amp; Co. in its capacity as Calculation Agent, including adjustments
    to the exchange factor or the calculation of the amount payable to you in
    the event of a price event acceleration, may affect the amount payable to
    you at maturity or upon a price event acceleration of the RevCons. See the
    sections of this prospectus supplement called &#147;Description of RevCons &#151;Antidilution
    Adjustments&#148; and &#147;&#151;Price Event Acceleration.&#148; </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The
    original issue price of the RevCons includes the agent&#146;s commissions
    and certain costs of hedging our obligations under the RevCons. The subsidiaries
    through which we hedge our obligations under the RevCons expect to make a
    profit. Since hedging our obligations entails risk and may be influenced
    by market forces beyond our or our subsidiaries&#146; control, such hedging
    may result in a profit that is more or less than initially projected. </FONT></P>
<P align="center"> <FONT size=2 face="serif">S-10</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="left"> <B><FONT size=2 face="serif">Hedging and trading activity by
      the Calculation Agent and its affiliates could potentially affect the value
      of the RevCons </FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">MS &amp; Co.
    and other affiliates of ours will carry out hedging activities related to
    the RevCons, including trading in the underlying stock as well as in other
    instruments related to the underlying stock. MS &amp; Co. and some of our
    other subsidiaries also trade the underlying stock and other financial instruments
    related to the underlying stock on a regular basis as part of their general
    broker-dealer and other businesses. Any of these hedging or trading activities
    on or prior to the pricing date could potentially affect the price of the
    underlying stock and, accordingly, potentially increase the initial share
    price used to calculate the trigger price and, therefore, potentially have
    raised the trigger price relative to the price of the underlying stock absent
    such hedging or trading activity. Additionally, such hedging or trading activities
    during the term of the RevCons could adversely affect whether the price of
    the underlying stock decreases to or below the trigger price and, therefore,
    whether or not you will receive the stated principal amount of the RevCons
    or shares of the underlying stock, or the cash value of the underlying stock,
    at maturity. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="serif">Because
      the characterization of the RevCons for U.S. federal income tax purposes
      is uncertain, the material U.S. federal income tax consequences of an investment
      in the RevCons are uncertain </FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">There
    is no direct legal authority as to the proper tax treatment of the RevCons,
    and our counsel has not rendered an opinion as to their proper characterization
    for U.S. federal income tax purposes. Significant aspects of the tax treatment
    of the RevCons are uncertain. Pursuant to the terms of the RevCons and subject
    to the discussion in this prospectus supplement under &#147;United States
    Federal Taxation</FONT><FONT size=2 face="serif"> &#151; </FONT><FONT size=2 face="serif"> Tax
    Consequences to U.S. Holders</FONT><FONT size=2 face="serif"> &#151; General,&#148; you
    will agree with us to treat a RevCons as a unit consisting of (i) a put right
    (the &#147;Put Right&#148;) written by you to us that, if exercised, requires
    you to pay us, in exchange for shares of underlying stock or, at our option,
    the cash value of such shares of underlying stock as determined on the determination
    date, an amount equal to a deposit (as described below) and (ii) a deposit
    with us of a fixed amount of cash to secure your obligation under the Put
    Right, as described in the section of this prospectus supplement called &#147;United
    States Federal Taxation</FONT><FONT size=2 face="serif"> &#151; </FONT><FONT size=2 face="serif"> Tax
    Consequences to U.S. Holders &#151; General.&#148; If the Internal Revenue
    Service (the &#147;IRS&#148;) were successful in asserting an alternative
    characterization for the RevCons, the timing and/or character of income on
    the RevCons and your tax basis for any underlying stock received in exchange
    for the RevCons could differ from the description herein. We do not plan
    to request a ruling from the IRS regarding the tax treatment of the RevCons,
    and the IRS or a court may not agree with the tax treatment described in
    this prospectus supplement. </FONT><B><FONT size=2 face="serif">Please read
    carefully the section of this prospectus supplement called
  &#147;United States Federal Taxation.&#148; </FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="serif">If
      you are a non-U.S. investor, please also read the section of this prospectus
      supplement called &#147;United States Federal Taxation </FONT></B><B><FONT size=2 face="serif"> &#151; </FONT></B><B><FONT size=2 face="serif"> Tax
      Consequences to Non-U.S. Holders.&#148; </FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="serif">You
      are urged to consult your own tax advisors regarding all aspects of the
      U.S. federal tax consequences of investing in the RevCons, as well as any
      tax consequences arising under the laws of any state, local or foreign
      taxing jurisdiction. </FONT></B></P>
<P align="center"> <FONT size=2 face="serif">S-11</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="center"> <B><FONT size=2 face="serif">DESCRIPTION OF REVCONS</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Investors
    should carefully read the general terms and provisions of our debt securities
    in &#147;Description of Debt Securities&#148; in the prospectus. This section
    supplements that description. </FONT><B><FONT size=2 face="serif">The pricing
    supplement will specify the particular terms for one or more issuances of
    RevCons, and may supplement, modify or replace any of the information in
    this section and in &#147;Description of Debt Securities&#148; in the prospectus. </FONT></B><FONT size=2 face="serif">References
    in this prospectus supplement to a RevCons shall refer to the stated principal
    amount specified as the denomination for that issuance of RevCons in the
    applicable pricing supplement. </FONT></P>
<P align="left"> <FONT size=2 face="serif">The following terms used in this section
    are defined in the indicated sections of the accompanying prospectus: </FONT></P>
<ul>
  <li> <FONT size=2 face="serif">Senior Debt Indenture (&#147;Description of
      Debt Securities &#151; Indentures&#148;) </FONT></li>
</ul>
<P align="left"> <B><FONT size=2 face="serif">General Terms of the RevCons</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">We will
    issue the RevCons as part of our Series F medium-term notes under the Senior
    Debt Indenture. Our senior Series F global medium-term notes, together with
    our senior Series G and Series H global medium-term notes, referred to below
    under &#147;Plan of Distribution,&#148; will constitute a single series under
    the Senior Debt Indenture, together with any other obligations we issue in
    the future under that indenture that we designate as being part of that series.
    The Senior Debt Indenture does not limit the amount of additional indebtedness
    that we may incur. We may create and issue additional RevCons with the same
    terms as previous issuances of RevCons, so that the additional RevCons will
    be considered as part of the same issuance as the earlier RevCons. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">Ranking</FONT></I><FONT size=2 face="serif">.
    Securities issued under the Senior Debt Indenture will rank on a parity with
    all of our other senior indebtedness and with all of our other unsecured
    and unsubordinated indebtedness, subject to statutory exceptions in the event
    of liquidation upon insolvency. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">Terms
      Specified in Pricing Supplement. </FONT></I><FONT size=2 face="serif">A
      pricing supplement will specify the following terms of one or more issuances
      of our RevCons to the extent applicable: </FONT></P>
<UL>
  <LI> <FONT size=2 face="serif">the issue price (price to public);</FONT></LI>
  <br>
  <br>
  <LI> <FONT size=2 face="serif">the stated principal amount per RevCons;</FONT></LI>
  <br>
  <br>
  <LI> <FONT size=2 face="serif">the aggregate principal amount;</FONT></LI>
  <br>
  <br>
  <LI> <FONT size=2 face="serif">the denominations or minimum denominations;</FONT></LI>
  <br>
  <br>
  <LI> <FONT size=2 face="serif">the original issue date;</FONT></LI>
  <br>
  <br>
  <LI> <FONT size=2 face="serif">the stated maturity date and any terms related
      to any extension of the maturity date not otherwise set forth</FONT> <FONT size=2 face="serif">in
      this prospectus supplement;</FONT></LI>
  <br>
  <br>
  <LI> <FONT size=2 face="serif">the rate per year at which the RevCons will
      pay a coupon, if any, or the method of calculating that rate and</FONT> <FONT size=2 face="serif">the
      dates on which the coupon will be payable;</FONT></LI>
  <br>
  <br>
  <LI> <FONT size=2 face="serif">the underlying stock</FONT></LI>
  <br>
  <br>
  <LI> <FONT size=2 face="serif">the underlying company;</FONT></LI>
  <br>
  <br>
  <LI> <FONT size=2 face="serif">the initial share price;</FONT></LI>
  <br>
  <br>
  <LI> <FONT size=2 face="serif">the trigger level;</FONT></LI>
  <br>
  <br>
  <LI> <FONT size=2 face="serif">the trigger price;</FONT></LI>
  <br>
  <br>
  <LI> <FONT size=2 face="serif">the determination date;</FONT></LI>
  <br>
  <br>
  <LI> <FONT size=2 face="serif">the stock exchange, if any, on which the RevCons
      may be listed;</FONT></LI>
</UL>
<P align="center"> <FONT size=2 face="serif">S-12</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<UL>
  <LI> <FONT size=2 face="serif">if any RevCons are not denominated and payable
      in U.S. dollars, the currency or currencies in which the</FONT> <FONT size=2 face="serif">principal
      and coupon, if any, will be paid, which we refer to as the &#147;specified
      currency,&#148; along with any</FONT> <FONT size=2 face="serif">other terms
      relating to the non-U.S. dollar denomination, including historical exchange
      rates as against the</FONT> <FONT size=2 face="serif">U.S. dollar;</FONT></LI>
  <br>
  <br>
  <LI> <FONT size=2 face="serif">if the RevCons are in book-entry form, whether
      the RevCons will be offered on a global basis to investors</FONT> <FONT size=2 face="serif">through
      Euroclear and Clearstream, Luxembourg as well as through the Depositary
      (each as defined</FONT> <FONT size=2 face="serif">below); and</FONT></LI>
  <br>
  <br>
  <LI> <FONT size=2 face="serif">any other terms on which we will issue the RevCons.</FONT></LI>
</UL>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">Some
      Definitions. </FONT></I><FONT size=2 face="serif">We have defined some
      of the terms that we use frequently in this prospectus supplement below:</FONT></P>
<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2
face="serif">acceleration trigger price</FONT></B><FONT size=2 face="serif">&#148; means &#36;2.00,
    unless otherwise specified in the applicable pricing supplement. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">business
      day</FONT></B><FONT size=2 face="serif">&#148; means any day, other than
      a Saturday or Sunday, (i) that is neither a legal holiday nor a day on
      which banking institutions are authorized or required by law or regulation
      to close (a) in The City of New York or (b) for RevCons 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 (c) for RevCons denominated in Australian dollars, in Sydney, and (ii)
      for RevCons denominated in euro, a day that is also a TARGET Settlement
      Day. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">Clearstream,
      Luxembourg</FONT></B><FONT size=2 face="serif">&#148; means Clearstream
      Banking, </FONT><I><FONT size=2 face="serif">soci&eacute;t&eacute; anonyme</FONT></I><FONT
size=2 face="serif">. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">closing
      price</FONT></B><FONT size=2 face="serif">&#148; 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 means: </FONT></P>
<UL>
  <LI> <FONT size=2 face="serif">if such underlying stock (or any such other
      security) is listed or admitted to trading on a national securities</FONT> <FONT size=2 face="serif">exchange
      (other than The NASDAQ Stock Market LLC (the &#147;NASDAQ&#148;)), the
      last reported sale price,</FONT> <FONT size=2 face="serif">regular way,
      of the principal trading session on such day on the principal national
      securities exchange</FONT> <FONT size=2 face="serif">registered under the
      Securities Exchange Act of 1934, as amended (the &#147;Exchange Act&#148;),
      on which such</FONT> <FONT size=2 face="serif">underlying stock (or any
      such other security) is listed or admitted to trading,</FONT></LI>
  <br>
  <br>
  <LI> <FONT size=2 face="serif">if such underlying stock (or any such other
      security) is a security of the NASDAQ, the official closing price</FONT> <FONT size=2 face="serif">published
      by the NASDAQ on such day, or</FONT></LI>
  <br>
  <br>
  <LI> <FONT size=2 face="serif">if such underlying stock (or any such other
      security) is not listed or admitted to trading on any national</FONT> <FONT size=2 face="serif">securities
      exchange but is included in the OTC Bulletin Board Service (the
    &#147;OTC Bulletin Board&#148;)</FONT> <FONT size=2 face="serif">operated
    by the National Association of Securities Dealers, Inc. (the &#147;NASD&#148;),
    the last reported sale price</FONT> <FONT size=2 face="serif">of the principal
    trading session on the OTC Bulletin Board on such day.</FONT></LI>
</UL>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">If such
    underlying stock (or any such other security) is listed or admitted to trading
    on any national securities exchange but the last reported sale price or the
    official closing price published by the NASDAQ, as applicable, is not available
    pursuant to the preceding sentence, then the closing price for one share
    of such underlying stock (or one unit of any such other security) on any
    trading day will mean the last reported sale price of the principal trading
    session on the over-the-counter market as reported on the NASDAQ or the OTC
    Bulletin Board on such day. If a market disruption event (as defined below)
    occurs with respect to such underlying stock (or any such other security)
    or the last reported sale price or the official closing price published by
    the NASDAQ, as applicable, for such 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 will be the mean, as determined by
    the Calculation Agent, of the bid prices for such 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 will make such bid
    prices available to the Calculation Agent. Bids of MS &amp; 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 &#147;OTC Bulletin Board Service&#148; will include any successor service
    thereto. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">Depositary</FONT></B><FONT size=2 face="serif">&#148; or &#147;</FONT><B><FONT size=2 face="serif">DTC</FONT></B><FONT size=2 face="serif">&#148; means
    The Depository Trust Company, New York, New York. </FONT></P>
<P align="center"> <FONT size=2 face="serif">S-13</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">determination
      date</FONT></B><FONT size=2 face="serif">&#148; will be the date specified
      as such in the applicable pricing supplement, </FONT><I><FONT
size=2 face="serif">provided</FONT></I><FONT size=2 face="serif"> that if such
      date is not a trading day or if a market disruption event occurs on such
      date, the determination date will be the immediately succeeding trading
      day on which no market disruption event occurs. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">exchange
      factor</FONT></B><FONT size=2 face="serif">&#148; will be set initially
      at 1.0, but will be subject to adjustment upon the occurrence of certain
      extraordinary dividends and corporate events affecting the underlying stock
      through and including the determination date. See &#147;Antidilution Adjustments&#148; below. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">exchange
      ratio</FONT></B><FONT size=2 face="serif">&#148; will be equal to the issue
      price per RevCons divided by the initial share price and will be determined
      on the pricing date. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">Euroclear
      operator</FONT></B><FONT size=2 face="serif">&#148; means Euroclear Bank
      S.A./N.V., as operator of the Euroclear System. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">initial
      share price</FONT></B><FONT size=2 face="serif">&#148; means the closing
      price of the underlying stock on the pricing date. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">interest
      payment date</FONT></B><FONT size=2 face="serif">&#148; for any RevCons
      means any date specified in the applicable pricing supplement for that
      RevCons for the regularly scheduled payment of the coupon. If the scheduled
      maturity date is postponed due to a market disruption event or otherwise,
      we will pay the coupon on the maturity date as postponed rather than on
      the scheduled maturity date, but no coupon will accrue on the RevCons or
      on such payment during the period from or after the scheduled maturity
      date. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">intraday
      price</FONT></B><FONT size=2 face="serif">&#148; 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: </FONT></P>
<UL>
  <LI> <FONT size=2 face="serif">if the underlying stock (or any such other security)
      is listed or admitted to trading on a national securities</FONT> <FONT size=2 face="serif">exchange
      (other than the NASDAQ), the most recently reported sale price, regular
      way, at such time during</FONT> <FONT size=2 face="serif">the principal
      trading session on such day on the principal national securities exchange
      registered under the</FONT> <FONT size=2 face="serif">Exchange Act on which
      the underlying stock (or any such other security) is listed or admitted
      to trading,</FONT></LI>
  <br>
  <br>
  <LI> <FONT size=2 face="serif">if the underlying stock (or any such other security)
      is a security of the NASDAQ, the most recently</FONT> <FONT size=2 face="serif">reported
      sale price, regular way, at such time during the principal trading session
      on such day quoted by the</FONT> <FONT size=2 face="serif">NASDAQ, or</FONT></LI>
  <br>
  <br>
  <LI> <FONT size=2 face="serif">if the underlying stock (or any such other security)
      is not listed or admitted to trading on any national</FONT> <FONT size=2 face="serif">securities
      exchange but is included in the OTC Bulletin Board, the most recently reported
      sale price at such</FONT> <FONT size=2 face="serif">time during the principal
      trading session on the OTC Bulletin Board on such day.</FONT></LI>
</UL>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">issue
      price</FONT></B><FONT size=2 face="serif">&#148; means the amount per RevCons
      specified as such in the applicable pricing supplement and will equal the
      stated principal amount of each RevCons, unless otherwise specified. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="serif">&#147;market
      disruption event</FONT></B><FONT size=2 face="serif">&#148; means, with
      respect to the underlying stock: </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(i)
    a suspension, absence or material limitation of trading of the underlying
    stock on the primary market for such common 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 </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">(ii)
    a determination by the Calculation Agent in its sole discretion that any
    event described in clause (i) above materially interfered with our ability
    or the ability of any of our affiliates to unwind or adjust all or a material
    portion of the hedge with respect to the RevCons. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">For
    purposes of determining whether a market disruption event has occurred: (1)
    a limitation on the hours or number of days of trading will not constitute
    a market disruption event if it results from an announced change in the regular
    business hours of the primary market, (2) a decision to permanently discontinue
    trading in the relevant </FONT></P>
<P align="center"> <FONT size=2 face="serif">S-14</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="left"> <FONT size=2 face="serif">options contract will not constitute
    a market disruption event, (3) limitations pursuant to New York Stock Exchange
    LLC (&#147;NYSE&#148;) 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 (the &#147;Commission&#148;) 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 will 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
    will not include any time when such securities market is itself closed for
    trading under ordinary circumstances. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The &#147;</FONT><B><FONT size=2 face="serif">maturity
      date</FONT></B><FONT size=2 face="serif">&#148; is specified in the applicable
      pricing supplement and is subject to acceleration as described below in &#147;&#151;Price
      Event Acceleration&#148; and &#147;&#151;Alternate Exchange Calculation
      in Case of an Event of Default&#148; and subject to extension if the determination
      date is postponed in accordance with the following paragraph.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">If the
    determination date is postponed due to a market disruption event or otherwise,
    the maturity date will be postponed so that the maturity date will be the
    second trading day following the determination date.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">original
      issue date</FONT></B><FONT size=2 face="serif">&#148; means the date specified
      in the applicable pricing supplement on which a particular issuance of
      RevCons will be issued. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">pricing
      date</FONT></B><FONT size=2 face="serif">&#148; means the day when we price
      an issuance of the RevCons for initial sale to the public. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">record
      date</FONT></B><FONT size=2 face="serif">&#148; for each interest payment
      date, including the interest payment date scheduled to occur on the maturity
      date, means the date 5 calendar days prior to such scheduled interest payment
      date, whether or not that date is a business day. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">stated
      principal amount</FONT></B><FONT size=2 face="serif">&#148; means the principal
      amount of each RevCons.</FONT><I><FONT size=2 face="serif"> </FONT></I></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">TARGET
      Settlement Day</FONT></B><FONT size=2 face="serif">&#148; means any day
      on which the Trans-European Automated Real-time Gross Settlement Express
      Transfer System is open. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">trading
      day</FONT></B><FONT size=2 face="serif">&#148; means a day, as determined
      by the Calculation Agent, on which trading is generally conducted on the
      NYSE, the American Stock Exchange LLC, the NASDAQ, the Chicago Mercantile
      Exchange and the Chicago Board of Options Exchange, in the over-the-counter
      market for equity securities in the United States and, if the principal
      trading market for the common stock or ordinary shares of the underlying
      company is outside the United States, in such principal trading market. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">trading
      price</FONT></B><FONT size=2 face="serif">&#148; 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. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">trigger
      level</FONT></B><FONT size=2 face="serif">&#148; means the percentage specified
      in the applicable pricing supplement for a particular RevCons. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">trigger
      price</FONT></B><FONT size=2 face="serif">&#148; means the product of the
      trigger level and the initial share price, and will be determined by the
      Calculation Agent on the pricing date. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">underlying
      company</FONT></B><FONT size=2 face="serif">&#148; means the company that
      is specified in the applicable pricing supplement, whose shares underlie
      the particular issuance of RevCons. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;</FONT><B><FONT size=2 face="serif">underlying
      stock</FONT></B><FONT size=2 face="serif">&#148; means the common stock
      of the underlying company that is specified in the applicable pricing supplement
      for a particular RevCons. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">References
    in this prospectus supplement to &#147;</FONT><B><FONT size=2 face="serif">U.S.
    dollars</FONT></B><FONT size=2 face="serif">&#148; or &#147;</FONT><B><FONT size=2
face="serif">U.S.&#36;</FONT></B><FONT size=2 face="serif">&#148; or &#147;</FONT><B><FONT size=2 face="serif">&#36;</FONT></B><FONT size=2 face="serif">&#148; are
    to the currency of the United States of America. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Other
    features of the RevCons are described in the following paragraphs. </FONT></P>
<P align="center"> <FONT size=2 face="serif">S-15</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="left"> <B><FONT size=2 face="serif">Payment at Maturity</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Unless
    the maturity of the RevCons has been accelerated, on the maturity date, upon
    delivery of the RevCons to the Trustee, we will deliver to you for each stated
    principal amount of the RevCons either: </FONT></P>
<UL>
  <LI> <FONT size=2 face="serif">an amount in cash equal to the stated principal
      amount per RevCons, or</FONT></LI>
  <br>
  <br>
  <LI> <FONT size=2 face="serif">if closing price on the determination date is </FONT><B><FONT size=2 face="serif">less
        than </FONT></B><FONT size=2 face="serif">the initial share price AND
        the trading price of the</FONT> <FONT size=2
face="serif">underlying stock has decreased to or below the trigger price </FONT><B><FONT size=2 face="serif">at
        any time on any trading day </FONT></B><FONT size=2 face="serif">from
        and</FONT> <FONT size=2 face="serif">including the pricing date to and
        including the determination date, either (i) a number of shares of the</FONT> <FONT size=2 face="serif">underlying
        stock equal to the product of the exchange ratio and the exchange factor,
        determined as of the</FONT> <FONT size=2
face="serif">determination date, or (ii) at our sole option, the cash value of
        the underlying stock as of the determination</FONT> <FONT size=2 face="serif">date.
        See &#147;exchange ratio&#148; above. The exchange factor is subject
        to adjustment upon the occurrence of</FONT> <FONT size=2 face="serif">certain
        extraordinary dividends and corporate events relating to the underlying
        stock. See &#147;exchange</FONT> <FONT size=2 face="serif">factor&#148; above
        and &#147;&#151;Antidilution Adjustments&#148; below.</FONT></LI>
</UL>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">We shall,
    or shall cause the Calculation Agent to, (i) provide written notice to the
    Trustee and to the Depositary, on or prior to 10:30 a.m. on the trading day
    immediately prior to the maturity date of the RevCons (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 our election, if applicable, to deliver
    either underlying stock or the cash value of the underlying stock, of the
    amount of cash or underlying stock, as applicable, to be delivered with respect
    to the stated principal amount of each RevCons and (ii) deliver such cash
    or shares of the underlying stock (and cash in respect of coupon and any
    fractional shares of the underlying stock), if applicable, to the Trustee
    for delivery to the holders on the maturity date. The Calculation Agent shall
    determine the exchange factor applicable at the maturity of the RevCons. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">If the
    maturity of the RevCons is accelerated because of a price event acceleration
    (as described under &#147;&#151;Price Event Acceleration&#148; below) or
    because of an event of default acceleration (as defined under &#147;&#151;Alternate
    Exchange Calculation in Case of an Event of Default&#148; below), we shall
    provide such notice as promptly as possible and in no event later than (i)
    in the case of an event of default acceleration, two trading days after 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 such trading day)
    and (ii) 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). </FONT></P>
<P align="left"> <B><FONT size=2 face="serif">Price Event Acceleration</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">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 of the common stock of the underlying company and the
    exchange factor is less than the acceleration trigger price, the maturity
    date of the RevCons will be deemed to be accelerated to the third business
    day immediately following such second trading day (the
  &#147;date of acceleration&#148;). See the definition of &#147;exchange ratio&#148; above.
  Upon such acceleration, with respect to the stated principal amount of each
  RevCons, we will deliver to DTC, as holder of the RevCons, on the date of acceleration: </FONT></P>
<UL>
  <LI> <FONT size=2 face="serif">a number of shares of underlying stock equal
      to the product of the exchange ratio and the exchange factor,</FONT> <FONT size=2 face="serif">as
      of such date of acceleration, or at our sole option, the cash value of
      the underlying shares as of such date</FONT> <FONT size=2 face="serif">of
      acceleration; and</FONT></LI>
  <br>
  <br>
  <LI> <FONT size=2 face="serif">accrued but unpaid coupon to but excluding the
      date of acceleration plus an amount of cash, as determined</FONT> <FONT size=2 face="serif">by
      the Calculation Agent, equal to the sum of the present values of the remaining
      scheduled payments of</FONT> <FONT size=2 face="serif">coupon on the RevCons
      (excluding any portion of such payments of coupon accrued to the date of</FONT> <FONT size=2 face="serif">acceleration)
      discounted to the date of acceleration based on the comparable yield that
      we would pay on a</FONT> <FONT size=2 face="serif">non-interest bearing,
      senior unsecured debt obligation having a maturity equal to the term of
      each such</FONT> <FONT size=2 face="serif">remaining scheduled payment.</FONT></LI>
</UL>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">We expect
    such shares (if any) and cash will be distributed to investors on the date
    of acceleration in accordance with the standard rules and procedures of DTC
    and its direct and indirect participants. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Investors
    will not be entitled to receive the return of the stated principal amount
    of each RevCons upon a price event acceleration. </FONT></P>
<P align="center"> <FONT size=2 face="serif">S-16</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="left"> <B><FONT size=2 face="serif">No Fractional Shares</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Following
    the delivery of the RevCons to the Trustee at maturity, if our payment is
    to be made in shares of underlying stock, we will deliver the aggregate number
    of shares of underlying stock due with respect to all of such RevCons, as
    described above, but we will 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 second scheduled trading day prior to
    the maturity of the RevCons. </FONT></P>
<P align="left"> <B><FONT size=2 face="serif">Antidilution Adjustments</FONT></B></P>
<P align="left"> <FONT size=2 face="serif">The exchange factor will be adjusted
    as follows:</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">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 will 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. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">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 will 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.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">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 the RevCons, then
    the exchange factor will be adjusted to equal the product of the prior exchange
    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. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">4. There
    will 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
    will be deemed to be an &#147;</FONT><B><FONT size=2
face="serif">Extraordinary Dividend</FONT></B><FONT size=2 face="serif">&#148; if
    such cash dividend or distribution exceeds the immediately preceding non-Extraordinary
    Dividend for the underlying stock by an amount equal to at least 10% 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 occurs with respect to the underlying
    stock, the exchange factor with respect to the underlying stock will be adjusted
    on the ex-dividend date with respect to such Extraordinary Dividend so that
    the new exchange factor will 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 &#147;</FONT><B><FONT size=2 face="serif">Extraordinary
    Dividend Amount</FONT></B><FONT size=2 face="serif">&#148; with respect to
    an Extraordinary Dividend for the underlying stock will 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.</FONT> <FONT size=2 face="serif">To the extent an Extraordinary
    Dividend is not paid in cash, the value of the non-cash</FONT></P>
<P align="center"> <FONT size=2 face="serif">S-17</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="left"> <FONT size=2 face="serif"> component will 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. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">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 &#147;</FONT><B><FONT size=2 face="serif">underlying
    company Successor</FONT></B><FONT size=2 face="serif">&#148;) 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 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 &#147;</FONT><B><FONT size=2 face="serif">Spin-off
    Event</FONT></B><FONT size=2 face="serif">&#148;) 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 &#147;</FONT><B><FONT size=2 face="serif">Reorganization Event</FONT></B><FONT size=2 face="serif">&#148;),
    the method of determining the amount payable upon exchange at maturity for
    each RevCons will be adjusted to provide that investors will be entitled
    to receive at maturity, in respect of the stated principal amount of each
    RevCons either: </FONT></P>
<UL>
  <LI> <FONT size=2 face="serif">an amount of cash equal to the stated principal
      amount of each RevCons, or</FONT></LI>
  <br>
  <br>
  <LI> <FONT size=2 face="serif">if (x) the trading price of the underlying stock
      at any time on any trading day from and including the</FONT> <FONT size=2 face="serif">pricing
      date to and including the effective date of the Reorganization Event, or
      (y) the Exchange Property</FONT> <FONT size=2 face="serif">Value (as defined
      below) at any time on any trading day from and including the effective
      date of the</FONT> <FONT size=2 face="serif">Reorganization Event to and
      including the determination date has decreased to or below the trigger
      price,</FONT> <FONT size=2 face="serif">and the Exchange Property Value
      (as defined below) on the determination date is less than the initial share</FONT> <FONT size=2 face="serif">price,
      securities, cash or any other assets distributed to holders of the underlying
      stock in or as a result of</FONT> <FONT size=2 face="serif">any such Reorganization
      Event, including (A) in the case of the issuance of tracking stock, the
      reclassified</FONT> <FONT size=2
face="serif">share of the underlying stock, (B) in the case of a Spin-off Event,
      the share of the underlying stock with</FONT> <FONT size=2 face="serif">respect
      to which the spun-off security was issued, and (C) in the case of any other
      Reorganization Event</FONT> <FONT size=2 face="serif">where the underlying
      stock continues to be held by the holders receiving such distribution,
      the underlying</FONT> <FONT size=2 face="serif">stock (collectively, the &#147;</FONT><B><FONT size=2
face="serif">Exchange Property</FONT></B><FONT size=2 face="serif">&#148;), in
      an amount equal to the amount of Exchange Property</FONT> <FONT size=2 face="serif">delivered
      with respect to a number of shares of the underlying stock equal to the
      Exchange Ratio times the</FONT> <FONT size=2 face="serif">exchange factor
      each determined at the time of the Reorganization Event, or, at our sole
      option, the cash</FONT> <FONT size=2 face="serif">value of such Exchange
      Property as of the determination date.</FONT></LI>
</UL>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">If Exchange
    Property consists of more than one type of property and we elect to deliver
    Exchange Property, rather than the cash value thereof, we will deliver to
    DTC, as holder of the RevCons, at maturity a pro rata share of each such
    type of Exchange Property. We expect that such Exchange Property will be
    distributed to investors in accordance with the standard rules and procedures
    of DTC and its direct and indirect participants. If Exchange Property includes
    a cash component, investors will not receive any interest accrued on such
    cash component. In the event Exchange Property consists of securities, those
    securities will, in turn, be subject to the antidilution adjustments set
    forth in paragraphs 1 through 5. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">For
    purposes of determining whether or not the Exchange Property Value has decreased
    to or below the trigger price at any time on any trading day from and including
    the time of the Reorganization Event to and including the determination date
    or whether or not the Exchange Property Value is less than the initial share
    price, &#147;</FONT><B><FONT size=2 face="serif">Exchange Property Value</FONT></B><FONT size=2
face="serif">&#148; 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.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">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</FONT></P>
<P align="center"> <FONT size=2 face="serif">S-18</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="left"> <FONT size=2 face="serif">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. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Following
    the occurrence of any Reorganization Event referred to in paragraph 5 above,
    (i) references to &#147;the underlying stock&#148; under &#147;&#151;No Fractional
    Shares,&#148;
  &#147;&#151;General Terms of the RevCons&#151;Some Definitions,&#148; &#147;&#151;Price
  Event Acceleration&#148; and &#147;&#151;Alternate Exchange Calculation in
  Case of an Event of Default&#148; 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 prospectus supplement to &#147;the
  underlying stock&#148; shall be deemed to refer to the Exchange Property into
  which the RevCons are thereafter exchangeable and references to a &#147;share&#148; or &#147;shares&#148; of
  the underlying stock shall be deemed to refer to the applicable unit or units
  of such Exchange Property, unless the context otherwise requires. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">No adjustment
    to the exchange factor will 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 will be rounded
    to the nearest one hundred-thousandth, with five one-millionths rounded upward.
    Adjustments to the exchange factor will be made up to the close of business
    on the determination date. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">No adjustments
    to the exchange factor or method of calculating the exchange factor will
    be required other than those specified above. The adjustments specified above
    do not cover all events that could affect the trading price or closing price
    of the underlying stock, including, without limitation, a partial tender
    or exchange offer for the underlying stock. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">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.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The
    Calculation Agent will provide information as to any adjustments to the exchange
    factor or to the method of calculating the amount payable at maturity of
    the RevCons made pursuant to paragraph 5 above upon written request by any
    investor in the RevCons. </FONT></P>
<P align="left"> <B><FONT size=2 face="serif">Alternate Exchange Calculation
      in Case of an Event of Default </FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">In case
    an event of default with respect to the RevCons shall have occurred and be
    continuing, the amount declared due and payable per RevCons upon any acceleration
    of the RevCons (an
  &#147;</FONT><B><FONT size=2 face="serif">Event of Default Acceleration</FONT></B><FONT size=2 face="serif">&#148;)
  shall be determined by the Calculation Agent and shall be an amount in cash
  equal to either (i) the stated principal amount of each RevCons plus accrued
  but unpaid coupon to but excluding the date of 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 acceleration AND the closing price of the underlying
  stock on the date of acceleration is less than the initial share price, (x)
  a number of shares of the underlying stock at the exchange ratio multiplied
  by the exchange factor as of the date of acceleration, or at our sole option,
  the cash value of such underlying stock as of the date of acceleration and
  (y) accrued but unpaid coupon to but excluding the date of acceleration. </FONT></P>
<P align="left"> <B><FONT size=2 face="serif">Trustee</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The &#147;</FONT><B><FONT size=2 face="serif">Trustee</FONT></B><FONT size=2 face="serif">&#148; for
    each offering of RevCons issued under our Senior Debt Indenture will be The
    Bank of New York, a New York banking corporation (as successor to JPMorgan
    Chase Bank, N.A.). </FONT></P>
<P align="left"> <B><FONT size=2 face="serif">Agent</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Unless
    otherwise specified in the applicable pricing supplement, the &#147;</FONT><B><FONT size=2 face="serif">Agent</FONT></B><FONT size=2 face="serif">&#148; for
    each underwritten offering of RevCons will be MS &amp; Co. </FONT></P>
<P align="center"> <FONT size=2 face="serif">S-19</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
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<PAGE>
<br>
<br>
<P align="left"> <B><FONT size=2 face="serif">Calculation Agent and Calculations</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The &#147;</FONT><B><FONT size=2 face="serif">Calculation
      Agent</FONT></B><FONT size=2 face="serif">&#148; for the RevCons will be
      MS &amp; Co. As Calculation Agent, MS &amp; Co. will determine whether
      the trading price of the underlying stock has decreased to or below the
      trigger price, whether the closing price of the underlying stock on the
      determination date is less than the initial share price, the appropriate
      payment at maturity, the amount payable per RevCons in the event of a price
      event acceleration or an event of default acceleration, and any adjustment
      to the exchange factor for certain extraordinary dividends or corporate
      events affecting underlying stock that we describe in the section called &#147;&#151;Antidilution
      Adjustments&#148; above. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">All
    determinations made by the Calculation Agent will be at the sole discretion
    of the Calculation Agent and will, in the absence of manifest error, be conclusive
    for all purposes and binding on you, the Trustee and us. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">All
    calculations with respect to the exchange ratio and the exchange factor will
    be made by the Calculation Agent and will be rounded to the nearest one hundred-thousandth,
    with five one-millionths rounded upward (</FONT><I><FONT size=2 face="serif">e.g.,</FONT></I><FONT size=2 face="serif"> .876545
    would be rounded to .87655); all dollar amounts paid with respect to the
    aggregate number of RevCons related to coupon payments or the payment at
    maturity will be rounded to the nearest cent, with one-half cent rounded
    upward. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Because
    the Calculation Agent is our affiliate, the economic interests of the Calculation
    Agent and its affiliates may be adverse to your interests, as an owner of
    the RevCons, including with respect to certain determinations and judgments
    that the Calculation Agent must make in making adjustments to the exchange
    factor or determining any closing price or whether a market disruption event
    has occurred or calculating the amount due to you in the event of a price
    event acceleration. See &#147;Antidilution Adjustments&#148;, and the definition
    of &#147;market disruption event&#148; above. MS &amp; Co. is obligated to
    carry out its duties and functions as Calculation Agent in good faith and
    using its reasonable judgment. </FONT></P>
<P align="left"> <B><FONT size=2 face="serif">Forms of Securities</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">As noted
    above, the RevCons are issued as part or our Series F medium-term note program.
    We will issue RevCons only in fully registered form either as book-entry
    securities or as certificated securities. References to &#147;holders&#148; mean
    those who own RevCons registered in their own names on the books that we
    or the Trustee maintain for this purpose, and not those who own beneficial
    interests in RevCons registered in street name or in RevCons issued in book-entry
    form through one or more depositaries. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">Book-entry
      securities. </FONT></I><FONT size=2 face="serif">For RevCons in book-entry
      form, we will issue one or more global certificates representing the entire
      issue of RevCons. Except as set forth in the prospectus under &#147;Forms
      of Securities &#151; Global Securities,&#148; you may not exchange book-entry
      securities or interests in book-entry securities for certificated securities. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Each
    global security certificate representing book-entry securities will be deposited
    with, or on behalf of, the Depositary and registered in the name of the Depositary
    or a nominee of the Depositary. These certificates name the Depositary or
    its nominee as the owner of the RevCons. The Depositary maintains a computerized
    system that will reflect the interests held by its participants in the global
    securities. An investor&#146;s beneficial interest will be reflected in the
    records of the Depositary&#146;s direct or indirect participants through
    an account maintained by the investor with its broker/dealer, bank, trust
    company or other representative. A further description of the Depositary&#146;s
    procedures for global securities representing book-entry securities is set
    forth under &#147;Forms of Securities&#151;The Depositary&#148; in the prospectus. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">Certificated
      securities. </FONT></I><FONT size=2 face="serif">If we issue RevCons in
      certificated form, the certificate will name the investor or the investor&#146;s
      nominee as the owner of the RevCons. The person named in the security register
      will be considered the owner of the RevCons for all purposes under the
      Senior Debt Indenture. For example, if we need to ask the holders of any
      issuance of RevCons to vote on a proposed amendment to such RevCons, the
      person named in the security register will be asked to cast any vote regarding
      that issuance of RevCons. If you have chosen to have some other entity
      hold the certificates for you, that entity will be considered the owner
      of your RevCons in our records and will be entitled to cast the vote regarding
      your RevCons. You may not exchange certificated securities for book-entry
      securities or interests in book-entry securities. </FONT></P>
<P align="center"> <FONT size=2 face="serif">S-20</FONT></P>
<br>
<br>
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<br>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">New
      York law to govern. </FONT></I><FONT size=2 face="serif">The RevCons will
      be governed by, and construed in accordance with, the laws of the State
      of New York. </FONT></P>
<P align="left"> <B><FONT size=2 face="serif">Interest and Principal Payments</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">You
    should read the section called &#147;Description of Debt Securities&#148; in
    the prospectus, where we describe generally how principal and coupon payments
    on the RevCons are made, how exchanges and transfers of the RevCons are effected
    and how fixed rate coupons on the RevCons are calculated. For purposes of
    this prospectus supplement for RevCons, the description of fixed rate interest
    payments in the section called
  &#147;Description of Debt Securities&#148; in the prospectus shall be deemed
  to apply to the payment of coupons with respect to the RevCons. </FONT></P>
<P align="center"> <FONT size=2 face="serif">S-21</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="center"> <B><FONT size=2 face="serif">UNDERLYING COMPANY AND STOCK &#150; PUBLIC
      INFORMATION</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Companies
    with securities registered under the Exchange Act are required to file periodically
    certain financial and other information specified by the Commission. Information
    provided to or filed with the Commission can be inspected and copied at the
    public reference facilities maintained by the Commission at Room 1580, 100
    F Street, N.E., Washington, D.C. 20549, and copies of such material can be
    obtained from the Public Reference Section of the Commission, 100 F Street,
    N.E., Washington, D.C. 20549, at prescribed rates. In addition, information
    provided to or filed with the Commission electronically can be accessed through
    a website maintained by the Commission. The address of the Commission&#146;s
    website is http://www.sec.gov. Information provided to or filed with the
    Commission by the underlying company pursuant to the Exchange Act can be
    located by reference to the Commission file number provided in the applicable
    pricing supplement. In addition, information regarding the underlying company
    may be obtained from other sources including, but not limited to, press releases,
    newspaper articles and other publicly disseminated documents. We make no
    representation or warranty as to the accuracy or completeness of such information. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="serif">This
      prospectus supplement relates only to the RevCons offered hereby and does
      not relate to the common stock of the underlying company or other securities
      of such company. In connection with any issuance of RevCons under this
      prospectus supplement, neither we nor the Agent has participated in the
      preparation of such documents or made any due diligence inquiry with respect
      to the underlying company. Neither we nor the Agent makes any representation
      that such publicly available documents or any other publicly available
      information regarding the underlying company is accurate or complete. Furthermore,
      we cannot give any assurance that all events occurring prior to the date
      hereof (including events that would affect the accuracy or completeness
      of the publicly available documents described in the preceding paragraph)
      that would affect the trading price of the underlying stock (and therefore
      the price of such common stock at the time we price the RevCons) have been
      publicly disclosed. Subsequent disclosure of any such events or the disclosure
      of or failure to disclose material future events concerning the underlying
      company could affect the value received at maturity with respect to the
      RevCons and therefore the trading prices of the RevCons. </FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="serif">Neither
      we nor any of our affiliates makes any representation to you as to the
      performance of the common stock of the underlying company. </FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">We and/or
    our affiliates may presently or from time to time engage in business with
    the underlying company, including extending loans to, or making equity investments
    in the underlying company or providing advisory services to the underlying
    company, such as merger and acquisition advisory services. In the course
    of such business, we and/or our affiliates may acquire non-public information
    with respect to the underlying company, and neither we nor any of our affiliates
    undertakes to disclose any such information to you. In addition, one or more
    of our affiliates may publish research reports with respect to the underlying
    company, and the reports may or may not recommend that investors buy or hold
    common stock of the underlying company. The statements in the preceding two
    sentences are not intended to affect the rights of investors in the RevCons
    under the securities laws. As a prospective purchaser of RevCons, you should
    undertake an independent investigation of the underlying company as in your
    judgment is appropriate to make an informed decision with respect to an investment
    in its common stock. </FONT></P>
<P align="center"> <B><FONT size=2 face="serif">USE OF PROCEEDS AND HEDGING</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The
    net proceeds we receive from the sale of the RevCons will be used for general
    corporate purposes and, in part, in connection with hedging our obligations
    under the RevCons through one or more of our subsidiaries. The original issue
    price of the RevCons includes the agent&#146;s commissions (as shown on the
    cover page of the applicable pricing supplement) paid with respect to the
    RevCons and the cost of hedging our obligations thereunder. The cost of hedging
    includes the projected profit that our subsidiaries expect to realize in
    consideration for assuming the risks inherent in managing the hedging transactions.
    Since hedging our obligations entails risk and may be influenced by market
    forces beyond our or our subsidiaries&#146; control, such hedging may result
    in a profit that is more or less than initially projected, or could result
    in a loss. See also &#147;Use of Proceeds&#148; in the accompanying prospectus. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">On or
    prior to the day we price the RevCons for initial sale to the public, we,
    through our subsidiaries or others, expect to hedge our anticipated exposure
    in connection with the RevCons by taking positions in the underlying stock,
    in options contracts on the underlying stock listed on major securities markets,
    or positions in any other available securities or instruments that we may
    wish to use in connection with such hedging. Such purchase activity</FONT></P>
<P align="center"> <FONT size=2 face="serif">S-22</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
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<PAGE>
<br>
<br>
<P align="left"> <FONT size=2 face="serif">could increase the price of the underlying
    stock, and, accordingly, potentially increase the issue price of the RevCons,
    and therefore, the price at which the underlying stock must close before
    you would receive at maturity an amount of common stock worth as much as
    or more than the stated principal amount of the RevCons. In addition, through
    our subsidiaries, we are likely to modify our hedge position throughout the
    life of the RevCons, by purchasing and selling the underlying stock, options
    contracts on the underlying stock listed on major securities markets or positions
    in any other available securities or instruments that we may wish to use
    in connection with such hedging activities. We cannot give any assurance
    that our hedging activities will not affect the price of the underlying stock
    and, therefore, adversely affect the value of the RevCons or the payment
    that you will receive at maturity or upon any acceleration of the RevCons. </FONT></P>
<P align="center"> <B><FONT size=2 face="serif">SECURITIES OFFERED ON A GLOBAL
      BASIS</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">If we
    offer the RevCons on a global basis we will so specify in the applicable
    pricing supplement. The additional information contained in the prospectus
    under &#147;Securities Offered on a Global Basis Through the Depositary&#151;Book-Entry,
    Delivery and Form&#148; and &#147;&#151;Global Clearance and Settlement Procedures&#148; will
    apply to every offering on a global basis. The additional provisions described
    under &#147;&#151;Tax Redemption&#148; and &#147;&#151;Payment of Additional
    Amounts&#148; will apply to RevCons offered on a global basis only if we
    so specify in the applicable pricing supplement. </FONT></P>
<P align="center"> <B><FONT size=2 face="serif">ERISA</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Each
    fiduciary of a pension, profit-sharing or other employee benefit plan subject
    to the Employee Retirement Income Security Act of 1974, as amended (&#147;</FONT><B><FONT size=2
face="serif">ERISA</FONT></B><FONT size=2 face="serif">&#148;) (a &#147;</FONT><B><FONT size=2 face="serif">Plan</FONT></B><FONT size=2 face="serif">&#148;),
    should consider the fiduciary standards of ERISA in the context of the Plan&#146;s
    particular circumstances before authorizing an investment in the RevCons.
    Accordingly, among other factors, the fiduciary should consider whether the
    investment would satisfy the prudence and diversification requirements of
    ERISA and would be consistent with the documents and instruments governing
    the Plan. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">In addition,
    we and certain of our subsidiaries and affiliates, including MS &amp; Co.
    and Morgan Stanley DW Inc. (formerly Dean Witter Reynolds Inc.) (&#147;</FONT><B><FONT size=2
face="serif">MSDWI</FONT></B><FONT size=2 face="serif">&#148;), may be each considered
    a &#147;party in interest&#148; within the meaning of ERISA, or a &#147;disqualified
    person&#148; within the meaning of the Internal Revenue Code of 1986, as
    amended (the &#147;</FONT><B><FONT size=2 face="serif">Code</FONT></B><FONT size=2 face="serif">&#148;),
    with respect to many Plans, as well as many individual retirement accounts
    and Keogh plans (also &#147;</FONT><B><FONT size=2
face="serif">Plans</FONT></B><FONT size=2 face="serif">&#148;). Prohibited transactions
    within the meaning of ERISA or the Code would likely arise, for example,
    if the RevCons are acquired by or with the assets of a Plan with respect
    to which MS
  &amp; Co., MSDWI or any of their affiliates is a service provider or other
  party in interest, unless the RevCons are acquired pursuant to an exemption
  from the &#147;prohibited transaction&#148; rules. A violation of these &#147;prohibited
  transaction&#148; rules could result in an excise tax or other liabilities
  under ERISA and/or Section 4975 of the Code for such persons, unless exemptive
  relief is available under an applicable statutory or administrative exemption. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The
    U.S. Department of Labor has issued five prohibited transaction class exemptions
    (&#147;</FONT><B><FONT size=2 face="serif">PTCEs</FONT></B><FONT size=2 face="serif">&#148;)
    that may provide exemptive relief for direct or indirect prohibited transactions
    resulting from the purchase or holding of the RevCons. Those class exemptions
    are PTCE 96-23 (for certain transactions determined by in-house asset managers),
    PTCE 95-60 (for certain transactions involving insurance company general
    accounts), PTCE 91-38 (for certain transactions involving bank collective
    investment funds), PTCE 90-1 (for certain transactions involving insurance
    company separate accounts) and PTCE 84-14 (for certain transactions determined
    by independent qualified asset managers). In addition, ERISA Section 408(b)(17)
    provides an exemption for the purchase and sale of RevCons and related lending
    transactions, provided that neither the issuer of the RevCons nor any of
    its affiliates have or exercise any discretionary authority or control or
    render any investment advice with respect to the assets of any Plan involved
    in the transaction, and provided further that the Plan pays no more than
  &#147;adequate consideration&#148; (to be defined in regulations to be issued
  by the Secretary of the Department of Labor) in connection with the transaction
  (the so-called &#147;service provider&#148;</FONT><B><FONT size=2 face="serif"> </FONT></B><FONT size=2 face="serif">exemption). </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Because
    we may be considered a party in interest with respect to many Plans, the
    RevCons may not be purchased, held or disposed of by any Plan, any entity
    whose underlying assets include
  &#147;plan assets&#148; by reason of any Plan&#146;s investment in the entity
  (a &#147;</FONT><B><FONT size=2 face="serif">Plan Asset Entity</FONT></B><FONT size=2 face="serif">&#148;)
  or any person investing &#147;plan assets&#148; of any Plan, unless such purchase,
  holding or disposition is eligible for exemptive relief, including relief available
  under PTCEs 96-23, 95-60, 91-38, 90-1, 84-14 or the service provider exemption
  or such purchase, holding or disposition is otherwise not prohibited. Any purchaser,
  including any fiduciary purchasing on behalf of a Plan, transferee or holder
  of the </FONT></P>
<P align="center"> <FONT size=2 face="serif">S-23</FONT></P>
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<br>
<hr size=3 color=GRAY noshade>
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<PAGE>
<br>
<br>
<P align="left"> <FONT size=2 face="serif">RevCons will be deemed to have represented,
    in its corporate and its fiduciary capacity, by its purchase and holding
    of the RevCons that either (a) it is not a Plan or a Plan Asset Entity and
    is not purchasing such RevCons on behalf of or with &#147;plan assets&#148; of
    any Plan, or with any assets of a governmental or church plan that is subject
    to any federal, state or local law that is substantially similar to the provisions
    of Section 406 of ERISA of Section 4975 of the Code or (b) its purchase,
    holding and disposition are eligible for exemptive relief or such purchase,
    holding and disposition are not prohibited by ERISA or Section 4975 of the
    Code (or in the case of a governmental or church plan, any substantially
    similar federal, state or local law). </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Under
    ERISA, assets of a Plan may include assets of certain commingled vehicles
    and entities in which the Plan has invested (including, in certain cases,
    the general account of an insurance company). Accordingly, commingled vehicles
    and entities which include assets of a Plan must ensure that one of the foregoing
    exemptions is available. Due to the complexity of these rules and the penalties
    that may be imposed upon persons involved in non-exempt prohibited transactions,
    it is particularly important that fiduciaries or other persons considering
    purchasing the RevCons on behalf of or with &#147;plan assets&#148; of any
    Plan consult with their counsel regarding the availability of exemptive relief
    under any available exemptions, such as PTCEs 96-23, 95-60, 91-38, 90-1 or
    84-14 or the service provider exemption. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Purchasers
    of the RevCons have exclusive responsibility for ensuring that their purchase,
    holding and disposition of the RevCons do not violate the prohibited transaction
    rules of ERISA or the Code or similar regulations applicable to governmental
    or church plans, as described above. The sale of any RevCons to any Plan
    investor is in no respect a representation by us or any of our affiliates
    or representatives that such an investment meets all relevant legal requirements
    with respect to investments by Plan investors generally or any particular
    Plan investor, or that such an investment is appropriate for Plan investors
    generally or any particular Plan investor. </FONT></P>
<P align="center"> <B><FONT size=2 face="serif">UNITED STATES FEDERAL TAXATION</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The
    following are the material U.S. federal tax consequences of ownership and
    disposition of the RevCons. This discussion only applies to initial investors
    in the RevCons who: </FONT></P>
<UL>
  <LI> <FONT size=2 face="serif">purchase the RevCons at their &#147;issue price&#148;;
      and</FONT></LI>
  <br>
  <br>
  <LI> <FONT size=2 face="serif">will hold the RevCons as capital assets within
      the meaning of Section 1221 of the Internal Revenue Code</FONT> <FONT size=2 face="serif">of
      1986, as amended (the &#147;Code&#148;).</FONT></LI>
</UL>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Subject
    to any additional discussions in the applicable pricing supplement, it is
    expected, and the discussion below assumes, that, for U.S. federal income
    tax purposes, the issue price of a RevCons is equal to its stated issue price
    indicated in the applicable pricing supplement. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">This
    discussion does not describe all of the tax consequences that may be relevant
    to a particular holder in light of the holder&#146;s particular circumstances
    or to holders subject to special rules, such as: </FONT></P>
<UL>
  <LI> <FONT size=2 face="serif">certain financial institutions;</FONT></LI>
  <LI> <FONT size=2 face="serif">insurance companies;</FONT></LI>
  <LI> <FONT size=2 face="serif">dealers in securities or foreign currencies;</FONT></LI>
  <LI> <FONT size=2 face="serif">investors holding the securities as part of
      a hedging transaction, &#147;straddle,&#148; conversion transaction, or
      other</FONT> <FONT size=2 face="serif">integrated transaction, or who holds
      the securities as part of a constructive sale transaction or constructive</FONT> <FONT size=2 face="serif">ownership
      transaction;</FONT></LI>
  <LI> <FONT size=2 face="serif">U.S. Holders, as defined below, whose functional
      currency is not the U.S. dollar;</FONT></LI>
  <LI> <FONT size=2 face="serif">partnerships or other entities classified as
      partnerships for U.S. federal income tax purposes;</FONT></LI>
  <LI> <FONT size=2 face="serif">regulated investment companies;</FONT></LI>
  <LI> <FONT size=2 face="serif">real estate investment trusts;</FONT></LI>
  <LI> <FONT size=2 face="serif">tax exempt entities, including an &#147;individual
      retirement account&#148; or &#147;Roth IRA&#148; as defined in Section
      408</FONT> <FONT size=2 face="serif">or 408A of the Code, respectively;</FONT></LI>
  <LI> <FONT size=2 face="serif">persons subject to the alternative minimum tax;</FONT></LI>
  <LI> <FONT size=2 face="serif">nonresident alien individuals who have lost
      their U.S. citizenship or who have ceased to be taxed as U.S.</FONT> <FONT size=2 face="serif">resident
      aliens; or</FONT></LI>
  <LI> <FONT size=2 face="serif">Non-U.S. Holders, as defined below, for whom
      income or gain in respect of the RevCons is effectively</FONT> <FONT size=2 face="serif">connected
      with a trade or business in the United States.</FONT></LI>
</UL>
<P align="center"> <FONT size=2 face="serif">S-24</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
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<br>
<br>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Additionally,
    except as pertains to the withholding tax described below under &#147;&#151;Tax
    Consequences to Non-U.S. Holders,&#148; the effect of the U.S. federal tax
    laws, including the effect of the U.S. federal estate tax laws, on an investment
    in the RevCons by non-U.S. investors is not discussed. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">As the
    law applicable to the U.S. federal income taxation of instruments such as
    the RevCons is technical and complex, the discussion below necessarily represents
    only a general summary. Moreover, the effect of any applicable state, local
    or foreign tax laws is not discussed. In addition, this summary does not
    address the U.S. federal income tax consequences of the ownership or disposition
    of shares of underlying stock should an investor receive shares of underlying
    stock at maturity or upon acceleration of the RevCons. Investors should consult
    their tax advisors regarding the potential U.S. federal income tax consequences
    of the ownership or disposition of the underlying stock. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">This
    discussion is based on the Code, administrative pronouncements, judicial
    decisions and final, temporary and proposed Treasury regulations, all as
    of the date hereof, changes to any of which subsequent to the date of this
    prospectus supplement may affect the tax consequences described herein. Persons
    considering the purchase of the RevCons are urged to consult their tax advisors
    with regard to the application of the U.S. federal income tax laws to their
    particular situations as well as any tax consequences arising under the laws
    of any state, local or foreign taxing jurisdiction. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="serif">This
      discussion is subject to any additional discussion regarding U.S. federal
      income taxation contained in the applicable pricing supplement. Accordingly,
      you should also consult the applicable pricing supplement for any additional
      discussion of U.S. federal income taxation with respect to the specific
      RevCons offered thereunder. </FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="serif">Tax
      Consequences to U.S. Holders</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">As used
    herein, the term &#147;U.S. Holder&#148; means a beneficial owner of a RevCons
    that is for U.S. federal income tax purposes:</FONT></P>
<UL>
  <LI> <FONT size=2 face="serif">a citizen or resident of the United States;</FONT></LI>
  <LI> <FONT size=2 face="serif">a corporation, or other entity taxable as a
      corporation for U.S. federal income tax purposes, created or</FONT> <FONT size=2 face="serif">organized
      in or under the laws of the United States or any political subdivision
      thereof; or</FONT></LI>
  <LI> <FONT size=2 face="serif">an estate or trust the income of which is subject
      to U.S. federal income taxation regardless of its source.</FONT></LI>
</UL>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The
    term U.S. Holder also includes certain former citizens and residents of the
    United States.</FONT></P>
<P align="left"> <B><I><FONT size=2 face="serif">General</FONT></I></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Unless
    otherwise provided in the applicable pricing supplement, pursuant to the
    terms of the RevCons and subject to the discussion below under &#147;</FONT><FONT size=2 face="serif"> &#151; </FONT><FONT size=2 face="serif">Tax
    Consequences to Non-U.S. Holders,&#148; we and every investor in the RevCons
    will agree (in the absence of an administrative determination or judicial
    ruling to the contrary) to characterize a RevCons for all U.S. federal income
    tax purposes as a unit consisting of the following:</FONT></P>
<TABLE border=0 cellspacing=0 cellpadding=0>
  <TR>
    <TD width="5%" valign=top nowrap>&nbsp;</TD>
    <TD width="5%" valign=top nowrap><FONT size=2 face="serif">(i)</FONT>&nbsp; &nbsp; &nbsp; </TD>
    <TD width=90%><FONT size=2 face="serif">a put right (the &#147;Put Right&#148;)
        written by the investor to us that, if exercised, requires the investor
        in a RevCons to pay us an amount equal to the Deposit (as defined below)
        in exchange for shares of underlying stock (and cash in lieu of any fractional
        shares), or, at our option, the cash value of such shares of underlying
        stock as determined on the determination date (or, if applicable, the
        date of acceleration); and</FONT> </TD>
  </TR>
  <TR>
    <TD colspan=3>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" valign=top nowrap>&nbsp;</TD>
    <TD width="5%" valign=top nowrap><FONT size=2 face="serif">(ii)</FONT>&nbsp; &nbsp; &nbsp; </TD>
    <TD width=90%><FONT size=2 face="serif">a deposit with us of a fixed amount
        of cash, equal to the issue price, to secure the investor&#146;s obligation
        to purchase shares of underlying stock (the &#147;Deposit&#148;), which
        Deposit pays interest in cash based on our cost of borrowing at the time
        of issuance (the &#147;Yield on the Deposit&#148;).</FONT> </TD>
  </TR>
</TABLE>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Please
    refer to the applicable pricing supplement for the Yield on the Deposit of
    the RevCons offered thereunder. The Put Right will be deemed to have been
    exercised only if the closing price of the underlying stock as of the determination
    date (or, if applicable, the date of acceleration) is less than its initial
    share price and the trading </FONT></P>
<P align="center"> <FONT size=2 face="serif">S-25</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="left"> <FONT size=2 face="serif">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 determination date (or,
    if applicable, the date of acceleration). </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Unless
    otherwise provided in the applicable pricing supplement, we will allocate
    100% of the issue price of the RevCons to the Deposit and none to the Put
    Right. Our allocation of the issue price between the Put Right and the Deposit
    will be binding on investors in the RevCons, unless an investor timely and
    explicitly discloses to the Internal Revenue Service (&#147;IRS&#148;) that
    its allocation is different from ours. The treatment of the RevCons described
    above and our allocation are not, however, binding on the IRS or the courts.
    No statutory, judicial or administrative authority directly addresses the
    characterization of the RevCons or instruments similar to the RevCons for
    U.S. federal income tax purposes, and no ruling is being requested from the
    IRS with respect to the RevCons. </FONT><B><FONT size=2 face="serif">Davis
    Polk &amp; Wardwell, our counsel, has not rendered an opinion as to the proper
    U.S. federal income tax characterization of the RevCons. Significant aspects
    of the U.S. federal income tax consequences of an investment in the RevCons
    are uncertain, and no assurance can be given that the IRS or the courts will
    agree with the characterization described herein. Accordingly, you are urged
    to consult your tax advisors regarding all aspects of the U.S. federal tax
    consequences of an investment in the RevCons (including alternative characterizations
    of the RevCons) and with respect to any tax consequences arising under the
    laws of any state, local or foreign taxing jurisdiction. Unless otherwise
    stated, the following discussion is based on the treatment and the allocation
    described above.</FONT></B><FONT size=2 face="serif"> </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I><FONT size=2 face="serif">Tax
        Treatment of the RevCons</FONT></I></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Unless
    otherwise provided in the applicable pricing supplement and assuming the
    characterization of the RevCons and allocation of the issue price as set
    forth above, the following U.S. federal income tax consequences should result. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I><FONT size=2 face="serif">RevCons
        with a Term Equal to or Less Than One Year. </FONT></I></B><FONT size=2 face="serif">The
        following discussion describes certain U.S. federal income tax consequences
        of ownership and disposition of a RevCons if the term of the RevCons
        is equal to or less than one year (taking into account the last possible
        date that the RevCons could be outstanding under its terms). </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">Coupon
      Payments on the RevCons. </FONT></I><FONT size=2 face="serif">Under the
      characterization described above under &#147;</FONT><FONT size=2 face="serif"> &#151; </FONT><FONT size=2
face="serif">General,&#148; only a portion of the coupon payments on the RevCons
      will be attributable to the Yield on the Deposit. The remainder of the
      coupon payments will represent payments attributable to the investor&#146;s
      sale of the Put Right (the &#147;Put Premium&#148;).</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The
    Deposit will be treated as a &#147;short-term obligation&#148; for U.S. federal
    income tax purposes. Accordingly, to the extent attributable to the Yield
    on the Deposit, coupon payments on the RevCons will generally be taxable
    to a U.S. Holder as ordinary interest income, as set forth herein. A U.S.
    Holder who is a cash method taxpayer will not be required to include the
    Yield on the Deposit currently in income for U.S. federal income tax purposes
    prior to its receipt unless the holder elects to do so. A U.S. Holder who
    is a cash method taxpayer and does not elect to make such election should
    include the Yield on the Deposit as income upon receipt. An accrual method
    taxpayer will be required to include the yield on the Deposit in income as
    it accrues on a straight-line basis, unless the holder makes an election
    to accrue the Yield on the Deposit according to a constant yield method based
    on daily compounding. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">A cash
    method U.S. Holder who is not required and does not make the election to
    include the Yield on the Deposit in income on an accrual basis will be required
    to defer deductions for certain interest paid on indebtedness incurred to
    purchase or carry the RevCons generally until and to the extent that such
    accrued Yield on the Deposit is included in income.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The
    Put Premium will not be taxable to a U.S. Holder upon receipt. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">Tax
      Basis. </FONT></I><FONT size=2 face="serif">Based on our determination
      set forth above, the U.S. Holder&#146;s tax basis in the Put Right will
      be zero, and the U.S. Holder&#146;s initial tax basis in the Deposit will
      be 100% of the issue price.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">Receipt
      of Stated Principal Amount in Cash upon Settlement of the RevCons. </FONT></I><FONT size=2 face="serif">If
      a U.S. Holder receives the stated principal amount of a RevCons in cash
      (excluding cash attributable to coupon payments on the RevCons, which will
      be taxed as described under &#147;</FONT><FONT size=2 face="serif">&#8212; </FONT><FONT size=2 face="serif">RevCons
      with a Term Equal to or Less Than One Year </FONT><FONT size=2 face="serif">&#8212; Coupon
      Payments on the RevCons&#148;), the Put Right will be deemed to have expired
      unexercised. In such case, a U.S. Holder </FONT></P>
<P align="center"> <FONT size=2 face="serif">S-26</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="left"> <FONT size=2 face="serif">will not recognize any gain upon the
    return of the Deposit, but will recognize the total amount of Put Premium
    received by the holder over the term of the RevCons as short-term capital
    gain at such time. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">Receipt
      of Cash Equal to the Value of Underlying Stock Upon Settlement of the RevCons. </FONT></I><FONT size=2 face="serif">If
      a U.S. Holder receives an amount of cash (excluding cash attributable to
      coupon payments on the RevCons, which will be taxed as described under &#147;</FONT><FONT size=2 face="serif">&#8212; </FONT><FONT size=2 face="serif">RevCons
      with a Term Equal to or Less Than One Year </FONT><FONT size=2 face="serif">&#8212; Coupon
      Payments on the RevCons&#148;) equal to the value of shares of underlying
      stock as of the determination date (or, if applicable, the date of acceleration),
      the Put Right will be deemed to have been exercised. In such case, a U.S.
      Holder will not recognize any gain in respect of the Deposit, but will
      recognize short-term capital gain or loss with respect to the Put Right
      in an amount equal to the difference between (i) the sum of the amount
      of cash received and the total Put Premium received by the holder over
      the term of the RevCons and (ii) the Deposit.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">Receipt
      of Underlying Stock Upon Settlement of the RevCons. </FONT></I><FONT size=2 face="serif">If
      a U.S. Holder receives shares of underlying stock (and cash in lieu of
      any fractional shares), the Put Right will be deemed to have been exercised.
      In such case, the U.S. Holder will not recognize any gain in respect of
      the Deposit. In addition, such U.S. Holder will not recognize any income
      or gain in respect of the total Put Premium received and will not recognize
      any gain or loss with respect to any shares of underlying stock received.
      The U.S. Holder would have an aggregate tax basis in the shares of underlying
      stock received (including any fractional shares) equal to the Deposit less
      the total Put Premium received over the term of the RevCons. A U.S. Holder&#146;s
      holding period for any shares of underlying stock received will start on
      the day after receipt. With respect to any cash received in lieu of fractional
      shares, a U.S. Holder will recognize short-term capital gain or loss with
      respect to the Put Right in an amount equal to the difference between the
      amount of cash received in lieu of fractional shares and the pro rata portion
      of the U.S. Holder&#146;s aggregate tax basis in underlying stock that
      is allocable to such fractional shares.</FONT><I><FONT size=2 face="serif"> </FONT></I></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">Sale
      or Exchange of the RevCons. </FONT></I><FONT size=2 face="serif">Upon a
      sale or exchange of a RevCons prior to its maturity, a U.S. Holder will
      generally recognize gain or loss with respect to the Deposit and such U.S.
      Holder&#146;s rights and obligations under the Put Right. For the purpose
      of determining such gain or loss, a U.S. Holder should apportion the amount
      realized on the sale or exchange of a RevCons between the Deposit and the
      Put Right based on their respective values on the date of such sale or
      exchange. The amount of gain or loss on the Deposit will equal the amount
      realized that is attributable to the Deposit, less the U.S. Holder&#146;s
      adjusted tax basis in the Deposit. Such gain will be treated as ordinary
      interest income to the extent of the amount of any accrued but unpaid Yield
      on the Deposit, and any remaining gain will be treated as short-term capital
      gain. Loss on the Deposit will be treated as short-term capital loss. The
      amount realized that is attributable to the Put Right, together with the
      total Put Premium received over the term of the RevCons, will be treated
      as short-term capital gain.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">If the
    value of the Deposit on the date of such sale or exchange exceeds the amount
    realized on the sale or exchange of the RevCons, the U.S. Holder will be
    treated as having (i) sold or exchanged the Deposit for an amount equal to
    its value on such date and (ii) made a payment (the &#147;Put Right Assumption
    Payment&#148;) to the purchaser of the RevCons equal to the amount of such
    excess, in exchange for the purchaser&#146;s assumption of the U.S. Holder&#146;s
    rights and obligations under the Put Right. In such a case, the U.S. Holder
    will recognize short-term capital gain or loss in respect of the Put Right
    in an amount equal to the total Put Premium received over the term of the
    RevCons, less the amount of the Put Right Assumption Payment deemed to be
    made by the U.S. Holder.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">Price
      Event Acceleration. </FONT></I><FONT size=2 face="serif">Although the tax
      consequences of a Price Event Acceleration are uncertain, we intend to
      treat a Price Event Acceleration as (i) the repayment by us of the Deposit
      for a price equal to the Deposit plus the present value of the portion
      of the remaining scheduled payments on the RevCons (from and including
      the date of acceleration) that is attributable to the Yield on the Deposit,
      (ii) the payment by us of the remaining Put Premium equal to the present
      value of the portion of the remaining scheduled payment on the RevCons
      (from and including the date of acceleration) that is attributable to the
      Put Premium, and (iii) the exercise of the Put Right, immediately followed
      by settlement through the delivery by the U.S. Holder to us of the Deposit
      in exchange for shares of underlying stock (or the cash value thereof).
      We will also pay cash representing unpaid coupon payments on the RevCons
      that accrued up to but excluding the date of acceleration. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Any
    cash received with respect to accrued coupon payments on the RevCons will
    be taxed as described under &#147;</FONT><FONT size=2 face="serif"> &#151; </FONT><FONT size=2 face="serif">RevCons
    with a Term Equal to or Less Than One Year &#151; Coupon Payments on the
    RevCons.&#148; </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Assuming
    the characterization of the Price Event Acceleration described above, any
    amount received attributable to the unaccrued Put Premium will be treated
    as Put Premium received under the Put Right. A U.S. </FONT></P>
<P align="center"> <FONT size=2 face="serif">S-27</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="left"> <FONT size=2 face="serif">Holder would, with respect to the
    amount paid by us to repay the Deposit, generally recognize short-term capital
    gain equal to the difference between such amount and the U.S. Holder&#146;s
    adjusted tax basis in the Deposit. In the case of an initial investor, such
    difference would be equal to the present value of the portion of the remaining
    scheduled payments on the RevCons attributable to the unaccrued Yield on
    the Deposit. In general, other than gain recognized on the Deposit as described
    in the previous sentence, the tax treatment of our exercise of the Put Right
    upon a Price Event Acceleration would be the same as described above under &#147;</FONT><FONT size=2 face="serif"> &#151; </FONT><FONT size=2
face="serif">RevCons with a Term Equal to or Less Than One Year &#151; Receipt
    of Cash Equal to the Value of Underlying Stock Upon Settlement of the RevCons&#148; or &#147;</FONT><FONT size=2 face="serif"> &#151; </FONT><FONT size=2 face="serif">RevCons
    with a Term Equal to or Less Than One Year &#151; Receipt of Underlying Stock
    Upon Settlement of the RevCons,&#148; as the case maybe.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I><FONT size=2 face="serif">RevCons
        with a Term of More Than One Year. </FONT></I></B><FONT size=2 face="serif">The
        following discussion describes certain U.S. federal income tax consequences
        of ownership and disposition of a RevCons if the term of the RevCons
        is more than one year (taking into account the last possible date that
        the RevCons could be outstanding under its terms).</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">Coupon
      Payments on the RevCons. </FONT></I><FONT size=2 face="serif">Under the
      characterization described above under &#147;</FONT><FONT size=2 face="serif"> &#151; </FONT><FONT size=2
face="serif">General,&#148; only a portion of the coupon payments on the RevCons
      will be attributable to the Yield on the Deposit. The remainder of the
      coupon payments will represent payments attributable to the investor&#146;s
      sale of the Put Right (the &#147;Put Premium&#148;). To the extent attributable
      to the Yield on the Deposit, coupon payments on the RevCons will generally
      be taxable to a U.S. Holder as ordinary interest income at the time accrued
      or received in accordance with the U.S. Holder&#146;s method of accounting
      for U.S. federal income tax purposes.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The
    Put Premium will not be taxable to a U.S. Holder upon receipt. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">Tax
      Basis. </FONT></I><FONT size=2 face="serif">Based on our determination
      set forth above, the U.S. Holder&#146;s tax basis in the Put Right will
      be zero, and the U.S. Holder&#146;s tax basis in the Deposit will be 100%
      of the issue price. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">Receipt
      of Stated Principal Amount in Cash upon Settlement of the RevCons. </FONT></I><FONT size=2 face="serif">If
      a U.S. Holder receives the stated principal amount of a RevCons in cash
      (excluding cash attributable to coupon payments on the RevCons, which would
      be taxed as described above under &#147;</FONT><FONT size=2 face="serif">&#8212; </FONT><FONT size=2 face="serif">RevCons
      with a Term of More Than One Year </FONT><FONT size=2 face="serif">&#8212; Coupon
      Payments on the RevCons&#148;), the Put Right will be deemed to have expired
      unexercised. In such case, a U.S. Holder will not recognize any gain upon
      the return of the Deposit, but will recognize the total amount of Put Premium
      received by the holder over the term of the RevCons as short-term capital
      gain at such time. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">Receipt
      of Cash Equal to the Value of Underlying Stock Upon Settlement of the RevCons. </FONT></I><FONT size=2 face="serif">If
      a U.S. Holder receives an amount of cash (excluding cash attributable to
      coupon payments on the RevCons, which would be taxed as described above
      under &#147;</FONT><FONT size=2 face="serif">&#8212; </FONT><FONT size=2 face="serif">RevCons
      with a Term of More Than One Year </FONT><FONT size=2 face="serif">&#8212; Coupon
      Payments on the RevCons&#148;) equal to the value of the underlying stock
      as of the determination date (or, if applicable, the date of acceleration),
      the Put Right will be deemed to have been exercised. In such case, a U.S.
      Holder will not recognize any gain in respect of the Deposit, but will
      recognize short-term capital gain or loss in an amount equal to the difference
      between (i) the sum of the amount of cash received and the total Put Premium
      received by the holder over the term of the RevCons and (ii) the Deposit.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">Receipt
      of Underlying Stock Upon Settlement of the RevCons. </FONT></I><FONT size=2 face="serif">If
      a U.S. Holder receives shares of underlying stock (and cash in lieu of
      any fractional shares), the Put Right will be deemed to have been exercised.
      In such case, the U.S. Holder will not recognize any gain in respect of
      the Deposit. In addition, such U.S. Holder will not recognize any income
      or gain in respect of the total Put Premium received and will not recognize
      any gain or loss with respect to any shares of underlying stock received.
      The U.S. Holder would have an aggregate tax basis in the shares of underlying
      stock received (including any fractional shares) equal to the Deposit less
      the total Put Premium received over the term of the RevCons. A U.S. Holder&#146;s
      holding period for any shares of underlying stock received will start on
      the day after receipt. With respect to any cash received in lieu of fractional
      shares, a U.S. Holder will recognize short-term capital gain or loss in
      an amount equal to the difference between the amount of cash received in
      lieu of fractional shares and the pro rata portion of the U.S. Holder&#146;s
      aggregate tax basis in underlying stock that is allocable to such fractional
      shares.</FONT><I><FONT size=2 face="serif"> </FONT></I></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">Sale
      or Exchange of the RevCons. </FONT></I><FONT size=2 face="serif">Upon a
      sale or exchange of a RevCons prior to its maturity, a U.S. Holder will
      generally recognize long-term capital gain or loss with respect to the
      Deposit (if the U.S. Holder has held the RevCons for more than one year
      at the time of such sale or exchange) and short-term capital gain or loss
      with respect to such U.S. Holder&#146;s rights and obligations under the
      Put Right. For the purpose of determining such gain </FONT></P>
<P align="center"> <FONT size=2 face="serif">S-28</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="left"> <FONT size=2 face="serif">or loss, a U.S. Holder should apportion
    the amount realized on the sale or exchange of a RevCons (excluding any amount
    attributable to accrued but unpaid Yield on the Deposit, which would be taxed
    as described under
  &#147;</FONT><FONT size=2 face="serif"> &#151; </FONT><FONT size=2 face="serif">RevCons
  with a Term of More Than One Year</FONT><FONT size=2 face="serif"> &#151; </FONT><FONT size=2 face="serif"> Coupon
  Payments on the RevCons&#148;) between the Deposit and the Put Right based
  on their respective values on the date of such sale or exchange. The amount
  of capital gain or loss on the Deposit will equal the amount realized that
  is attributable to the Deposit, less the U.S. Holder&#146;s tax basis in the
  Deposit. The amount realized that is attributable to the Put Right, together
  with the total Put Premium received over the term of the RevCons, will be treated
  as short-term capital gain. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">If the
    value of the Deposit on the date of such sale or exchange exceeds the amount
    realized on the sale or exchange of the RevCons, the U.S. Holder will be
    treated as having (i) sold or exchanged the Deposit for an amount equal to
    its value on such date and (ii) made a payment (the &#147;Put Right Assumption
    Payment&#148;) to the purchaser of the RevCons equal to the amount of such
    excess, in exchange for the purchaser&#146;s assumption of the U.S. Holder&#146;s
    rights and obligations under the Put Right. In such a case, the U.S. Holder
    will recognize short-term capital gain or loss in respect of the Put Right
    in an amount equal to the total Put Premium received over the term of the
    RevCons, less the amount of the Put Right Assumption Payment deemed to be
    made by the U.S. Holder.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">Price
      Event Acceleration. </FONT></I><FONT size=2 face="serif">Although the tax
      consequences of a Price Event Acceleration are uncertain, we intend to
      treat a Price Event Acceleration as (i) the repayment by us of the Deposit
      for a price equal to the Deposit plus the present value of the portion
      of the remaining scheduled payments on the RevCons (from and including
      the date of acceleration) that is attributable to the Yield on the Deposit,
      (ii) the payment by us of the remaining Put Premium equal to the present
      value of the portion of the remaining scheduled payment on the RevCons
      (from and including the date of acceleration) that is attributable to the
      Put Premium, and (iii) the exercise of the Put Right, immediately followed
      by settlement through the delivery by the U.S. Holder to us of the Deposit
      in exchange for shares of underlying stock (or the cash value thereof).
      We will also pay cash representing unpaid coupon payments on the RevCons
      that accrued up to but excluding the date of acceleration. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Any
    cash received with respect to accrued coupon payments on the RevCons will
    be taxed as described under &#147;</FONT><FONT size=2 face="serif"> &#151; </FONT><FONT size=2 face="serif">RevCons
    with a Term of More Than One Year &#151; Coupon Payments on the RevCons.&#148; </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Assuming
    the characterization of the Price Event Acceleration described above, any
    amount received attributable to the unaccrued Put Premium will be treated
    as Put Premium received under the Put Right. A U.S. Holder would, with respect
    to the amount paid by us to repay the Deposit, generally recognize capital
    gain or loss equal to the difference between such amount and the U.S. Holder&#146;s
    tax basis in the Deposit. In the case of an initial investor, such difference
    would be equal to the present value of the portion of the remaining scheduled
    payments on the RevCons attributable to the unaccrued Yield on the Deposit.
    In general, other than gain recognized on the Deposit as described in the
    previous sentence, the tax treatment of our exercise of the Put Right upon
    a Price Event Acceleration would be the same as described above under &#147;</FONT><FONT size=2 face="serif"> &#151; </FONT><FONT size=2 face="serif">RevCons
    with a Term of More Than One Year</FONT><FONT size=2 face="serif"> &#151; </FONT><FONT size=2 face="serif"> Receipt
    of Cash Equal to the Value of Underlying Stock Upon Settlement of the RevCons&#148; or &#147;</FONT><FONT size=2 face="serif"> &#151; </FONT><FONT
size=2 face="serif">RevCons with a Term of More Than One Year &#151; Receipt
    of Underlying Stock Upon Settlement of the RevCons,&#148; as the case maybe.</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I><FONT size=2 face="serif">Possible
        Alternative Tax Treatments of an Investment in the RevCons </FONT></I></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Due
    to the absence of authorities that directly address the proper characterization
    of the RevCons, no assurance can be given that the IRS will accept, or that
    a court will uphold, the characterization and tax treatment described above.
    In particular, with respect to a RevCons that matures more than one year
    from its date of issuance (taking into account the last possible date that
    the RevCons could be outstanding under its terms), the IRS could seek to
    analyze the U.S. federal income tax consequences of owning a RevCons under
    Treasury regulations governing contingent payment debt instruments (the &#147;Contingent
    Debt Regulations&#148;).</FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">If the
    IRS were successful in asserting that the Contingent Debt Regulations applied
    to the RevCons or to the Deposit, the timing and character of income thereon
    would be significantly affected. Among other things, a U.S. Holder would
    be required to accrue interest income as original issue discount, subject
    to adjustments, at a &#147;comparable yield&#148; on the issue price. Furthermore,
    if the RevCons or Deposit were treated as contingent payment debt instruments,
    any gain realized with respect to the RevCons or the Deposit would generally
    be treated as ordinary income. In addition, if the Contingent Debt Regulations
    applied to the RevCons, a U.S. Holder would recognize income upon maturity
    of the RevCons to the extent that the fair market value of shares of underlying
    stock and cash (if any) received exceeded the adjusted issue price of the
    RevCons.</FONT></P>
<P align="center"> <FONT size=2 face="serif">S-29</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Even
    if the Contingent Debt Regulations do not apply to the RevCons, other alternative
    U.S. federal income tax characterizations or treatments of the RevCons are
    also possible, which if applied could significantly affect the timing and
    character of the income or loss with respect to the RevCons. It is possible,
    for example, that the RevCons could be treated as constituting an &#147;open
    transaction&#148; with the result that the coupon payments on the RevCons
    might not be accounted for separately as giving rise to income to U.S. Holders
    until the sale, exchange or retirement of the RevCons. Other alternative
    characterizations are also possible. Accordingly, prospective purchasers
    are urged to consult their own tax advisors regarding the U.S. federal income
    tax consequences of an investment in the RevCons. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I><FONT size=2 face="serif">Backup
        Withholding and Information Reporting</FONT></I></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Backup
    withholding may apply in respect of the amounts paid to a U.S. Holder, unless
    such U.S. Holder provides proof of an applicable exemption or a correct taxpayer
    identification number, or otherwise complies with applicable requirements
    of the backup withholding rules. The amounts withheld under the backup withholding
    rules are not an additional tax and may be refunded, or credited against
    the U.S. Holder&#146;s U.S. federal income tax liability, provided the required
    information is furnished to the IRS. In addition, information returns will
    be filed with the IRS in connection with the payments on the RevCons and
    the proceeds from a sale or other disposition of the RevCons, unless the
    U.S. Holder provides proof of an applicable exception from the information
    reporting rules. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT size=2 face="serif">Tax
      Consequence to Non-U.S. Holders</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">This
    section only applies to you if you are a Non-U.S. Holder. As used herein,
    the term &#147;Non-U.S. Holder&#148; means a beneficial owner of a RevCons
    that is for U.S. federal income tax purposes: </FONT></P>
<UL>
  <LI> <FONT size=2 face="serif">an individual who is classified as a nonresident
      alien;</FONT></LI>
  <LI> <FONT size=2 face="serif">a foreign corporation; or</FONT></LI>
  <LI> <FONT size=2 face="serif">a foreign trust or estate.</FONT></LI>
</UL>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">&#147;Non-U.S.
    Holder&#148; does not include a holder who is an individual present in the
    United States for 183 days or more in the taxable year of disposition and
    who is not otherwise a resident of the United States for U.S. federal income
    tax purposes. Such a holder is urged to consult his or her own tax advisors
    regarding the U.S. federal tax consequences of the sale, exchange or other
    disposition of the RevCons. </FONT></P>
<P align="left"> <B><I><FONT size=2 face="serif">General</FONT></I></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">As described
    above, we and every holder of a RevCons agree (in the absence of an administrative
    determination or judicial ruling to the contrary) to characterize a RevCons
    for all U.S. federal income tax purposes as a unit consisting of the Put
    Right and the Deposit, and the discussion herein assumes such treatment. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Subject
    to the discussion below concerning backup withholding, payments with respect
    to a RevCons by us or a paying agent to a Non-U.S. Holder, and gain realized
    on the sale, exchange or other disposition of such RevCons, will not be subject
    to U.S. federal income or withholding tax, provided that:</FONT></P>
<UL>
  <LI> <FONT size=2 face="serif">the Non-U.S. Holder does not own, directly or
      by attribution, ten percent or more of the total combined</FONT> <FONT size=2 face="serif">voting
      power of all classes of our stock entitled to vote;<br>
    <br>
    </FONT></LI>
  <LI> <FONT size=2 face="serif">the Non-U.S. Holder is not a controlled foreign
      corporation related, directly or indirectly, to us through</FONT> <FONT size=2 face="serif">stock
      ownership;<br>
    <br>
    </FONT></LI>
  <LI> <FONT size=2 face="serif">the Non-U.S. Holder is not a bank receiving
      interest under Section 881(c)(3)(A) of the Code; and<br>
    <br>
    </FONT></LI>
  <LI> <FONT size=2 face="serif">the certification requirement described below
      has been fulfilled with respect to the beneficial owner.</FONT></LI>
</UL>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT size=2 face="serif">Certification
      Requirement. </FONT></I><FONT size=2 face="serif">The certification requirement
      referred to in the preceding paragraph will be fulfilled if the beneficial
      owner of a RevCons (or a financial institution holding the RevCons on behalf
      of the beneficial owner) furnishes to us an IRS Form W-8BEN, in which the
      beneficial owner certifies under penalties of perjury that it is not a
      U.S. person. </FONT></P>
<P align="center"> <FONT size=2 face="serif">S-30</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I><FONT size=2 face="serif">Possible
        Alternative Tax Treatments of an Investment in the RevCons</FONT></I></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">As described
    above under &#147;</FONT><FONT size=2 face="serif">&#8212; Tax Consequences
    to U.S. Holders </FONT><FONT size=2 face="serif">&#8212; </FONT><FONT size=2
face="serif"> Possible Alternative Tax Treatments of an Investment in the RevCons,&#148; the
    IRS may seek to apply a different characterization and tax treatment than
    those described herein. However, even if such a recharacterization were successful,
    the U.S. federal income and withholding tax consequences to a Non-U.S. Holder
    of ownership and disposition of a RevCons should be the same as those described
    immediately above. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I><FONT size=2 face="serif">Backup
        Withholding and Information Reporting</FONT></I></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Information
    returns may be filed with the IRS in connection with payments on the RevCons
    as well as in connection with the proceeds from a sale, exchange or other
    disposition of the RevCons. A Non-U.S. Holder may be subject to backup withholding
    in respect of amounts paid to the Non-U.S. Holder, unless such Non-U.S. Holder
    complies with certification procedures to establish that it is not a U.S.
    person for U.S. federal income tax purposes or otherwise establishes an exemption.
    The certification procedures described under &#147;</FONT><FONT size=2 face="serif">&#8212; </FONT><FONT size=2 face="serif">General </FONT><FONT size=2 face="serif">&#8212; </FONT><FONT size=2 face="serif"> Certification
    Requirement&#148; will satisfy the certification requirements necessary to
    avoid the backup withholding as well. The amount of any backup withholding
    from a payment to a Non-U.S. Holder will be allowed as a credit against the
    Non-U.S. Holder&#146;s U.S. federal income tax liability and may entitle
    the Non-U.S. Holder to a refund, provided that the required information is
    furnished to the IRS. </FONT></P>
<P align="center"> <FONT size=2 face="serif">S-31</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="center"> <B><FONT size=2 face="serif">PLAN OF DISTRIBUTION</FONT></B></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">We are
    offering the RevCons as part of our Series F medium-term notes on a continuing
    basis exclusively through Morgan Stanley &amp; Co. Incorporated and Morgan
    Stanley DW Inc., which we refer to individually as an &#147;agent&#148; and
    together as the &#147;agents,&#148; who have agreed to use reasonable efforts
    to solicit offers to purchase these RevCons. We will have the sole right
    to accept offers to purchase these RevCons and may reject any offer in whole
    or in part. Each agent may reject, in whole or in part, any offer it solicited
    to purchase RevCons. We will pay an agent, in connection with sales of these
    RevCons resulting from a solicitation that agent made or an offer to purchase
    that agent received, a commission that will be specified in the applicable
    pricing supplement. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">We may
    also sell the RevCons to an agent as principal for its own account at discounts
    to be agreed upon at the time of sale within the range of the commissions
    stated above or as otherwise disclosed in the applicable pricing supplement.
    That agent may resell these RevCons to investors and other purchasers at
    a fixed offering price or at prevailing market prices, or prices related
    thereto at the time of resale or otherwise, as that agent determines and
    as we will specify in the applicable pricing supplement. An agent may offer
    the RevCons it has purchased as principal to other dealers, which may include
    Morgan Stanley &amp; Co. International Limited and Bank Morgan Stanley AG.
    That agent may sell the RevCons to any dealer at a discount and, unless otherwise
    specified in the applicable pricing supplement, the discount allowed to any
    dealer will not be in excess of the discount that agent will receive from
    us. After the initial public offering of RevCons that an agent is to resell
    on a fixed public offering price basis, the agent may change the public offering
    price, concession and discount. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Each
    of the agents may be deemed to be an &#147;underwriter&#148; within the meaning
    of the Securities Act of 1933, as amended. We and the agents have agreed
    to indemnify each other against certain liabilities, including liabilities
    under the Securities Act, or to contribute to payments made in respect of
    those liabilities. We have also agreed to reimburse the agents for specified
    expenses. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">We estimate
    that we will spend approximately &#36;5,070,500 for printing, rating agency,
    trustee&#146;s and legal fees and other expenses allocable to the offering
    of the Series F medium-term notes, including the RevCons, and the other RevCons
    registered on our shelf registration statement and estimate that we will
    spend corresponding amounts with respect to any additional RevCons that we
    may register on our shelf registration statement in the future. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Unless
    otherwise provided in the applicable pricing supplement, we do not intend
    to apply for the listing of these RevCons on a national securities exchange,
    but have been advised by the agents that they intend to make a market in
    these RevCons as applicable laws and regulations permit. The agents are not
    obligated to do so, however, and the agents may discontinue making a market
    at any time without notice. No assurance can be given as to the liquidity
    of any trading market for these RevCons. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Morgan
    Stanley &amp; Co. Incorporated and Morgan Stanley DW Inc. are our wholly-owned
    subsidiaries. The agents will conduct each offering of these RevCons in compliance
    with the requirements of Rule 2720 of the NASD regarding an NASD member firm&#146;s
    distributing the RevCons of an affiliate. Following the initial distribution
    of these RevCons, each agent may offer and sell those RevCons in the course
    of its business as a broker-dealer. An agent may act as principal or agent
    in those transactions and will make any sales at varying prices related to
    prevailing market prices at the time of sale or otherwise. The agents may
    use this prospectus supplement in connection with any of those transactions.
    The agents are not obligated to make a market in any of these RevCons and
    may discontinue any market-making activities at any time without notice. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Neither
    of the agents nor any dealer utilized in the initial offering of these RevCons
    will confirm sales to accounts over which it exercises discretionary authority
    without the prior specific written approval of its customer. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">In order
    to facilitate the offering of these RevCons, the agents may engage in transactions
    that stabilize, maintain or otherwise affect the price of these RevCons or
    the underlying stock. Specifically, the agents may sell more RevCons than
    they are obligated to purchase in connection with the offering, creating
    a naked short position for their own accounts. The agents must close out
    any naked short position by purchasing RevCons in the open market. A naked
    short position is more likely to be created if the agents are concerned that
    there may be downward pressure on the price of these RevCons in the open
    market after pricing that could adversely affect investors who purchase in
    the offering. As an additional means of facilitating the offering, the agents
    may bid for, and purchase, these RevCons or any underlying stock in the open
    market to stabilize the price of these RevCons or of the </FONT></P>
<P align="center"> <FONT size=2 face="serif">S-32</FONT></P>
<br>
<br>
<hr size=3 color=GRAY noshade>
<p style="page-break-before:always"></p>
<PAGE>
<br>
<br>
<P align="left"> <FONT size=2 face="serif">underlying stock. Finally, in any
    offering of the RevCons through a syndicate of underwriters or dealer group,
    the agent acting on behalf of the underwriting syndicate or for itself may
    also reclaim selling concessions allowed to an underwriter or a dealer for
    distributing these RevCons in the offering, if the agent repurchases previously
    distributed RevCons to cover syndicate short positions or to stabilize the
    price of these RevCons. Any of these activities may raise or maintain the
    market price of these RevCons above independent market levels or prevent
    or retard a decline in the market price of these RevCons. The agents are
    not required to engage in these activities, and may end any of these activities
    at any time. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">The
    agent or an affiliate of the agent will enter into a hedging transaction
    with us in connection with each offering of RevCons. See &#147;Use of Proceeds
    and Hedging&#148; above. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">Concurrently
    with the offering of these RevCons through the agents, we may issue other
    debt securities under the indenture referred to in this prospectus supplement
    or under our subordinated debt indenture described in the accompanying prospectus
    similar to those described in this prospectus supplement. Those debt securities
    may include other Series F medium-term notes and medium-term notes under
    our Series G and Series H prospectus supplement, which we refer to as &#147;Euro
    medium-term notes.&#148; The other Series F medium-term notes and the Euro
    medium-term notes may have terms substantially similar to the terms of the
    RevCons offered under this prospectus supplement. The Euro medium-term notes
    may be offered concurrently with the offering of these RevCons, on a continuing
    basis outside the United States by us, under a distribution agreement with
    Morgan Stanley &amp; Co. International Limited, as agent for us. The terms
    of that distribution agreement, which we refer to as the Euro Distribution
    Agreement, are substantially similar to the terms of the distribution agreement
    for a U.S. offering, except for selling restrictions specified in the Euro
    Distribution Agreement. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">With
    respect to each issuance of RevCons, the Agent for each issuance of RevCons,
    acting as principal for its own account, will agree to purchase, and we will
    agree to sell, the stated principal amount of RevCons set forth on the cover
    of the applicable pricing supplement. The Agent will propose initially to
    offer the RevCons directly to the public at the public offering price set
    forth on the cover page of the applicable pricing supplement plus accrued
    coupon, if any, from the original issue date. The Agent may allow a concession
    not in excess of the agent&#146;s commissions specified in the applicable
    pricing supplement per RevCons to other dealers. After the initial offering
    of the RevCons, the Agent may vary the offering price and other selling terms
    from time to time. </FONT></P>
<P align="left"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=2 face="serif">With
    respect to each issuance of RevCons, we expect to deliver the RevCons against
    payment therefor in New York, New York on the original issue date (settlement
    date) specified in the applicable pricing supplement. Under Rule 15c6-1 of
    the Exchange Act, trades in the secondary market generally are required to
    settle in three business days, unless the parties to any such trade expressly
    agree otherwise. Accordingly, if the original issue date for any issuance
    of RevCons is more than three business days after the pricing date, purchasers
    who wish to trade RevCons more than three business days prior to the original
    issue date will be required to specify alternative settlement arrangements
    to prevent a failed settlement. </FONT></P>
<P align="center"> <FONT size=2 face="serif">S-33</FONT></P>
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end
</TEXT>
</DOCUMENT>
</SUBMISSION>
