<SUBMISSION>
<ACCESSION-NUMBER>0000950103-06-002878
<TYPE>FWP
<PUBLIC-DOCUMENT-COUNT>3
<FILING-DATE>20061226
<DATE-OF-FILING-DATE-CHANGE>20061226
<SUBJECT-COMPANY>
<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>FWP
<ACT>34
<FILE-NUMBER>333-131266
<FILM-NUMBER>061299298
</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>
</SUBJECT-COMPANY>
<FILED-BY>
<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>FWP
</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>
</FILED-BY>
<DOCUMENT>
<TYPE>FWP
<SEQUENCE>1
<FILENAME>dp04329_fwp-ps167.htm
<TEXT>

<HTML>
<HEAD>
   <TITLE></TITLE>
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<BODY bgcolor="#ffffff">
<table width="100%"  border="0" cellpadding="2" cellspacing="0">
  <tr valign="top">
    <td width="100%">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="100%" align="right"><img src="mslogo.jpg"></td>
  </tr>
  <tr valign="top">
    <td width="100%" align="right"><B><FONT size=4 face="sans-serif">Structured
    Investments</FONT></B></td>
  </tr>
  <tr valign="top">
    <td width="100%" align="right"><FONT size=3 face="sans-serif"><em>Opportunities in Equities</em></FONT> </td>
  </tr>
</table>
<p><FONT size=1 face="sans-serif">December 2006 &#150; January 2007</FONT> </p>
<p><FONT size=1 face="sans-serif">Preliminary
  Terms No. 167 / Registration Statement No. 333-131266 / Dated December 26, 2006
    / Filed pursuant to Rule 433</FONT></p>
<P align="left">
  <FONT color="#336699" size=4 face="sans-serif">8% SPARQS<SUP>&reg;</SUP></FONT><br>
  <FONT color="#336699" face="sans-serif">Mandatorily Exchangeable for Common Stock
  of Noble Energy, Inc.</FONT><FONT color="#336699" face="sans-serif"></FONT> <br>
  <font color="#336699"><FONT size=2 face="sans-serif"><strong>Stock
  Participation Accreting Redemption Quarterly-pay Securities<SUP>SM</SUP></strong></FONT></font></P>
<P align="left">
<FONT size=2 face="sans-serif">SPARQS are short-term yield-enhancement securities that provide enhanced current income with exposure to an underlying security. In exchange for current income, investors forgo upside potential above the yield to
call.</FONT></P>
<TABLE width=100% border=0 cellpadding=2 cellspacing=0 bgcolor="#9FA9C6">
<TR valign="top">
  <TD colspan="3"><p align="left"> <b><font size=2 face="sans-serif">S U M M
          A R Y &nbsp;&nbsp;T E R M
    S</font></b></p></TD>
  </TR>

<TR valign="top">
  <TD><b><font size=2 face="sans-serif">Issued By:</font></b></TD>
  <TD>&nbsp;</TD>
  <TD colspan=1><font size=2 face="sans-serif">Morgan Stanley</font></TD>
</TR>

<TR valign="top">
  <TD><b><font size=2 face="sans-serif">Maturity:</font></b></TD>
  <TD>&nbsp;</TD>
  <TD colspan=1><font size=2 face="sans-serif">February 20, 2008</font></TD>
</TR>

<TR valign="top">
  <TD><b><font size=2 face="sans-serif">Underlying Stock:</font></b></TD>
  <TD>&nbsp;</TD>
  <TD colspan=1><font size=2 face="sans-serif">Noble Energy, Inc. common stock
    (&#147;NBL Stock&#148;)</font></TD>
</TR>

<TR valign="top">
  <TD><b><font size=2 face="sans-serif">Coupon:</font></b></TD>
  <TD>&nbsp;</TD>
  <TD colspan=1><font size=2 face="sans-serif">8% per annum, payable quarterly beginning
    May 20, 2007</font></TD>
</TR>

<TR valign="top">
	<TD width=30%><P><B><FONT size=2 face="sans-serif">Exchange at Maturity:</FONT></B></P></TD>
	<TD width=5%>&nbsp;	</TD>
	<TD width=65% colspan=1><P><FONT size=2 face="sans-serif">At maturity, unless previously called by the Issuer, each SPARQS will be exchanged into NBL Stock at the Exchange Ratio</FONT></P></TD>
</TR>

<TR valign="top">
	<TD width=30%><P><B><FONT size=2 face="sans-serif">Exchange Ratio:</FONT></B></P>	</TD>
	<TD width=5%>&nbsp;	</TD>
	<TD width=65% colspan=1><P><FONT size=2 face="sans-serif">The initial exchange ratio will be 1.0, subject to adjustment for corporate events; however, if the Issuer determines to price the SPARQS at a fraction of the closing price of NBL Stock, the
initial exchange ratio will be adjusted so that it represents that fraction.</FONT></P>	</TD>
</TR>

<TR valign="top">
	<TD width=30%><P><B><FONT size=2 face="sans-serif">Issuer Call Right:</FONT></B></P>	</TD>
	<TD width=5%>&nbsp;	</TD>
	<TD width=65% colspan=1><P><FONT size=2 face="sans-serif">Beginning on August 20, 2007, the Issuer may call the SPARQS for a cash Call Price that, together with coupons paid from the Issue Date through the Call Date, implies an annualized rate of
return on the Stated Principal Amount equal to the Yield to Call</FONT></P>	</TD>
</TR>

<TR valign="top">
	<TD width=30%><P><B><FONT size=2 face="sans-serif">Expected Yield to Call:</FONT></B></P>	</TD>
	<TD width=5%>&nbsp;	</TD>
	<TD width=65% colspan=1><P><FONT size=2 face="sans-serif">16-20% per annum on the Stated Principal Amount (actual Yield to Call will be determined on the Pricing Date).</FONT></P>	</TD>
</TR>

<TR valign="top">
  <TD><b><font size=2 face="sans-serif">First Call Date:</font></b></TD>
  <TD>&nbsp;</TD>
  <TD colspan=1><font size=2 face="sans-serif">August 20, 2007</font></TD>
</TR>

<TR valign="top">
  <TD><b><font size=2 face="sans-serif">Final Call Date:</font></b></TD>
  <TD>&nbsp;</TD>
  <TD colspan=1><font size=2 face="sans-serif">February 10, 2008</font></TD>
</TR>

<TR valign="top">
  <TD><b><font size=2 face="sans-serif">Stated Principal Amount:</font></b></TD>
  <TD>&nbsp;</TD>
  <TD colspan=1><font size=2 face="sans-serif">The price of NBL Stock on the
    Pricing Date</font></TD>
</TR>

<TR valign="top">
  <TD><b><font size=2 face="sans-serif">Issue Price:</font></b></TD>
  <TD>&nbsp;</TD>
  <TD colspan=1><font size=2 face="sans-serif">The price of NBL Stock on the
    Pricing Date</font></TD>
</TR>

<TR valign="top">
  <TD><b><font size=2 face="sans-serif">Expected Pricing Date:</font></b></TD>
  <TD>&nbsp;</TD>
  <TD colspan=1><font size=2 face="sans-serif">January __, 2007</font></TD>
</TR>

<TR valign="top">
	<TD width=30%><P><B><FONT size=2 face="sans-serif"> </FONT></B><B><FONT size=2 face="sans-serif">Settlement
      Date:</FONT></B></P></TD>
	<TD width=5%>&nbsp;	</TD>
	<TD width=65% colspan=1><P><FONT size=2 face="sans-serif">January __, 2007</FONT></P></TD>
</TR>
</TABLE>
<P align="left">
<FONT size=2 face="sans-serif">The issuer has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement
and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the issuer, any
underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-584-6837.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">You may access these documents on the SEC web site at www.sec.gov as follows:</FONT></P>
<P align="left"><FONT size=2 face="sans-serif"> <a href="http://www.sec.gov/Archives/edgar/data/895421/000095010306002841/dp04045_424b2.htm">Amendment
      No. 1 to Prospectus Supplement for SPARQS dated December 21, 2006</a><br>
    <a href="http://www.sec.gov/Archives/edgar/data/895421/000095010306000145/jan2506_424b2.txt">Prospectus
    dated January 25, 2006</a></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="bottom">
  <TD align=right><img src="small_logo.jpg"></TD>
</TR>
<TR valign="bottom">
  <TD align=right>&nbsp;</TD>
</TR>
<TR valign="bottom">
	<TD align=right width=100%>
<FONT color="#336699" face="sans-serif">8% SPARQS</FONT>	</TD>
</TR>
<TR valign="bottom">
	<TD align=right width=100%>
<FONT color="#336699" face="sans-serif">Mandatorily Exchangeable for</FONT>	</TD>
</TR>
<TR valign="bottom">
	<TD align=right width=100%>
<FONT color="#336699" face="sans-serif">Common Stock of Noble Energy, Inc.</FONT>	</TD>
</TR>
<TR>
	<TD>
      <hr width=100% size=2 noshade color="#336699">    	</TD>
</TR>
</TABLE>
<P align="left">
<FONT color="#336699" size=4 face="sans-serif">Investment Overview</FONT></P>
<P align="left">
<font color="#336699"><B><FONT size=2 face="sans-serif">Stock Participation Accreting Redemption Quarterly-pay Securities<sup>SM</sup></FONT></B></font></P>
<P align="left">
<FONT size=2 face="sans-serif">SPARQS pay a relatively high fixed quarterly coupon compared to the dividend yield of the underlying stock in exchange for a limit on the opportunity for appreciation. Regardless of the stated maturity, SPARQS are
callable by the issuer at any time after the call date, typically 6 months from the issue date. If called, the SPARQS will return a stated annualized return, inclusive of any coupons previously paid and accrued to the call date. If not called,
SPARQS will return a fixed number of shares of the underlying stock per SPARQS. SPARQS are not principal protected.</FONT></P>
<P align="left">
<FONT color="#336699" size=4 face="sans-serif">Noble Energy, Inc. </FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">Noble Energy, Inc. is an energy company engaged, directly or through its subsidiaries, in the exploration, development, production and marketing of crude oil and natural gas.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">Information as of market close on December 22, 2006</FONT></P>
<TABLE border=0 width=60% cellspacing=0 cellpadding=0>
<TR valign="bottom">
	<TD width=40% align=left nowrap>
<B><FONT size=2 face="sans-serif">Ticker:</FONT></B>	</TD>
	<TD  width=5%>&nbsp;	</TD>
	<TD align=left width=55%>
<FONT size=2 face="sans-serif">NBL</FONT>	</TD>
</TR>
<TR valign="bottom">
	<TD width=40% align=left nowrap>
<B><FONT size=2 face="sans-serif">Current Stock Price:</FONT></B>	</TD>
	<TD  width=5%>&nbsp;	</TD>
	<TD align=left width=55%>
<FONT size=2 face="sans-serif">&#36;49.34</FONT>	</TD>
</TR>
<TR valign="bottom">
	<TD width=40% align=left nowrap>
<B><FONT size=2 face="sans-serif">52 Week High (on 12/14/2006):</FONT></B>	</TD>
	<TD  width=5%>&nbsp;	</TD>
	<TD align=left width=55%>
<FONT size=2 face="sans-serif">&#36;54.03</FONT>	</TD>
</TR>
<TR valign="bottom">
	<TD width=40% align=left nowrap>
<B><FONT size=2 face="sans-serif">52 Week Low (on 6/13/2006):</FONT></B>	</TD>
	<TD  width=5%>&nbsp;	</TD>
	<TD align=left width=55%>
<FONT size=2 face="sans-serif">&#36;36.28</FONT>	</TD>
</TR>
<TR valign="bottom">
	<TD width=40% align=left nowrap>
<B><FONT size=2 face="sans-serif">Current Dividend Yield:</FONT></B>	</TD>
	<TD  width=5%>&nbsp;	</TD>
	<TD align=left width=55%>
<FONT size=2 face="sans-serif">0.59%</FONT>	</TD>
</TR>
</TABLE>
<P align="left">
<FONT size=2 face="sans-serif">NBL Stock is registered under the Exchange Act. Information provided to or filed with the Commission by Noble Energy, Inc. pursuant to the Exchange Act can be located by reference to Commission file number 001-07964
through the Commission&#146;s website at http://www.sec.gov. Additional information regarding Noble Energy, Inc. may be obtained from other sources including, but not limited to, press releases, newspaper articles and other publicly disseminated
documents. See the section called &#147;Underlying Company and Stock&#151;Public Information&#148; in the prospectus supplement for SPARQS.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">These preliminary terms relate only to the SPARQS offered hereby and do not relate to NBL Stock or other securities of Noble Energy, Inc. The Issuer has derived all disclosures contained in these preliminary terms
regarding Noble Energy, Inc. from the publicly available documents described in the preceding paragraph. In connection with the offering of the SPARQS, neither the Issuer nor the Agent has participated in the preparation of such documents or made
any due diligence inquiry with respect to Noble Energy, Inc. Neither the Issuer nor the Agent makes any representation that such publicly available documents or any other publicly available information regarding Noble Energy, Inc. is accurate or
complete.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">Neither the Issuer nor any of its affiliates makes any representation to you as to the performance of NBL Stock.</FONT></P>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
<TR valign="bottom">
  <TD colspan="2" align=left><hr width=100% size=2 noshade color="#336699"></TD>
  </TR>
<TR valign="bottom">
	<TD align=left width=50%>
<FONT size=2 face="sans-serif">December 2006 &#150; January 2007</FONT>	</TD>
	<TD align=right width=50%>
<FONT size=2 face="sans-serif">Page 2</FONT>	</TD>
</TR>
</TABLE>

<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="bottom">
    <TD align=right><img src="small_logo.jpg"></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=100%> <FONT color="#336699" face="sans-serif">8% SPARQS</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=100%> <FONT color="#336699" face="sans-serif">Mandatorily
        Exchangeable for</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=100%> <FONT color="#336699" face="sans-serif">Common
        Stock of Noble Energy, Inc.</FONT> </TD>
  </TR>
  <TR>
    <TD>
      <hr width=100% size=2 noshade color="#336699">    </TD>
  </TR>
</TABLE>
<P align="left"><FONT color="#336699" size=4 face="sans-serif">Key Investment Rationale</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">The 8% Noble Energy, Inc. SPARQS (the &#147;SPARQS&#148;) provides a defensive total return strategy linked to NBL Stock.</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
	<TD width="5%" valign=top nowrap>
<font color="#336699" face="Wingdings">&#110;</font> 	</TD>
	<TD width=95%>
<FONT size=2 face="sans-serif">8% coupon, which is higher than the current dividend yield of NBL Stock.</FONT>	</TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
	<TD width="5%" valign=top nowrap>
<font color="#336699" face="Wingdings">&#110;</font> 	</TD>
	<TD width=95%>
<FONT size=2 face="sans-serif">Investors maintain some upside exposure to the stock, limited to the Yield to Call.</FONT>	</TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
	<TD width="5%" valign=top nowrap>
<font color="#336699" face="Wingdings">&#110;</font> 	</TD>
	<TD width=95%>
<FONT size=2 face="sans-serif">The coupon may offset potential capital losses if NBL Stock decreases over the term of the SPARQS.</FONT>	</TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
	<TD width="5%" valign=top nowrap>
<font color="#336699" face="Wingdings">&#110;</font> 	</TD>
	<TD width=95%>
<FONT size=2 face="sans-serif">SPARQS are not principal protected.</FONT>	</TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR></TABLE>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
<TR valign="bottom">
	<TD align=left width=13%>
<B><FONT size=2 face="sans-serif">Best Case</FONT></B>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=left width=84%>
<FONT size=2 face="sans-serif">NBL Stock appreciates and SPARQS are called prior to maturity for a total annualized</FONT>	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=13%>
<B><FONT size=2 face="sans-serif">Scenario</FONT></B>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=left width=84%>
<FONT size=2 face="sans-serif">return equal to the Yield to Call. You will forgo any appreciation in NBL Stock beyond</FONT>	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=13%>&nbsp;	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=left width=84%>
<FONT size=2 face="sans-serif">the Yield to Call.</FONT>	</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=13%>
<B><FONT size=2 face="sans-serif">Worst Case</FONT></B>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=left width=84%>
<FONT size=2 face="sans-serif">NBL Stock depreciates at maturity and the SPARQS redeem for NBL Stock worth less</FONT>	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=13%>
<B><FONT size=2 face="sans-serif">Scenario</FONT></B>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=left width=84%>
<FONT size=2 face="sans-serif">than the Stated Principal Amount of the SPARQS. You will still receive a quarterly</FONT>	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=13%>&nbsp;	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=left width=84%>
<FONT size=2 face="sans-serif">coupon of 8% if this occurs.</FONT>	</TD>
</TR>
</TABLE>
<P align="left">
<FONT color="#336699" size=4 face="sans-serif">Summary of Selected Key Risks (see page 9)</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
	<TD width="5%" valign=top nowrap>
<font color="#336699" face="Wingdings">&#110;</font> 	</TD>
	<TD width=95%>
<FONT size=2 face="sans-serif">No guaranteed return of principal.</FONT>	</TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
	<TD width="5%" valign=top nowrap>
<font color="#336699" face="Wingdings">&#110;</font> 	</TD>
	<TD width=95%>
<FONT size=2 face="sans-serif">Your return on the SPARQS is limited by the Issuer&#146;s call right.</FONT>	</TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
	<TD width="5%" valign=top nowrap>
<font color="#336699" face="Wingdings">&#110;</font> 	</TD>
	<TD width=95%>
<FONT size=2 face="sans-serif">Secondary trading may be limited, and the inclusion of commissions and projected profit from hedging in the original issue price is likely to adversely affect secondary market prices.</FONT>	</TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
	<TD width="5%" valign=top nowrap>
<font color="#336699" face="Wingdings">&#110;</font> 	</TD>
	<TD width=95%>
<FONT size=2 face="sans-serif">The maturity of the HITS will be accelerated if the closing price of
AAPL Stock on any two consecutive trading days is less than (i) $2.00 times (ii) the Exchange Ratio
on the Original Issue Date and you will receive NBL Stock worth substantially less than the
Stated Principal Amount or even zero.</FONT>	</TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
	<TD width="5%" valign=top nowrap>
<font color="#336699" face="Wingdings">&#110;</font> 	</TD>
	<TD width=95%>
<FONT size=2 face="sans-serif">Noble Energy, Inc. is not involved with this offering in any way. The Issuer has not made any due diligence inquiry in connection with this offering.</FONT>	</TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
	<TD width="5%" valign=top nowrap>
<font color="#336699" face="Wingdings">&#110;</font> 	</TD>
	<TD width=95%>
<FONT size=2 face="sans-serif">The antidilution adjustments the calculation agent is required to make do not cover every corporate event that could affect NBL Stock.</FONT>	</TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
	<TD width="5%" valign=top nowrap>
<font color="#336699" face="Wingdings">&#110;</font> 	</TD>
	<TD width=95%>
<FONT size=2 face="sans-serif">Credit Risk to Morgan Stanley whose credit rating is currently Aa3/A+.</FONT>	</TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
	<TD width="5%" valign=top nowrap>
<font color="#336699" face="Wingdings">&#110;</font> 	</TD>
	<TD width=95%>
<FONT size=2 face="sans-serif">The U.S. federal income tax consequences of an investment in the SPARQS are uncertain.</FONT>	</TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR></TABLE>

<br>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
  <TR valign="bottom">
    <TD colspan="2" align=left><hr width=100% size=2 noshade color="#336699"></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=50%> <FONT size=2 face="sans-serif">December 2006 &#150; January
        2007</FONT> </TD>
    <TD align=right width=50%> <FONT size=2 face="sans-serif">Page 3 </FONT> </TD>
  </TR>
</TABLE>
<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="bottom">
    <TD align=right><img src="small_logo.jpg"></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=100%> <FONT color="#336699" face="sans-serif">8% SPARQS</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=100%> <FONT color="#336699" face="sans-serif">Mandatorily
        Exchangeable for</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=100%> <FONT color="#336699" face="sans-serif">Common
        Stock of Noble Energy, Inc.</FONT> </TD>
  </TR>
  <TR>
    <TD>
      <hr width=100% size=2 noshade color="#336699">    </TD>
  </TR>
</TABLE>
<P align="left"><FONT color="#336699" size=4 face="sans-serif">Fact Sheet</FONT></P>
<P align="left">
<I><FONT size=2 face="sans-serif">The SPARQS offered are senior unsecured obligations of Morgan Stanley, will pay 8% interest per year and will have the terms described in the prospectus supplement for SPARQS and the prospectus, as supplemented or
modified by these preliminary terms. At maturity the SPARQS will pay a number of shares of Noble Energy, Inc. common stock, subject to the Issuer&#146;s right to call the SPARQS for cash at any time beginning August 20, 2007. The SPARQS do not
guarantee any return of principal at maturity.</FONT></I></P>
<TABLE width=100% border=0 cellpadding=2 cellspacing=0 bgcolor="#9FA9C6">
<TR valign="bottom">
	<TD align=left><B><FONT size=2 face="sans-serif">Expected Key Dates</FONT></B>	</TD>
</TR>
</TABLE>
<table width="100%"  border="0" cellpadding="0" cellspacing="0">
  <tr valign="top">
    <td width="30%"><b><font size=2 face="sans-serif">Pricing Date</font></b><font size=2 face="sans-serif">:
    </font></td>
    <td width="5%">&nbsp;</td>
    <td width="33%"><b><font size=2 face="sans-serif">Issue Date (Settlement
    Date):</font></b></td>
    <td width="32%"><b><font size=2 face="sans-serif">Maturity Date:</font></b></td>
  </tr>
  <tr valign="top">
    <td width="30%">&nbsp;</td>
    <td width="5%">&nbsp;</td>
    <td width="33%">&nbsp;</td>
    <td width="32%">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="30%"><font size=2 face="sans-serif">January &nbsp;&nbsp;, 2007</font></td>
    <td width="5%">&nbsp;</td>
    <td width="33%"><font size=2 face="sans-serif">January &nbsp;&nbsp;, 2007 (5 trading
    days after the Pricing Date)</font></td>
    <td width="32%"><p align="left"> <font size=2 face="sans-serif">February
    20, 2008, subject to postponement due to a Market Disruption Event</font></p></td>
  </tr>
  <tr valign="top">
    <td width="30%"><hr width=100% size=1 noshade>    </td>
    <td width="5%"><hr width=100% size=1 noshade></td>
    <td width="33%"><hr width=100% size=1 noshade></td>
    <td width="32%"><hr width=100% size=1 noshade></td>
  </tr>
  <tr valign="top">
    <td width="30%">&nbsp;</td>
    <td width="5%">&nbsp;</td>
    <td width="33%">&nbsp;</td>
    <td width="32%">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="30%">&nbsp;</td>
    <td width="5%">&nbsp;</td>
    <td width="33%">&nbsp;</td>
    <td width="32%">&nbsp;</td>
  </tr>
</table>
<TABLE width=100% border=0 cellpadding=2 cellspacing=0 bgcolor="#9FA9C6">
  <TR valign="bottom">
    <TD align=left width=100%><B><FONT size=2 face="sans-serif">Key
    Terms</FONT></B> </TD>
  </TR>
</TABLE>
<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr valign="top">
    <td width="30%"><b><font size=2 face="sans-serif">Issuer:</font></b><font size=2 face="sans-serif"> Morgan
    Stanley</font></td>
    <td width="5%">&nbsp;</td>
    <td width="32%"><p align="left"> <b><font size=2 face="sans-serif">Underlying
            Stock: </font></b><font size=2 face="sans-serif">Noble Energy, Inc.
    common stock (the &#147;NBL Stock&#148;)</font></p></td>
    <td width="33%"><p align="left"> <b><font size=2 face="sans-serif">Coupon: </font></b><font size=2 face="sans-serif">8%
    per annum, payable quarterly beginning May 20, 2007</font></p></td>
  </tr>
  <tr valign="top">
    <td width="30%"><hr width=100% size=1 noshade>    </td>
    <td width="5%"><hr width=100% size=1 noshade></td>
    <td width="32%"><hr width=100% size=1 noshade></td>
    <td width="33%"><hr width=100% size=1 noshade></td>
  </tr>
  <tr valign="top">
    <td width="30%">&nbsp;</td>
    <td width="5%">&nbsp;</td>
    <td width="32%">&nbsp;</td>
    <td width="33%">&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="sans-serif">Issue Price:</FONT></B></P>	</TD>
	<TD width=5%>&nbsp;	</TD>
	<TD width=65% colspan=1><P><FONT size=2 face="sans-serif">NBL Stock closing price on the Pricing Date.</FONT></P>
<P><FONT size=2 face="sans-serif">The SPARQS will be issued at 100% of the Stated
    Principal Amount per SPARQS and the agent&#146;s commissions will be 1.625%
    of the Stated Principal Amount per SPARQS; provided that the price to public
    and the  agent's commissions for any single transaction to purchase between &#36;1,000,000
    to &#36;2,999,999 principal amount of SPARQS will be 99.75% of the Stated
    Principal Amount per SPARQS and 1.375% of the Stated Principal Amount per
    SPARQS,  respectively, for any single transaction to purchase between &#36;3,000,000
    to &#36;4,999,999 principal amount of SPARQS will be 99.625% of the Stated
    Principal Amount per SPARQS and 1.25% of the Stated Principal Amount per
    SPARQS, respectively, and  for any single transaction to purchase &#36;5,000,000
    or more principal amount of SPARQS will be 99.50% of the Stated Principal
    Amount per SPARQS and 1.125% of the Stated Principal Amount per SPARQS, respectively.
    Selling concessions allowed to  dealers in connection with the offering may
    be reclaimed by the agent, if, within 30 days of the offering, the agent
    repurchases the SPARQS distributed by such dealers.</FONT></P>	</TD>
</TR>
<TR valign="bottom">
  <TD align=left>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=30%>
<B><FONT size=2 face="sans-serif">Stated Principal Amount</FONT></B>	</TD>
	<TD  width=5%>&nbsp;	</TD>
	<TD align=left width=65%>&nbsp;	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=30%>
<B><FONT size=2 face="sans-serif">(Par):</FONT></B>	</TD>
	<TD  width=5%>&nbsp;	</TD>
	<TD align=left width=65%>
<FONT size=2 face="sans-serif">NBL Stock closing price on the Pricing Date</FONT>	</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="sans-serif">Interest Payment Dates:</FONT></B></P>
<P><B><FONT size=2 face="sans-serif">Exchange at Maturity:</FONT></B></P>	</TD>
	<TD width=5%>&nbsp;	</TD>
	<TD width=65% colspan=1><P><FONT size=2 face="sans-serif">May 20, 2007, August 20, 2007, November 20, 2007 and the Maturity Date</FONT></P>
<P><FONT size=2 face="sans-serif">At maturity, unless previously called by the Issuer, each SPARQS will be exchanged into NBL Stock at the Exchange Ratio</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="sans-serif">Exchange Ratio:</FONT></B></P>	</TD>
	<TD width=5%>&nbsp;	</TD>
	<TD width=65% colspan=1><P><FONT size=2 face="sans-serif">The initial exchange ratio will be 1.0, subject to adjustment for corporate events; however, if the Issuer determines to price the SPARQS at a fraction of the closing price of NBL Stock, the
initial exchange ratio will be adjusted so that it represents that fraction.</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="sans-serif">Issuer Call Right:</FONT></B></P>	</TD>
	<TD width=5%>&nbsp;	</TD>
	<TD width=65% colspan=1><P><FONT size=2 face="sans-serif">Beginning on August 20, 2007, the Issuer may call the SPARQS for a cash Call Price that, together with coupons paid from the Issue Date through the Call Date, implies an annualized rate of
return on the Stated Principal Amount equal to the Yield to Call.</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="sans-serif">Expected Yield to Call:</FONT></B></P>	</TD>
	<TD width=5%>&nbsp;	</TD>
	<TD width=65% colspan=1><P><FONT size=2 face="sans-serif">16-20% per annum on the Stated Principal Amount (actual yield to call to be determined on the Pricing Date). See &#147;Hypothetical Call Price Calculations&#148; beginning on page
6.</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="sans-serif">Call Notice Date:</FONT></B></P>	</TD>
	<TD width=5%>&nbsp;	</TD>
	<TD width=65% colspan=1><P><FONT size=2 face="sans-serif">If the Issuer calls the SPARQS, at least 10 but not more than 30 calendar days notice will be given before the Call Date specified in the notice.</FONT></P>	</TD>
</TR>
<TR valign="top">
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD colspan=1>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD><b><font size=2 face="sans-serif">First Call Date</font></b></TD>
  <TD>&nbsp;</TD>
  <TD colspan=1><font size=2 face="sans-serif">August 20, 2007</font></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="sans-serif"> Final Call Date</FONT></B></P>
<P><B><FONT size=2 face="sans-serif">Risk Factors:</FONT></B></P>	</TD>
	<TD width=5%>&nbsp;	</TD>
	<TD width=65% colspan=1><P><FONT size=2 face="sans-serif"> February 10, 2008</FONT></P>
<P><FONT size=2 face="sans-serif">Please see &#147;Risk Factors&#148; on page 9.</FONT></P>	</TD>
</TR>
</TABLE>
<p><br>
</p>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
  <TR valign="bottom">
    <TD colspan="2" align=left><hr width=100% size=2 noshade color="#336699"></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=50%> <FONT size=2 face="sans-serif">December 2006 &#150; January
        2007</FONT> </TD>
    <TD align=right width=50%> <FONT size=2 face="sans-serif">Page 4 </FONT> </TD>
  </TR>
</TABLE>
<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="bottom">
    <TD align=right><img src="small_logo.jpg"></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=100%> <FONT color="#336699" face="sans-serif">8% SPARQS</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=100%> <FONT color="#336699" face="sans-serif">Mandatorily
        Exchangeable for</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=100%> <FONT color="#336699" face="sans-serif">Common
        Stock of Noble Energy, Inc.</FONT> </TD>
  </TR>
  <TR>
    <TD>
      <hr width=100% size=2 noshade color="#336699">    </TD>
  </TR>
</TABLE>
<br>
<TABLE width=100% border=0 cellpadding=2 cellspacing=0 bgcolor="#9FA9C6">
<TR valign="bottom">
	<TD align=left width=100%>
<B><FONT size=2 face="sans-serif">&nbsp;&nbsp;General Information</FONT></B>	</TD>
</TR>
</TABLE><BR>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
<TR valign="top">
	<TD width=30%><P><B><FONT size=2 face="sans-serif">Listing:</FONT></B></P>	</TD>
	<TD width=5%>&nbsp;	</TD>
	<TD width=65% colspan=1><P><FONT size=2 face="sans-serif">Application will be made to list the SPARQS on the American Stock Exchange (&#147;AMEX&#148;) under the ticker symbol &#147;NEH&#148;, subject to meeting the listing requirements. If
accepted for listing, the SPARQS will begin trading the day after the Pricing Date.</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="sans-serif">CUSIP:</FONT></B></P>
<P><B><FONT size=2 face="sans-serif">Minimum Ticketing Size:</FONT></B></P>
<P><B><FONT size=2 face="sans-serif">Tax Consideration:</FONT></B></P>	</TD>
	<TD width=5%>&nbsp;	</TD>
	<TD width=65% colspan=1><P><FONT size=2 face="sans-serif">61750V824</FONT></P>
<P><FONT size=2 face="sans-serif">50 SPARQS</FONT></P>
<P><FONT size=2 face="sans-serif">The U.S. federal income tax consequences of an investment in the SPARQS are uncertain. There is no direct legal authority as to the proper tax treatment of the SPARQS, and the Issuer&#146;s counsel has not rendered
an opinion as to their proper characterization for U.S. federal income tax purposes. Pursuant to the terms of the SPARQS and subject to the discussion in the accompanying prospectus supplement for SPARQS under &#147;United States Federal
Taxation,&#148; you agree with the Issuer to treat a SPARQS as a unit consisting of (i) a terminable forward contract and (ii) a deposit with the Issuer of a fixed amount of cash to secure your obligation under the terminable forward contract.
Assuming the characterization of the SPARQS as set forth above is respected, a portion of the stated interest payments on the SPARQS will be treated as the Yield on the Deposit, and the remainder will be attributable to the Contract Fees, as
described in the section of the accompanying prospectus supplement for SPARQS called &#147;United
States Federal Taxation &#8212;</FONT> <FONT size=2 face="sans-serif">Tax Treatment of the SPARQS.&#148;
The Yield on the Deposit will be determined as of the pricing date and set forth in the applicable pricing supplement to the accompanying prospectus supplement for SPARQS.</FONT></P>
<P><FONT size=2 face="sans-serif">Assuming the characterization of the SPARQS as set forth above is respected, the following U.S. federal income tax consequences would result. The portion of the stated interest payment on the SPARQS that is
attributable to the deposit will be taxable to a U.S. Holder as ordinary interest income. The Issuer will treat the portion of the stated interest payment that is attributable to the terminable forward contract as ordinary income. Based on the tax
treatment described above, upon sale, exchange or redemption of the SPARQS solely for cash, a U.S. Holder will generally recognize capital gain or loss equal to the difference between the amount realized and the issue price. Upon physical settlement
of the terminable forward contract at maturity, a U.S. Holder generally will not recognize any gain or loss with respect to the underlying equity received and will have a tax basis in the underlying equity received equal to the issue
price.</FONT></P>
<P><FONT size=2 face="sans-serif">Please read the discussion under &#147;Risk Factors </FONT>&#8212;<font size="2" face="sans-serif"> Structure Specific Risk Factors&#148; in these preliminary terms and the discussion
under &#147;United States Federal Taxation&#148; in the accompanying prospectus supplement for SPARQS concerning the U.S. federal income tax consequences of investing in the SPARQS.</font></P>
<P><FONT size=2 face="sans-serif">Notwithstanding the foregoing, any stated interest
    payments on the SPARQS made to non-U.S. holders (as defined in the accompanying
    prospectus supplement for SPARQS) will generally be withheld upon at a rate
    of 30%.  See the section called &#147;United States Federal Taxation &#151; Tax
    Consequences to Non- U.S. Holders&#148; in the accompanying prospectus supplement
    for SPARQS. Non-U.S. holders should also note that the discussion in the
    accompanying prospectus  supplement for SPARQS does not address the tax consequences
    to non-U.S. holders for whom income or gain in respect of the SPARQS is effectively
    connected with a trade or business in the United States or who own more than
    5% of the fair market value  of the SPARQS.</FONT></P>
<P><B><FONT size=2 face="sans-serif">The Issuer does not render any advice on tax matters. This material is not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the
taxpayer under U.S. federal tax laws. You are urged to consult your own tax advisors regarding all aspects of the U.S. federal tax consequences of investing in the SPARQS, as well as any tax consequences arising under the laws of any state, local or
foreign taxing jurisdiction.</FONT></B></P>	</TD>
</TR>
<TR valign="top">
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD colspan=1>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD><b><font size=2 face="sans-serif">Trustee:</font></b></TD>
  <TD>&nbsp;</TD>
  <TD colspan=1><font size=2 face="sans-serif">The Bank of New York (as successor
    Trustee to JPMorgan Chase Bank, N.A.)</font></TD>
</TR>
<TR valign="top">
  <TD>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD colspan=1>&nbsp;</TD>
</TR>
<TR valign="top">
  <TD><b><font size=2 face="sans-serif">Calculation Agent:</font></b></TD>
  <TD>&nbsp;</TD>
  <TD colspan=1><font size=2 face="sans-serif">Morgan Stanley &amp; Co. Incorporated
    (&#147;MS &amp; Co.&#148;)</font></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="sans-serif">Contact:</FONT></B></P></TD>
	<TD width=5%>&nbsp;	</TD>
	<TD width=65% colspan=1><P><FONT size=2 face="sans-serif">You may contact your local Morgan Stanley branch office or our principal executive offices at 1585 Broadway, New York, New York, 10036 (telephone number (866) 477-4776 / (914) 225 7000)</FONT></P></TD>
</TR>
<TR valign="top">
  <TD colspan="3"><hr width=100% size=1 noshade>    </TD>
  </TR>
</TABLE>
<P align="left">
<FONT size=2 face="sans-serif">This offering summary represents a summary of the terms and conditions of the SPARQS. We encourage you to read the accompanying prospectus supplement for SPARQS and prospectus related to this offering.</FONT></P>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
  <TR valign="bottom">
    <TD colspan="2" align=left><hr width=100% size=2 noshade color="#336699"></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=50%> <FONT size=2 face="sans-serif">December 2006 &#150; January
        2007</FONT> </TD>
    <TD align=right width=50%> <FONT size=2 face="sans-serif">Page 5 </FONT> </TD>
  </TR>
</TABLE>
<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="bottom">
    <TD align=right><img src="small_logo.jpg"></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=100%> <FONT color="#336699" face="sans-serif">8% SPARQS</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=100%> <FONT color="#336699" face="sans-serif">Mandatorily
        Exchangeable for</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=100%> <FONT color="#336699" face="sans-serif">Common
        Stock of Noble Energy, Inc.</FONT> </TD>
  </TR>
  <TR>
    <TD>
      <hr width=100% size=2 noshade color="#336699">    </TD>
  </TR>
</TABLE>
<P align="left"><FONT color="#336699" size=4 face="sans-serif">Hypothetical Call Price Calculations</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">The following tables set forth sample values based on calculations of the Call Price for hypothetical Call Dates as indicated based on the following hypothetical terms:</FONT></P>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
<TR valign="top">
	<TD width=30%><P><B><FONT size=2 face="sans-serif">Original Issue Date:</FONT></B></P>
<P><B><FONT size=2 face="sans-serif">Interest Payment Dates:</FONT></B></P>	</TD>
	<TD width=5%>&nbsp;	</TD>
	<TD width=65% colspan=1><P><FONT size=2 face="sans-serif">January 31, 2007</FONT></P>
<P><FONT size=2 face="sans-serif">May 20, 2007, August 20, 2007, November 20, 2007 and the Maturity Date</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="sans-serif">Yield to Call:</FONT></B></P>	</TD>
	<TD width=5%>&nbsp;	</TD>
	<TD width=65% colspan=1><P><FONT size=2 face="sans-serif">18% per annum (computed on the basis of a 360-day year of twelve 30-day months)</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="sans-serif">Stated Principal Amount: </FONT></B></P>
	  <P><B><FONT size=2 face="sans-serif">Interest Rate:</FONT></B></P>	  <P><B><FONT size=2 face="sans-serif">Discount Factor:</FONT></B></P>	</TD>
	<TD width=5%>&nbsp;	</TD>
	<TD width=65% colspan=1><P><FONT size=2 face="sans-serif">&#36;51.00 per SPARQS </FONT></P>
	  <P><FONT size=2 face="sans-serif">8% per annum</FONT></P>	  <P><FONT size=2 face="sans-serif">1 / 1.18<sup>x</sup>, where x is the number of years from the Original Issue Date to and including the applicable payment date.</FONT></P>	</TD>
</TR>
</TABLE>
<P align="left">
<FONT size=2 face="sans-serif">The Call Price with respect to any Call Date is an amount of cash per SPARQS such that the sum of the present values of all cash flows on each SPARQS to and including the Call Date (i.e., the Call Price and all of the
interest payments and accrued interest on each SPARQS), discounted to the Original Issue Date at the applicable Discount Factor, equals the Stated Principal Amount. The Discount Factor is based on the hypothetical Yield to Call rate of 18% per annum
and the number of years (or fraction of a year) from the Original Issue Date to and including the applicable payment date.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">Each of the Call Price and total amount received calculations below are based upon the hypothetical terms set forth above and the sample Call Dates as indicated. The actual amount you will receive if the Issuer calls
the SPARQS will depend upon the actual terms of the SPARQS and the actual Call Date.</FONT></P>
<TABLE border=0 width=75% cellspacing=0 cellpadding=0>
<TR valign="bottom">
	<TD width=81% align=left nowrap>
<B><FONT size=2 face="sans-serif">Call on August 20, 2007 (First Call Date)</FONT></B>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=left width=17%>&nbsp;	</TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=left>&nbsp;</TD>
</TR>
<TR valign="bottom">
	<TD width=81% align=left nowrap>
<FONT size=2 face="sans-serif">Call Price received:</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD width=17% align=left nowrap>
<FONT size=2 face="sans-serif">&#36;53.5925</FONT>	</TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=left nowrap>&nbsp;</TD>
</TR>
<TR valign="bottom">
	<TD width=81% align=left nowrap>
<FONT size=2 face="sans-serif">Total amount received over the term of the SPARQS:</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD width=17% align=left nowrap>
<FONT size=2 face="sans-serif">&#36;55.8592</FONT>	</TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=left nowrap>&nbsp;</TD>
</TR>
<TR valign="bottom">
	<TD width=81% align=left nowrap>
<B><FONT size=2 face="sans-serif">Call on September 30, 2007 (random interim Call date)</FONT></B>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD width=17% align=left nowrap>&nbsp;	</TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=left nowrap>&nbsp;</TD>
</TR>
<TR valign="bottom">
	<TD width=81% align=left nowrap>
<FONT size=2 face="sans-serif">Call Price received</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD width=17% align=left nowrap>
<FONT size=2 face="sans-serif">&#36;54.1339</FONT>	</TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=left nowrap>&nbsp;</TD>
</TR>
<TR valign="bottom">
	<TD width=81% align=left nowrap>
<FONT size=2 face="sans-serif">Total amount received over the term of the SPARQS</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD width=17% align=left nowrap>
<FONT size=2 face="sans-serif">&#36;56.8539</FONT>	</TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=left nowrap>&nbsp;</TD>
</TR>
<TR valign="bottom">
	<TD width=81% align=left nowrap>
<B><FONT size=2 face="sans-serif">Call on February 20, 2008 (Maturity Date)</FONT></B>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD width=17% align=left nowrap>&nbsp;	</TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=left nowrap>&nbsp;</TD>
</TR>
<TR valign="bottom">
	<TD width=81% align=left nowrap>
<FONT size=2 face="sans-serif">Call Price received</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD width=17% align=left nowrap>
<FONT size=2 face="sans-serif">&#36;56.1334</FONT>	</TD>
</TR>
<TR valign="bottom">
  <TD align=left nowrap>&nbsp;</TD>
  <TD>&nbsp;</TD>
  <TD align=left nowrap>&nbsp;</TD>
</TR>
<TR valign="bottom">
	<TD width=81% align=left nowrap>
<FONT size=2 face="sans-serif">Total amount received over the term of the SPARQS</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD width=17% align=left nowrap>
<FONT size=2 face="sans-serif">&#36;60.4401</FONT>	</TD>
</TR>
</TABLE>
<P align="left">
<FONT size=2 face="sans-serif">The table on the following page sets forth a more detailed sample calculation of the Call Price for a hypothetical Call Date of August 20, 2007 based upon the hypothetical terms set forth above.<br>
</FONT></P>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
  <TR valign="bottom">
    <TD colspan="2" align=left><hr width=100% size=2 noshade color="#336699"></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=50%> <FONT size=2 face="sans-serif">December 2006 &#150; January
        2007</FONT> </TD>
    <TD align=right width=50%> <FONT size=2 face="sans-serif">Page 6 </FONT></TD>
  </TR>
</TABLE>
<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="bottom">
    <TD align=right><img src="small_logo.jpg"></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=100%> <FONT color="#336699" face="sans-serif">8% SPARQS</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=100%> <FONT color="#336699" face="sans-serif">Mandatorily
        Exchangeable for</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=100%> <FONT color="#336699" face="sans-serif">Common
        Stock of Noble Energy, Inc.</FONT> </TD>
  </TR>
  <TR>
    <TD>
      <hr width=100% size=2 noshade color="#336699">    </TD>
  </TR>
</TABLE>
<P align="left"><B><FONT color="#336699" size=2 face="sans-serif">Hypothetical Call Price Calculation on the First Call Date (continued)</FONT></B></P>
<P align="left">
<FONT size=2 face="sans-serif">The Call Price in the hypothetical example shown below is determined as follows:</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
	<TD width="5%" valign=top nowrap>
<font color="#336699" face="Wingdings">&#110;</font> 	</TD>
	<TD colspan=2>
<FONT size=2 face="sans-serif">The known cash flows on the SPARQS (i.e., the interest payments) are discounted to their present value on the Original Issue Date at the applicable Discount Factor. The sum of these present values equals the present
value on the Original Issue Date of all of the interest payments payable on the SPARQS to and including the applicable Call Date.</FONT>	</TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD width="5%">&nbsp;</TD>	<TD width="5%" valign=top nowrap>&#8212;
 	</TD>
	<TD width=90%>
<FONT size=2 face="sans-serif">For example, the present value of all of the interest payments for the hypothetical Call Date of August 20, 2007 is &#36;2.1156 (&#36;1.1852 + &#36;0.9304).</FONT>	</TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
	<TD width="5%" valign=top nowrap>
<font color="#336699" face="Wingdings">&#110;</font> 	</TD>
	<TD colspan=2>
<FONT size=2 face="sans-serif">Since the present value of all payments on the SPARQS to and including the Call Date (i.e., the Call Price and all of the interest payment on each SPARQS) must equal the Stated Principal Amount, the Issuer can
determine the present value of the applicable Call Price by subtracting the sum of the present values of the interest payments from the Stated Principal Amount.</FONT>	</TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD width="5%">&nbsp;</TD>	<TD width="5%" valign=top nowrap>&#8212;
	</TD>
	<TD width=90%>
<FONT size=2 face="sans-serif">For example, for the hypothetical Call Date of August 20, 2007, the present value of the Call Price is &#36;48.8844 (&#36;51.0000 - &#36;2.1156).</FONT>	</TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
	<TD width="5%" valign=top nowrap>
<font color="#336699" face="Wingdings">&#110;</font> 	</TD>
	<TD colspan=2>
<FONT size=2 face="sans-serif">The Call Price is then derived by determining the amount that, when discounted to the Original Issue Date from the applicable Call Date at the applicable Discount Factor, equals the present value of the Call
Price.</FONT>	</TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD width="5%">&nbsp;</TD>	<TD width="5%" valign=top nowrap>&#8212;
 	</TD>
	<TD width=90%>
<FONT size=2 face="sans-serif">For the hypothetical Call Date of August 20, 2007, the Call Price is therefore &#36;53.5925, which is the amount that if paid on August 20, 2007 has a present value on the Original Issue Date of &#36;48.8844, based on
the applicable Discount Factor.</FONT>	</TD>
</TR></TABLE>
<P align="left">
<I><FONT size=2 face="sans-serif">The Call Price calculated in the following table is based upon the hypothetical terms set forth above and the sample Call Date of August 20, 2007. The actual amount you will receive if the Issuer calls the SPARQS
will depend upon the actual terms of the SPARQS and the actual Call Date.</FONT></I></P>
<TABLE border=0 width=100% cellspacing=0 cellpadding=2>
<TR valign="bottom" bgcolor="#9FA9C6">
	<TD width=28% align=left>&nbsp;	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD width=6% align=center nowrap>
<B><FONT size=1 face="sans-serif">Stated<br>
Principal<br>
Amount</FONT></B></TD>
	<TD  width=2% align="center" nowrap>&nbsp;	</TD>
	<TD width=6% align=center nowrap>
<B><FONT size=1 face="sans-serif">Payment<br>
Date</FONT></B></TD>
	<TD  width=2% align="center" nowrap>&nbsp;	</TD>
	<TD width=6% align=center nowrap>
<B><FONT size=1 face="sans-serif">Accrued but<br>
Unpaid Interest<br>
Received on<br>
Call Date</FONT></B></TD>
	<TD  width=2% align="center" nowrap>&nbsp;	</TD>
	<TD width=6% align=center nowrap>
<B><FONT size=1 face="sans-serif">Call Price<br>
Received<SUP>1</SUP></FONT></B></TD>
	<TD  width=2% align="center" nowrap>&nbsp;	</TD>
	<TD width=6% align=center nowrap>
<B><FONT size=1 face="sans-serif">Total Cash<br>
Received on<br>
Payment Date</FONT></B></TD>
	<TD  width=2% align="center" nowrap>&nbsp;	</TD>
	<TD width=6% align=center nowrap>
 <b><font size=1 face="sans-serif">Days from<br>
 Original Issue<br>Date<SUP>2</SUP></FONT></B></TD>
	<TD  width=2% align="center" nowrap>&nbsp;	</TD>
	<TD width=6% align=center nowrap>
<B><FONT size=1 face="sans-serif">Years from<br>
Original Issue<br>
Date<br>
(Days</FONT></B><font size="1"><B><SUP><FONT face="sans-serif">2 </FONT></SUP><FONT face="sans-serif">/360)</FONT></B></font></TD>
	<TD  width=2% align="center" nowrap>&nbsp;	</TD>
	<TD width=6% align=center nowrap>
<b><font size=1 face="sans-serif">Discount<br>
Factor at Yield</font></b><font size="1"><br>
<B><FONT face="sans-serif">to Call<SUP>3</SUP></FONT></B></font></TD>
	<TD  width=2% align="center" nowrap>&nbsp;	</TD>
	<TD width=6% align=center nowrap>
<B><FONT size=1 face="sans-serif">Present Value<br>
at Original<br>
Issue Date of<br>
Call Received<br>
on Payment<br>
Date at Yield to<br>
Call</FONT></B></TD>
</TR>
<TR valign="bottom">
	<TD width=28% align=left nowrap>
<FONT size=2 face="sans-serif">January 31, 2007</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=right width=6%>
<FONT size=2 face="sans-serif">(&#36;51.00)</FONT>	</TD>
	<TD  width=2% align="right">&nbsp;	</TD>
	<TD align=right width=6%>&nbsp;	</TD>
	<TD  width=2% align="right">&nbsp;	</TD>
	<TD align=right width=6%>&nbsp;	</TD>
	<TD  width=2% align="right">&nbsp;	</TD>
	<TD align=right width=6%>&nbsp;	</TD>
	<TD  width=2% align="right">&nbsp;	</TD>
	<TD align=right width=6%>&nbsp;	</TD>
	<TD  width=2% align="right">&nbsp;	</TD>
	<TD align=right width=6%>
<FONT size=2 face="sans-serif">0</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=6%>
<FONT size=2 face="sans-serif">.00000</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=right width=6%>
<FONT size=2 face="sans-serif">100.000%</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=left width=6%>&nbsp;	</TD>
</TR>
<TR valign="bottom">
	<TD width=28% align=left nowrap>
<FONT size=2 face="sans-serif">May 20, 2007</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=right width=6%>&nbsp;	</TD>
	<TD  width=2% align="right">&nbsp;	</TD>
	<TD align=right width=6%>
<FONT size=2 face="sans-serif">&#36;1.2467</FONT>	</TD>
	<TD  width=2% align="right">&nbsp;	</TD>
	<TD align=right width=6%>&nbsp;	</TD>
	<TD  width=2% align="right">&nbsp;	</TD>
	<TD align=right width=6%>&nbsp;	</TD>
	<TD  width=2% align="right">&nbsp;	</TD>
	<TD align=right width=6%>
<FONT size=2 face="sans-serif">&#36;1.2467</FONT>	</TD>
	<TD  width=2% align="right">&nbsp;	</TD>
	<TD align=right width=6%>
<FONT size=2 face="sans-serif">110</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=6%>
<FONT size=2 face="sans-serif">.30556</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=right width=6%>
<FONT size=2 face="sans-serif">95.068%</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=right width=6%>
<FONT size=2 face="sans-serif">&#36;1.1852</FONT>	</TD>
</TR>
<TR valign="bottom">
	<TD width=28% align=left nowrap>
<FONT size=2 face="sans-serif">Call Date (August 20, 2007)</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=right width=6%>&nbsp;	</TD>
	<TD  width=2% align="right">&nbsp;	</TD>
	<TD align=right width=6%>&nbsp;	</TD>
	<TD  width=2% align="right">&nbsp;	</TD>
	<TD align=right width=6%> <FONT size=2 face="sans-serif">&#36;1.0200</FONT>	</TD>
	<TD  width=2% align="right">&nbsp;	</TD>
	<TD align=right width=6%>&nbsp;	</TD>
	<TD  width=2% align="right">&nbsp;	</TD>
	<TD align=right width=6%>
<FONT size=2 face="sans-serif">&#36;1.0200</FONT>	</TD>
	<TD  width=2% align="right">&nbsp;	</TD>
	<TD align=right width=6%>
<FONT size=2 face="sans-serif">200</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=6%>
<FONT size=2 face="sans-serif">.55556</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=right width=6%>
<FONT size=2 face="sans-serif">91.215%</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=right width=6%>
<FONT size=2 face="sans-serif">&#36;0.9304</FONT>	</TD>
</TR>
<TR valign="bottom">
	<TD width=28% align=left nowrap>
<FONT size=2 face="sans-serif">Call Date (August 20, 2007)</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=right width=6%>&nbsp;	</TD>
	<TD  width=2% align="right">&nbsp;	</TD>
	<TD align=right width=6%>&nbsp;	</TD>
	<TD  width=2% align="right">&nbsp;	</TD>
	<TD align=right width=6%>&nbsp;	</TD>
	<TD  width=2% align="right">&nbsp;	</TD>
	<TD align=right width=6%>
<FONT size=2 face="sans-serif">&#36;53.5925</FONT>	</TD>
	<TD  width=2% align="right">&nbsp;	</TD>
	<TD align=right width=6%>
<FONT size=2 face="sans-serif">&#36;53.5925</FONT>	</TD>
	<TD  width=2% align="right">&nbsp;	</TD>
	<TD align=right width=6%>
<FONT size=2 face="sans-serif">200</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=6%>
<FONT size=2 face="sans-serif">.55556</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=right width=6%>
<FONT size=2 face="sans-serif">91.215%</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=right width=6%>
<FONT size=2 face="sans-serif">&#36;48.8844</FONT>	</TD>
</TR>
<TR valign="bottom">
	<TD colspan=15 align=left nowrap>
<FONT size=2 face="sans-serif">Total amount received on the Call Date: &#36;54.6125</FONT>								</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=left width=6%>&nbsp;	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=left width=6%>&nbsp;	</TD>
</TR>
<TR valign="bottom">
	<TD colspan=15 align=left nowrap>
<FONT size=2 face="sans-serif">Total amount received over the term of the SPARQS: &#36;55.8592</FONT>								</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=left width=6%>&nbsp;	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=left width=6%>&nbsp;	</TD>
</TR>
</TABLE>
<BR>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
<TR valign="top">
  <TD width=5% align=left><font size=2 face="sans-serif">1</font></TD>
	<TD width=95% align=left>
<FONT size=2 face="sans-serif"> The Call Price of &#36;53.5925 is the dollar
amount that has a present value of &#36;48.8844,
which has been discounted to the Original Issue Date from the Call Date at the
Yield to Call rate of 18% so that the sum&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;of the
present values of </FONT><font size=2 face="sans-serif">all
of the interest payments on the SPARQS and the present value of the Call Price
is equal to the Stated Principal Amount of &#36;51.00 per SPARQS.</font>	</TD>
  </TR>
<TR valign="top">
  <TD width=5% align=left><font size=2 face="sans-serif">2</font></TD>
	<TD width=95% align=left>
<FONT size=2 face="sans-serif"> Based upon a 360-day year of twelve 30-day months.</FONT>	</TD>
  </TR>
<TR valign="top">
  <TD width=5% align=left><font size=2 face="sans-serif">3</font></TD>
	<TD width=95% align=left>
<FONT size=2 face="sans-serif"> Discount Factor = 1 / 1.18<sup>x</sup>, where x is years
from Original Issue Date to and including the applicable payment date.</FONT>	</TD>
  </TR>
</TABLE>
<p>&nbsp;</p>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
  <TR valign="bottom">
    <TD colspan="2" align=left><hr width=100% size=2 noshade color="#336699"></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=50%> <FONT size=2 face="sans-serif">December 2006 &#150; January
        2007</FONT> </TD>
    <TD align=right width=50%> <FONT size=2 face="sans-serif">Page 7 </FONT> </TD>
  </TR>
</TABLE>
<BR>

  <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="bottom">
    <TD align=right><img src="small_logo.jpg"></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=100%> <FONT color="#336699" face="sans-serif">8% SPARQS</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=100%> <FONT color="#336699" face="sans-serif">Mandatorily
        Exchangeable for</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=100%> <FONT color="#336699" face="sans-serif">Common
        Stock of Noble Energy, Inc.</FONT> </TD>
  </TR>
  <TR>
    <TD>
      <hr width=100% size=2 noshade color="#336699">    </TD>
  </TR>
</TABLE>
<P align="left"><FONT color="#336699" size=4 face="sans-serif">Historical Information</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">The following table presents the published high and
low closing prices of NBL Stock for 2003, 2004, 2005 and 2006 through December 22,
2006. The closing price of NBL Stock on December 22, 2006 was &#36;49.34. The
Issuer obtained the closing prices and other information below from Bloomberg Financial
Markets, without independent verification. You should not take the historical prices
of NBL Stock as an indication of future performance.</FONT></P>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
<TR valign="bottom" bgcolor="#9FA9C6">
	<TD width=46% align=left>
<B><FONT size=2 face="sans-serif">(CUSIP 037833100)</FONT></B>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD width=16% align=center>
<B><FONT size=2 face="sans-serif">High</FONT></B>	</TD>
	<TD  width=2% align="center">&nbsp;	</TD>
	<TD width=16% align=center>
<B><FONT size=2 face="sans-serif">Low</FONT></B>	</TD>
	<TD  width=2% align="center">&nbsp;	</TD>
	<TD width=16% align=center>
<B><FONT size=2 face="sans-serif">Dividends</FONT></B>	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=46%>
<FONT size=2 face="sans-serif">2003</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>&nbsp;	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>&nbsp;	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>&nbsp;	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=46%>
<FONT size=2 face="sans-serif">First Quarter</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">19.13</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">16.76</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">0.020</FONT>	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=46%>
<FONT size=2 face="sans-serif">Second Quarter</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">19.89</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">16.29</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">0.020</FONT>	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=46%>
<FONT size=2 face="sans-serif">Third Quarter</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">19.97</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">17.69</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">0.020</FONT>	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=46%>
<FONT size=2 face="sans-serif">Fourth Quarter</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">22.90</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">18.83</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">0.025</FONT>	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=46%>
<FONT size=2 face="sans-serif">2004</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>&nbsp;	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>&nbsp;	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>&nbsp;	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=46%>
<FONT size=2 face="sans-serif">First Quarter</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">23.99</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">21.37</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">0.025</FONT>	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=46%>
<FONT size=2 face="sans-serif">Second Quarter</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">25.82</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">22.12</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">0.025</FONT>	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=46%>
<FONT size=2 face="sans-serif">Third Quarter</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">29.26</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">24.70</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">0.025</FONT>	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=46%>
<FONT size=2 face="sans-serif">Fourth Quarter</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">31.98</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">28.35</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">0.025</FONT>	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=46%>
<FONT size=2 face="sans-serif">2005</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>&nbsp;	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>&nbsp;	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>&nbsp;	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=46%>
<FONT size=2 face="sans-serif">First Quarter</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">34.35</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">28.06</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">0.025</FONT>	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=46%>
<FONT size=2 face="sans-serif">Second Quarter</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">39.22</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">31.66</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">0.025</FONT>	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=46%>
<FONT size=2 face="sans-serif">Third Quarter</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">47.52</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">38.81</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">0.050</FONT>	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=46%>
<FONT size=2 face="sans-serif">Fourth Quarter</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">47.79</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">35.96</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">0.050</FONT>	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=46%>
<FONT size=2 face="sans-serif">2006</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>&nbsp;	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>&nbsp;	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>&nbsp;	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=46%>
<FONT size=2 face="sans-serif">First Quarter</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">46.28</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">39.05</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">0.050</FONT>	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=46%>
<FONT size=2 face="sans-serif">Second Quarter</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">48.67</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">36.28</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">0.075</FONT>	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=46%>
<FONT size=2 face="sans-serif">Third Quarter</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">50.99</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">42.94</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">0.075</FONT>	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=46%>
<FONT size=2 face="sans-serif">Fourth Quarter (through December 22, 2006)</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">54.03</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">43.00</FONT>	</TD>
	<TD  width=2%>&nbsp;	</TD>
	<TD align=center width=16%>
<FONT size=2 face="sans-serif">0.075</FONT>	</TD>
</TR>
<TR>
	<TD width="46%">
<HR noshade size=1>	</TD>
	<TD width="2%"><HR noshade size=1>	</TD>
	<TD width="16%" align="center">
<HR noshade size=1>	</TD>
	<TD width="2%"><HR noshade size=1>	</TD>
	<TD width="16%" align="center">
<HR noshade size=1>	</TD>
	<TD width="2%"><HR noshade size=1>	</TD>
	<TD width="16%" align="center">
<HR noshade size=1>	</TD>
</TR>
</TABLE>
<P align="left">
<FONT size=2 face="sans-serif">Historical prices with respect to NBL Stock have been adjusted for two-for-one stock splits that were effected on September 14, 2005. The Issuer makes no representation as to the amount of dividends, if any, that Noble
Energy, Inc. will pay in the future. In any event, as an investor in the SPARQS, you will not be entitled to receive dividends, if any, that may be payable on NBL Stock.</FONT></P>
<P align="left">&nbsp;</P>
<P align="left">&nbsp;</P>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
  <TR valign="bottom">
    <TD colspan="2" align=left><hr width=100% size=2 noshade color="#336699"></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=50%> <FONT size=2 face="sans-serif">December 2006 &#150; January
        2007</FONT> </TD>
    <TD align=right width=50%> <FONT size=2 face="sans-serif">Page 8 </FONT> </TD>
  </TR>
</TABLE>
<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="bottom">
    <TD align=right><img src="small_logo.jpg"></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=100%> <FONT color="#336699" face="sans-serif">8% SPARQS</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=100%> <FONT color="#336699" face="sans-serif">Mandatorily
        Exchangeable for</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=100%> <FONT color="#336699" face="sans-serif">Common
        Stock of Noble Energy, Inc.</FONT> </TD>
  </TR>
  <TR>
    <TD>
      <hr width=100% size=2 noshade color="#336699">    </TD>
  </TR>
</TABLE>
<P align="left"><FONT color="#336699" size=4 face="sans-serif">Risk Factors</FONT></P>
<P align="left">
<I><FONT size=2 face="sans-serif">The SPARQS are financial instruments that are suitable only for investors who are capable of understanding the complexities and risks specific to the SPARQS. Accordingly, investors should consult their own financial
and legal advisors as to the risks entailed by an investment in the SPARQS and the suitability of such SPARQS in light of an investor&#146;s particular circumstances.</FONT></I></P>
<P align="left">
<I><FONT size=2 face="sans-serif">The following is a non-exhaustive list of certain key considerations for investors in the SPARQS. For a complete list of considerations and risk factors, please see the accompanying prospectus supplement for SPARQS
and the accompanying prospectus.</FONT></I></P>
<P align="left">
<B><FONT color="#336699" size=2 face="sans-serif">Structure Specific Risk Factors</FONT></B></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
	<TD width="5%" valign=top nowrap>
<font color="#336699" face="Wingdings">&#110;</font> 	</TD>
	<TD width=95%>
<B><FONT size=2 face="sans-serif">No guaranteed return of principal. </FONT></B><FONT size=2 face="sans-serif">If at maturity the closing price of NBL Stock has declined from the closing price on the Pricing Date, and the Issuer has not called the
SPARQS, the payout at maturity will be less than the Stated Principal Amount of the SPARQS.</FONT>	</TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
	<TD width="5%" valign=top nowrap>
<font color="#336699" face="Wingdings">&#110;</font> 	</TD>
	<TD width=95%>
<B><FONT size=2 face="sans-serif">The return on the SPARQS is limited by the Issuer&#146;s call right. </FONT></B><FONT size=2 face="sans-serif">The return you realize on the SPARQS is limited by the Issuer&#146;s call right. The Issuer may call the
SPARQS at any time beginning August 20, 2007, including at maturity, for the cash Call Price, which will be calculated based on the Call Date. The Call Price will be an amount of cash per SPARQS that, together with all of the interest paid on the
SPARQS to and including the Call Date, gives you a yield to call of 16-20% per annum on the Stated Principal Amount of each SPARQS from and including the date of issuance to but excluding the Call Date. You should not expect to obtain a total yield
(including interest payments) of more than 16-20% per annum on the Stated Principal Amount of the SPARQS to the Call Date.</FONT>	</TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
	<TD width="5%" valign=top nowrap>
<font color="#336699" face="Wingdings">&#110;</font> 	</TD>
	<TD width=95%>
<FONT size=2 face="sans-serif">M</FONT><B><FONT size=2 face="sans-serif">arket price influenced by many unpredictable factors. </FONT></B><FONT size=2 face="sans-serif">Several factors will influence the value of the SPARQS in the secondary market.
It is expected that generally the trading price of NBL Stock on any day will affect the value of the SPARQS more than any other single factor. However, because of the Issuer&#146;s call right, the SPARQS may trade differently from NBL Stock. Other
factors that may influence the value of the SPARQS include: the volatility of NBL Stock, geopolitical conditions and economic, financial, political, regulatory or judicial events, interest and yield rates, time remaining until the Issuer can call
the SPARQS and until the SPARQS mature, the dividend rate on NBL Stock, the Issuer&#146;s creditworthiness and the occurrence of certain events affecting Noble Energy, Inc. that may or may not require an adjustment to the exchange
ratio.</FONT>	</TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
	<TD width="5%" valign=top nowrap>
<font color="#336699" face="Wingdings">&#110;</font> 	</TD>
	<TD width=95%>
<B><FONT size=2 face="sans-serif">Maturity date of the SPARQS may be accelerated. </FONT></B><FONT size=2 face="sans-serif">The
maturity of the SPARQS will be accelerated if (i) the closing price of NBL Stock
on any two consecutive trading days is  less than (x) &#36;2.00 times (y) the Exchange
Ratio on the Original Issue Date or (ii) there is an event of default with respect
to the SPARQS. The amount payable to you if the maturity of the SPARQS is accelerated
will differ depending on the reason for the acceleration and may be substantially
less than the principal amount of the SPARQS.</FONT>	</TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
	<TD width="5%" valign=top nowrap>
<font color="#336699" face="Wingdings">&#110;</font> 	</TD>
	<TD width=95%>
<B><FONT size=2 face="sans-serif">No shareholder rights. </FONT></B><FONT size=2 face="sans-serif">Investing in SPARQS is not equivalent to investing in NBL Stock. As an investor in the SPARQS, you will not have voting rights or rights to receive
dividends or other distributions or any other rights with respect to NBL Stock.</FONT>	</TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
	<TD width="5%" valign=top nowrap>
<font color="#336699" face="Wingdings">&#110;</font> 	</TD>
	<TD width=95%>
<B><FONT size=2 face="sans-serif">The SPARQS may become exchangeable into the common stock of companies other than Noble Energy, Inc. </FONT></B><FONT size=2 face="sans-serif">Following certain corporate events relating to NBL Stock, you will
receive at maturity either the common stock of three companies in the same industry group as Noble Energy, Inc. in lieu of, or in addition to, NBL Stock or the common stock of a successor corporation to Noble Energy, Inc. The occurrence of such
corporate events and the consequent adjustments may materially and adversely affect the market price of the SPARQS.</FONT>	</TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR></TABLE>

<br>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
  <TR valign="bottom">
    <TD colspan="2" align=left><hr width=100% size=2 noshade color="#336699"></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=50%> <FONT size=2 face="sans-serif">December 2006 &#150; January
        2007</FONT> </TD>
    <TD align=right width=50%> <FONT size=2 face="sans-serif">Page 9 </FONT> </TD>
  </TR>
</TABLE>
<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="bottom">
    <TD align=right><img src="small_logo.jpg"></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=100%> <FONT color="#336699" face="sans-serif">8% SPARQS</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=100%> <FONT color="#336699" face="sans-serif">Mandatorily
        Exchangeable for</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=100%> <FONT color="#336699" face="sans-serif">Common
        Stock of Noble Energy, Inc.</FONT> </TD>
  </TR>
  <TR>
    <TD>
      <hr width=100% size=2 noshade color="#336699">    </TD>
  </TR>
</TABLE>
<br>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
	<TD width="5%" valign=top nowrap>
<font color="#336699" face="Wingdings">&#110;</font> 	</TD>
	<TD width=95%>
<B><FONT size=2 face="sans-serif">Antidilution adjustments. </FONT></B><FONT size=2 face="sans-serif">Although the calculation agent will adjust the amount payable at maturity for certain corporate events affecting NBL Stock, other corporate events
may occur (such as partial tender or exchange offers) for which the calculation agent is not required to make any adjustments. If an event occurs that does not require the calculation agent to adjust the amount of NBL Stock payable at maturity, the
market price of the SPARQS may be materially and adversely affected.</FONT>	</TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
	<TD width="5%" valign=top nowrap>
<font color="#336699" face="Wingdings">&#110;</font> 	</TD>
	<TD width=95%>
<B><FONT size=2 face="sans-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><FONT size=2 face="sans-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 SPARQS 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 SPARQS, as well as the projected profit included in the cost of hedging the Issuer&#146;s obligations under the SPARQS.</FONT>	</TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
	<TD width="5%" valign=top nowrap>
<font color="#336699" face="Wingdings">&#110;</font> 	</TD>
	<TD width=95%>
      <p><B><FONT size=2 face="sans-serif">The U.S. federal income tax consequences of
  an investment in the SPARQS are uncertain. </FONT></B><FONT size=2 face="sans-serif">There
  is no direct legal authority as to the proper tax treatment of the SPARQS,
  and the Issuer&#146;s counsel has
  not rendered an opinion as to their proper characterization for U.S. federal
  income tax purposes.</FONT></p>
      <p><font size=2 face="sans-serif">Please read the discussion
    under &#147;Fact Sheet </font>&#8212;<font size=2 face="sans-serif"> General
    Information </font>&#8212;<font size=2
face="sans-serif">Tax Consideration&#148; in these preliminary terms and the
    discussion under &#147;United States Federal Taxation&#148; in the accompanying
    prospectus supplement for SPARQS (together the &#147;Tax Disclosure Sections&#148;)
    concerning the U.S. federal income tax consequences of investing in the SPARQS.
    If the Internal Revenue Service (the &#147;IRS&#148;) were successful in
    asserting an alternative characterization for the SPARQS, the timing and
    character of income on the SPARQS might differ from the tax treatment described
    in the Tax Disclosure Sections. The Issuer does not plan to request a ruling
    from the IRS regarding the tax treatment of the SPARQS, and the IRS or a
    court may not agree with the tax treatment described in these preliminary
    terms and the prospectus supplement for SPARQS.</font>	</p></TD>
</TR></TABLE>
<P align="left">
<B><FONT color="#336699" size=2 face="sans-serif">Other Risk Factors</FONT></B></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
	<TD width="5%" valign=top nowrap>
<font color="#336699" face="Wingdings">&#110;</font> 	</TD>
	<TD width=95%>
<B><FONT size=2 face="sans-serif">Secondary trading may be limited. </FONT></B><FONT size=2 face="sans-serif">There may be little or no secondary market for the SPARQS. The Issuer will apply to list the SPARQS on the American Stock Exchange or AMEX
under the symbol &#147;NEH.&#148; For a security to be listed on the AMEX, the AMEX requires, among other things, that there be 1 million units and 400 holders of such security. It is not possible to predict whether the SPARQS will meet the
requirements for listing or trade in the secondary market and we do not expect to announce whether or not the SPARQS will meet those requirements prior to the pricing of the SPARQS. In addition, the SPARQS could be delisted under certain
circumstances, such as the delisting of the underlying stock. Because it is not possible to predict whether the market for the SPARQS will be liquid or illiquid, you should be willing to hold your SPARQS to maturity.</FONT>	</TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
	<TD width="5%" valign=top nowrap>
<font color="#336699" face="Wingdings">&#110;</font> 	</TD>
	<TD width=95%>
<B><FONT size=2 face="sans-serif">No affiliation with Noble Energy, Inc. </FONT></B><FONT size=2 face="sans-serif">Noble Energy, Inc. is not an affiliate of ours, is not involved with this offering in any way, and has no obligation to consider your
interests in taking any corporate actions that might affect the value of the SPARQS. The Issuer has not made any due diligence inquiry with respect to Noble Energy, Inc. in connection with this offering.</FONT>	</TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
	<TD width="5%" valign=top nowrap>
<font color="#336699" face="Wingdings">&#110;</font> 	</TD>
	<TD width=95%>
<B><FONT size=2 face="sans-serif">Potential adverse economic interest of the calculation agent. </FONT></B><FONT size=2 face="sans-serif">The economic interest of the calculation agent and other affiliates of ours that will carry out hedging
activities related to the SPARQS or that trade NBL Stock on a regular basis are potentially adverse to your interests as an investor in the SPARQS. The hedging or trading activities of the Issuer&#146;s affiliates on or prior to the Pricing Date and
during the term of the SPARQS could adversely affect the price of NBL Stock on the Pricing Date and at maturity and, as a result, could decrease the value of the payment you receive on</FONT>	</TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR></TABLE>

<br>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
  <TR valign="bottom">
    <TD colspan="2" align=left><hr width=100% size=2 noshade color="#336699"></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=50%> <FONT size=2 face="sans-serif">December 2006 &#150; January
        2007</FONT> </TD>
    <TD align=right width=50%> <FONT size=2 face="sans-serif">Page 10 </FONT> </TD>
  </TR>
</TABLE>
<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="bottom">
    <TD align=right><img src="small_logo.jpg"></TD>
  </TR>
  <TR valign="bottom">
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=100%> <FONT color="#336699" face="sans-serif">8% SPARQS</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=100%> <FONT color="#336699" face="sans-serif">Mandatorily
        Exchangeable for</FONT> </TD>
  </TR>
  <TR valign="bottom">
    <TD align=right width=100%> <FONT color="#336699" face="sans-serif">Common
        Stock of Noble Energy, Inc.</FONT> </TD>
  </TR>
  <TR>
    <TD>
      <hr width=100% size=2 noshade color="#336699">    </TD>
  </TR>
</TABLE>
<br>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
<TR>
<TD width="5%">&nbsp;</TD>	<TD width=95%>
<FONT size=2 face="sans-serif">the SPARQS at maturity. Any of these hedging or trading activities on or prior to the Pricing Date could potentially affect the price of NBL Stock and, accordingly, potentially increase the Issue Price of the SPARQS
and, therefore, the price at which NBL Stock must close before you would receive at maturity an amount of NBL Stock worth as much as or more than the Stated Principal Amount of the SPARQS. Additionally, such hedging or trading activities during the
term of the SPARQS could adversely affect the price of NBL Stock at maturity and, accordingly, if the Issuer has not called the SPARQS, the value of NBL Stock or in certain circumstances cash, you will receive at maturity, including upon an
acceleration event.</FONT>	</TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
	<TD width="5%" valign=top nowrap>
<font color="#336699" face="Wingdings">&#110;</font> 	</TD>
	<TD width=95%>
<B><FONT size=2 face="sans-serif">Morgan Stanley may engage in business with or involving Noble Energy, Inc. without regard to your interests. </FONT></B><FONT size=2 face="sans-serif">The Issuer or its affiliates may presently or from time to time
engage in business with Noble Energy, Inc. without regard to your interests, and thus may acquire non-public information about Noble Energy, Inc. Neither the Issuer nor any of its affiliates undertakes to disclose any such information to you. In
addition, the Issuer or its affiliates from time to time have published and in the future may publish research reports with respect to Noble Energy, Inc., which may or may not recommend that investors buy or hold NBL Stock.</FONT>	</TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR>
<TR>
  <TD colspan=2>&nbsp;</TD>
</TR>
<TR>
  <TD colspan=2>&nbsp;</TD>
</TR>
<TR>
  <TD colspan=2>&nbsp;</TD>
</TR>
<TR>
  <TD colspan=2>&nbsp;</TD>
</TR>
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<br>
<TABLE border=0 width=100% cellspacing=0 cellpadding=0>
  <TR valign="bottom">
    <TD colspan="2" align=left><hr width=100% size=2 noshade color="#336699"></TD>
  </TR>
  <TR valign="bottom">
    <TD align=left width=50%> <FONT size=2 face="sans-serif">December 2006 &#150; January
        2007</FONT> </TD>
    <TD align=right width=50%> <FONT size=2 face="sans-serif">Page 11 </FONT> </TD>
  </TR>
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