424B2 1 dp03413_424b2-ps87.htm

CALCULATION OF REGISTRATION FEE

    Maximum Aggregate   Amount of Registration
Title of Each Class of Securities Offered   Offering Price   Fee1
Bear Market PLUS due 2007   $28,000,000   $2,996.00

(1) Pursuant to Rule 457(p) under the Securities Act of 1933, filing fees of $2,652,225.08 have already been paid with respect to unsold securities that were previously registered pursuant to a Registration Statement on Form S-3 (No. 333-129243) filed by Morgan Stanley on October 25, 2005 and have been carried forward. The $2,996.00 fee with respect to the $28,000,000 Notes sold pursuant to this registration statement is offset against those filing fees, and $810,350.39 remains available for future registration fees. No additional fee has been paid with respect to this offering.

PROSPECTUS Dated January 25, 2006 Pricing Supplement No. 87
PROSPECTUS SUPPLEMENT Registration Statement No. 333-131266
for PLUS Dated August 24, 2006
Dated February 21, 2006 Rule 424(b)(2)

GLOBAL MEDIUM-TERM NOTES, SERIES F
Senior Fixed Rate Notes
Bear Market PLUS due September 20, 2007
Mandatorily Exchangeable for an Amount Payable in U.S. Dollars
Based Inversely on the Value of the S&P 500® Index

The PLUS offered are senior unsecured obligations of Morgan Stanley, will pay no interest, provide for only 50% return of principal at maturity and have the terms described in the prospectus supplement for PLUS and the prospectus, as supplemented or modified by this pricing supplement. At maturity you will receive for each $10 principal amount of PLUS that you hold an amount in cash that may be more or less than the principal amount based inversely upon the closing value of the S&P 500® Index at maturity.

Final Terms:    
Underlying index:   S&P 500® Index
Underlying index publisher:   Standard & Poor’s Corporation (“S&P”)
Aggregate principal amount:   $28,000,000
Pricing date:   August 24, 2006
Original issue date:   August 31, 2006, which is the fifth trading day following the pricing date
Maturity date:   September 20, 2007
Original issue price:   $10 per PLUS
Interest rate:   None
Denominations:   $10 and integral multiples thereof
Bull market or bear market PLUS:   Bear market PLUS
Payment at maturity:   An amount of cash per PLUS equal to:
  • if the final index value is less than or equal to the initial index value, $10 plus the enhanced downside payment, subject to the maximum payment at maturity; or
  • if the final index value is greater than the initial index value, $10 less the upside reduction amount, subject to the minimum payment at maturity
Enhanced downside payment:   The product of (i) $10 and (ii) the leverage factor and (iii) the index percent decrease
Upside reduction amount:   The product of (i) $10 and (ii) the index percent increase
Leverage factor:   400%
Index percent decrease:   A fraction, the numerator of which is the initial index value minus the final index value and the
    denominator of which is the initial index value
Index percent increase:   A fraction, the numerator of which is the final index value minus the initial index value and the
    denominator of which is the initial index value
Initial index value:   1,296.06, the index closing value on the pricing date, as published on Bloomberg page “SPX” or any successor page
Final index value:   The index closing value of the underlying index on the index valuation date, as published on
    Bloomberg page “SPX” or any successor page
Index valuation date:   September 18, 2007, subject to adjustment for certain market disruption events
Maximum payment at maturity:   $14.00 per PLUS
Minimum payment at maturity:   $5.00 per PLUS (50% of the original issue price)
Listing:   The PLUS have been approved for listing on the AMEX subject to official notice of issuance. The
    AMEX listing symbol for the PLUS is “BMP.” It is not possible to predict whether any secondary
    market for the PLUS will develop.
CUSIP:   61747S157

The PLUS involve risks not associated with an investment in ordinary debt securities. See “Risk Factors” beginning on PS-7.

The Securities and Exchange Commission and state securities regulators have not approved or disapproved these securities, or determined if this pricing supplement or the accompanying prospectus supplement and prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

    Price to
Public  		  Agent’s
Commissions(1)  		  Proceeds to
Company 
Per PLUS    $10.00    $0.15    $9.85 
Total    $28,000,000    $420,000    $27,580,000 

(1) For additional information, see “Plan of Distribution” in the prospectus supplement for PLUS.

MORGAN STANLEY





Where You Can Find More Information

     Morgan Stanley has filed a registration statement (including a prospectus, as supplemented by a prospectus supplement for PLUS) with the Securities and Exchange Commission, or SEC, for the offering to which this pricing supplement relates. Before you invest, you should read the prospectus in that registration statement, the prospectus supplement for PLUS and any other documents relating to this offering that Morgan Stanley has filed with the SEC for more complete information about Morgan Stanley and this offering. You may get these documents without cost by visiting EDGAR on the SEC web site at www.sec.gov. Alternatively, Morgan Stanley will arrange to send you the prospectus and the prospectus supplement for PLUS if you so request by calling toll-free 800-584-6837.

     You may access these documents on the SEC web site at www.sec.gov as follows:

     Terms used in this pricing supplement are defined in the prospectus supplement for PLUS or in the prospectus. As used in this pricing supplement, the “Company,” “we,” “us,” and “our” refer to Morgan Stanley.

Your Return on the PLUS

     No interest and provides for only 50% return of principal at maturity. Unlike ordinary debt securities, the PLUS do not pay interest and provide for only 50% return of principal at maturity. If the final index value is greater than the initial index value, we will pay to you an amount in cash per PLUS that is less than the $10 issue price of each PLUS by an amount proportionate to the increase in the value of the underlying index, subject to the minimum payment at maturity of $5. The PLUS are not callable prior to maturity.

     Payment at maturity.  At maturity, you will receive for each $10 principal amount of PLUS that you hold an amount in cash based inversely upon the value of the underlying index, determined as follows:

  • If the final index value is less than or equal to the initial index value, you will receive for each $10 principal amount of PLUS that you hold a payment at maturity equal to:
     
         $10     +     enhanced downside payment,
     
    where,
     
         enhanced downside payment     =     $10     ×     400%     ×     index percent decrease
     
    and
     
         index percent decrease      =      initial index value - final index value  
    initial index value  
         
    subject to a maximum payment at maturity of $14.00, or 140% of the issue price.
     
  •

If the final index value is greater than the initial index value, you will receive for each $10 principal amount of PLUS that you hold a payment at maturity equal to:
     
         $10   – upside reduction amount
     
    subject to a minimum payment at maturity of $5, or 50% of the issue price,
     
    where,
     
    upside reduction amount     =     $10     ×     index percent increase
     
      and
     
         index percent increase     =      final index value - initial index value  
    initial index value  
         

PS-2





     Investing in the PLUS is not equivalent to investing in the underlying index or its component stocks.

     Postponement of maturity date. If the scheduled index valuation date is postponed, because that day is not a trading day or a market disruption event occurs on that day, and the postponed index valuation date is less than two trading days prior to the scheduled maturity date, the maturity date will be the second trading day following the index valuation date as postponed.

PS-3





Hypothetical Payouts on the PLUS at Maturity

     For each PLUS, the following graph illustrates the payment at maturity on the PLUS for a range of hypothetical percentage changes in the index. The PLUS Zone illustrates the leveraging effect of the leverage factor taking into account the maximum payment at maturity. The graph is based on the following terms:

• Issue price per PLUS: $10
• Initial index value: 1,296.06
• Leverage factor: 400%
• Maximum payment at maturity: $14 (140% of the issue price)
• Minimum payment at maturity: $5 (50% of the issue price)

     Where the final index value is less than the initial index value, the payment at maturity on the PLUS reflected in the graph below is greater than the $10 principal amount per PLUS, but in all cases is subject to the maximum payment at maturity. Where the final index value is greater than the initial index value, the payment at maturity on the PLUS reflected in the graph below is less than the $10 principal amount per PLUS, subject to the minimum payment at maturity.

     You will realize the maximum payment at maturity at a final index value of approximately 90% of the initial index value, or approximately 1,166.45. The graph does not show every situation that may occur.

PS-4





The Underlying Index

     The S&P 500 Index. The S&P 500 Index is described under the heading “Underlying Indices and Underlying Index Publishers Information—S&P 500 Index” in the prospectus supplement for PLUS.

     License Agreement. “Standard & Poor’s®,” “S&P®,” “S&P 500®,” “Standard & Poor’s 500®” and “500®” are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by Morgan Stanley. The PLUS have not been passed on by S&P as to their legality or suitability. The PLUS are not issued, endorsed, sold or promoted by S&P. S&P makes no warranties and bears no liability with respect to the PLUS. See “Underlying Indices and Underlying Index Publishers Information—S&P 500 Index—License Agreement between S&P and Morgan Stanley” in the prospectus supplement for PLUS.

     Historical Information. The following table sets forth the published high and low index closing values, as well as end-of-quarter index closing values, of the underlying index for each quarter in the period from January 1, 2001 through August 24, 2006. The index closing value on August 24, 2006 was 1,296.06. We obtained the information in the table below from Bloomberg Financial Markets, without independent verification. The historical values of the underlying index should not be taken as an indication of future performance, and no assurance can be given as to the level of the underlying index on the index valuation date. The payment of dividends on the stocks that constitute the underlying index are not reflected in the level of the index and, therefore, have no effect on the calculation of the payment at maturity.

S&P 500 Index   High   Low   Period End
2001            
First Quarter   1,373.73   1,117.58   1,160.33
Second Quarter   1,312.83   1,103.25   1,224.42
Third Quarter   1,236.72   965.80   1,040.94
Fourth Quarter   1,170.35   1,038.55   1,148.08
2002            
First Quarter   1,172.51   1,080.17   1,147.39
Second Quarter   1,146.54   973.53   989.82
Third Quarter   989.03   797.70   815.28
Fourth Quarter   938.87   776.76   879.82
2003            
First Quarter   931.66   800.73   848.18
Second Quarter   1,011.66   858.48   974.50
Third Quarter   1,039.58   965.46   995.97
Fourth Quarter   1,111.92   1,018.22   1,111.92
2004            
First Quarter   1,157.76   1,091.33   1,126.21
Second Quarter   1,150.57   1,084.10   1,140.84
Third Quarter   1,129.30   1,063.23   1,114.58
Fourth Quarter   1,213.55   1,094.81   1,211.92
2005            
First Quarter   1,225.31   1,163.75   1,180.59
Second Quarter   1,216.96   1,137.50   1,191.33
Third Quarter   1,245.04   1,194.44   1,228.81
Fourth Quarter   1,272.74   1,176.84   1,248.29
2006            
First Quarter   1,307.25   1,254.78   1,300.25
Second Quarter   1,325.76   1,223.69   1,270.20
Third Quarter (through            
     August 24, 2006)   1,302.30   1,234.49   1,296.06

PS-5





     Use of Proceeds and Hedging. The net proceeds we receive from the sale of the PLUS will be used for general corporate purposes and, in part, in connection with hedging our obligations under the PLUS through one or more of our subsidiaries.

     On or prior to the date of this pricing supplement, we, through our subsidiaries or others, hedged our anticipated exposure in connection with the PLUS by taking short positions in the stocks constituting the underlying index and in futures contracts on the underlying index. Such sale activity could have decreased the value of the underlying index, and therefore the value at which the underlying index must close on the index valuation date before you would receive at maturity a payment that exceeds the principal amount of the PLUS. For further information on our use of proceeds and hedging, see “Use of Proceeds and Hedging” in the prospectus supplement for PLUS.

PS-6





Risk Factors

     The PLUS involve risks not associated with conventional debt securities, some of which are briefly summarized below:

     The PLUS do not pay interest and provide for only 50% return of principal. If the final index value is greater than the initial index value, you will receive an amount in cash that is less than the $10 issue price of each PLUS by an amount proportionate to the increase in the value of the underlying index, subject to the minimum payment at maturity, and will lose money on your investment.

     Your appreciation potential is limited. The appreciation potential of the PLUS is limited by the maximum payment at maturity of $14.00, or 140% of the issue price. Although the leverage factor provides 400% exposure to any decrease in the value of the underlying index at maturity, because the payment at maturity will be limited to 140% of the issue price for each PLUS, the percentage exposure provided by the leverage factor is progressively reduced as the final index value decreases to approximately 90% of the initial index value.

     Secondary trading may be limited. There may be little or no secondary market for the PLUS. You should be willing to hold your PLUS to maturity.

     Market price of the PLUS will be influenced by many unpredictable factors. Several factors, many of which are beyond our control, will influence the value of the PLUS in the secondary market and the price at which MS & Co. may be willing to purchase or sell the PLUS in the secondary market, including: the value of the underlying index at any time and on the determination date, the volatility of the underlying index, interest and yield rates in the market, geopolitical conditions and economic, financial, political and regulatory or judicial events, the time remaining to the maturity of the PLUS, the dividend rate on the stocks comprising the underlying index and our creditworthiness.

     The inclusion of commissions and projected profit from hedging in the original issue price is likely to adversely affect secondary market prices. Assuming no change in market conditions or any other relevant factors, the price, if any, at which MS & Co. is willing to purchase PLUS 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 PLUS, as well as the projected profit included in the cost of hedging our obligations under the PLUS. In addition, any such prices may differ from values determined by pricing models used by MS & Co., as a result of dealer discounts, mark-ups or other transaction costs.

     Adjustments to the underlying index could adversely affect the value of the PLUS. The underlying index publisher may discontinue or suspend calculation or publication of the underlying index at any time. In these circumstances, MS & Co., as the calculation agent, will have the sole discretion to substitute a successor index that is comparable to the discontinued underlying index and is not precluded from considering indices that are calculated and published by MS & Co. or any of its affiliates.

     The economic interests of the calculation agent and other affiliates of ours are potentially adverse to your interests. The hedging or trading activities of our affiliates on or prior to the pricing date and on the index valuation date could adversely affect the value of the underlying index and, as a result, could decrease the amount you may receive on the PLUS at maturity. Any of these hedging or trading activities on or prior to the pricing date could have affected the initial index value and, therefore, have decreased the value at which the underlying index must close on the index valuation date before you receive a payment at maturity that exceeds the principal amount of the PLUS. Additionally, such hedging or trading activities during the term of the PLUS could potentially affect the value of the underlying index on the index valuation date and, accordingly, the amount of cash you will receive at maturity.

     Investing in the PLUS is not equivalent to investing in the underlying index. Investing in the PLUS is not equivalent to investing in the underlying index or its component stocks. As an investor in the PLUS, you will not have voting rights or rights to receive dividends or other distributions or any other rights with respect to the stocks that constitute the underlying index.

PS-7





     Because the characterization of the PLUS for U.S. federal income tax purposes is uncertain, the material U.S. federal income tax consequences of an investment in the PLUS are uncertain.

     You should also consider the U.S. federal income tax consequences of investing in the PLUS. Please note that the discussions in this pricing supplement concerning the U.S. federal income tax consequences of investing in the PLUS supersede the discussions contained in the accompanying prospectus supplement. There is no direct legal authority as to the proper tax treatment of the PLUS, and consequently 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 PLUS are uncertain. Pursuant to the terms of the PLUS, you have agreed with us to treat a PLUS as a single financial contract, as described in the section of this pricing supplement called “United States Federal Income Taxation—General.” If the Internal Revenue Service (the “IRS”) were successful in asserting an alternative characterization for the PLUS, the timing and/or character of income or loss with respect to the PLUS would differ. We do not plan to request a ruling from the IRS regarding the tax treatment of the PLUS, and the IRS or a court may not agree with the tax treatment described in this pricing supplement. Please read carefully the section of this pricing supplement called “United States Federal Income Taxation.”

     If you are a non-U.S. investor, please also read the section of this pricing supplement called “United States Federal Income Taxation—Tax Consequences to Non-U.S. Holders.”

     You are urged to consult your own tax advisors regarding all aspects of the U.S. federal tax consequences of investing in the PLUS as well as any tax consequences arising under the laws of any state, local or foreign taxing jurisdiction.

     For further discussion of these and other risks you should read the section entitled “Risk Factors” beginning on S-7 of the prospectus supplement for PLUS. We also urge you to consult your investment, legal, tax, accounting and other advisers before you invest in the PLUS.

ERISA

     See “ERISA” in the prospectus supplement for PLUS.

UNITED STATES FEDERAL INCOME TAXATION

     Prospective investors should note that the discussion under the section called “United States Federal Taxation” in the accompanying prospectus supplement does not apply to the PLUS issued under this pricing supplement and is superseded by the following discussion.

     The following summary is based on the advice of Davis Polk & Wardwell, our counsel (“Tax Counsel”), and is a general discussion of the principal U.S. federal tax consequences of ownership and disposition of the PLUS. This discussion only applies to initial investors in the PLUS who:

  • purchase the PLUS at their “issue price”; and

  • will hold the PLUS as capital assets within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the “Code”).

     This discussion does not describe all of the tax consequences that may be relevant to a particular holder in light of the holder’s particular circumstances or to holders subject to special rules, such as:

  • certain financial institutions;
  • insurance companies;
  • dealers in securities or foreign currencies;
  • investors holding the PLUS as part of a hedge or any similar transaction;
  • U.S. Holders, as defined below, whose functional currency is not the U.S. dollar;
  • partnerships or other entities classified as partnerships for U.S. federal income tax purposes;
  • regulated investment companies;
  • real estate investment trusts;

PS-8





  • persons subject to the alternative minimum tax;
  • nonresident alien individuals who have lost their U.S. citizenship or who have ceased to be taxed as U.S. resident aliens; and
  • Non-U.S. Holders for whom income or gain in respect of the PLUS is effectively connected with a trade or business in the United States.

     As the law applicable to the U.S. federal income taxation of instruments such as the PLUS 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.

     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 pricing supplement may affect the tax consequences described herein. Persons considering the purchase of the PLUS 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.

     General

     Pursuant to the terms of the PLUS, we and every investor in the PLUS agree (in the absence of an administrative determination or judicial ruling to the contrary) to characterize a PLUS for all tax purposes as a single financial contract that is an “open transaction” for U.S. federal income tax purposes which (i) requires the investor to pay us at inception an amount equal to the purchase price of the PLUS and (ii) entitles the investor to receive at maturity an amount in cash based upon the performance of the underlying index. The characterization of the PLUS described above is not, however, binding on the Internal Revenue Service (the “IRS”) or the courts. No statutory, judicial or administrative authority directly addresses the characterization of the PLUS (or of similar instruments) for U.S. federal income tax purposes, and no ruling is being requested from the IRS with respect to their proper characterization and treatment. Due to the absence of authorities that directly address the PLUS (or similar instruments), Tax Counsel has not rendered an opinion as to whether the U.S. federal income tax characterization and treatment of the PLUS stated above should be respected. Significant aspects of the U.S. federal income tax consequences of an investment in the PLUS are uncertain, and no assurance can be given that the IRS or the courts will agree with the characterization and tax treatment described herein. Accordingly, you are urged to consult your own tax advisors regarding the U.S. federal tax consequences of an investment in the PLUS (including possible alternative characterizations of the PLUS) and regarding 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 characterization and treatment of the PLUS described above.

     Tax Consequences to U.S. Holders

     As used herein, the term “U.S. Holder” means a beneficial owner of a PLUS that is, for U.S. federal income tax purposes:

  • a citizen or resident of the United States;

  • a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States or any political subdivision thereof; or

  • an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source.

     The term U.S. Holder also includes certain former citizens and residents of the United States.

     Tax Treatment of the PLUS

     Assuming the characterization of the PLUS as set forth above is respected, Tax Counsel believes that the following U.S. federal income tax consequences should result.

PS-9





     Tax Treatment Prior to Maturity. A U.S. holder should not be required to recognize taxable income over the term of the PLUS prior to maturity, other than pursuant to a sale or exchange as described below.

     Tax Basis. A U.S. Holder’s tax basis in the PLUS should equal the amount paid by the U.S. Holder to acquire the PLUS.

     Sale, Exchange or Settlement of the PLUS. Upon a sale or exchange of the PLUS, or upon settlement of the PLUS at maturity, a U.S. Holder should generally recognize gain or loss equal to the difference between the amount realized on the sale, exchange or settlement and the U.S. Holder’s tax basis in the PLUS sold, exchanged, or settled. Any capital gain or loss recognized upon sale, exchange or settlement of a PLUS should be long-term capital gain or loss if the U.S. Holder has held the PLUS for more than one year at such time.

     Possible Alternative Tax Treatments of an Investment in the PLUS

     Due to the absence of authorities that directly address the proper characterization of the PLUS, no assurance can be given that the IRS will accept, or that a court will uphold, the characterization and treatment described above. In particular, the IRS could seek to analyze the U.S. federal income tax consequences of owning a PLUS under Treasury regulations governing contingent payment debt instruments (the “Contingent Debt Regulations”).

     If the IRS were successful in asserting that the Contingent Debt Regulations applied to the PLUS, the timing and character of income thereon would be significantly affected. Among other things, a U.S. Holder would be required to accrue original issue discount on the PLUS every year at a “comparable yield” determined at the time of their issuance. Furthermore, any gain realized by a U.S. Holder at maturity or upon a sale or other disposition of the PLUS would generally be treated as ordinary income, and any loss realized at maturity would be treated as ordinary loss to the extent of the U.S. Holder’s prior accruals of original issue discount, and as capital loss thereafter.

     Even if the Contingent Debt Regulations do not apply to the PLUS, other alternative federal income tax characterizations of the PLUS are also possible, which if applied could also affect the timing and character of the income or loss with respect to the PLUS. It is possible, for example, that a PLUS could be treated as a unit consisting of a loan and a forward contract, in which case a U.S. Holder would be required to accrue original issue discount as income on a current basis. Accordingly, prospective investors are urged to consult their own tax advisors regarding all aspects of the U.S. federal income tax consequences of an investment in the PLUS.

     Backup Withholding and Information Reporting

     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’s U.S. federal income tax liability, provided that the required information is furnished to the IRS. In addition, information returns will be filed with the IRS in connection with payments on the PLUS and the proceeds from a sale or other disposition of the PLUS, unless the U.S. Holder provides proof of an applicable exemption from the information reporting rules.

     Tax Consequences to Non-U.S. Holders

     This section only applies to you if you are a Non-U.S. Holder. As used herein, the term “Non-U.S. Holder” means a beneficial owner of a PLUS that is, for U.S. federal income tax purposes:

  • an individual who is classified as a nonresident alien;
  • a foreign corporation; or
  • a foreign trust or estate.

     “Non-U.S. Holder” 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 holder is urged to consult his or her own tax advisors regarding the U.S. federal income tax consequences of the sale, exchange or other disposition of a PLUS.

PS-10





     Tax Treatment upon Sale, Exchange or Settlement of a PLUS

     In general. Assuming the characterization of the PLUS as set forth above is respected, a Non-U.S. Holder of the PLUS will not be subject to U.S. federal income or withholding tax in respect of amounts paid to the Non-U.S. Holder.

     If all or any portion of a PLUS were recharacterized as a debt instrument, any payment made to a Non-U.S. Holder with respect to the PLUS would not be subject to U.S. federal withholding tax, provided that:

  • the Non-U.S. Holder does not own, directly or by attribution, ten percent or more of the total combined voting power of all classes of our stock entitled to vote;

  • the Non-U.S. Holder is not a controlled foreign corporation related, directly or indirectly, to us through stock ownership;

  • the Non-U.S. Holder is not a bank receiving interest under section 881(c)(3)(A) of the Code; and

  • the certification requirements described below has been fulfilled with respect to the beneficial owner.

     Certification Requirement. The certification requirement referred to in the preceding paragraph will be fulfilled if the beneficial owner of a PLUS (or a financial institution holding the PLUS 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.

     U.S. Federal Estate Tax

     Individual Non-U.S. Holders and entities the property of which is potentially includible in such an individual’s gross estate for U.S. federal estate tax purposes (for example, a trust funded by such an individual and with respect to which the individual has retained certain interests or powers), should note that, absent an applicable treaty benefit, the PLUS are likely to be treated as U.S. situs property subject to U.S. federal estate tax. Prospective investors that are non-U.S. individuals, or are entities of the type described above, are urged to consult their own tax advisors regarding the U.S. federal estate tax consequences of investing in the PLUS.

     Backup Withholding and Information Reporting

     Information returns may be filed with the IRS in connection with the payment on the PLUS at maturity as well as in connection with the proceeds from a sale, exchange or other disposition. 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 above under “ — Tax Treatment upon Sale, Exchange or Settlement of a PLUS — Certification Requirement” 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’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.

PS-11