MORGAN STANLEY Morgan Stanley DirectSecurities(SM) DISTRIBUTION AGREEMENT

 

 

                                                                     EXHIBIT 1-e

 

                                 MORGAN STANLEY

 

                 Global Medium-Term Notes, Series G and Series H

 

                       Global Units, Series G and Series H

 

                           EURO DISTRIBUTION AGREEMENT

 

 

                                                          [               ], 2005

 

 

Morgan Stanley & Co. International Limited

c/o Morgan Stanley & Co. International

     Limited

25 Cabot Square

Canary Wharf London E14 4QA

United Kingdom

 

Dear Sirs:

 

         Morgan Stanley, a Delaware corporation (the "Company"), confirms its

agreement with you with respect to the issue and sale from time to time by the

Company primarily outside the United States of up to $[     ] (or the equivalent

thereof in one or more currencies other than U.S. dollars) aggregate initial

public offering price of its Global Medium-Term Notes, Series G and Series H,

each due more than nine months from the date of issue (the "Notes") and its

Global Units, Series G and Series H (the "Units" and together with the Notes,

the "Program Securities"), in each case subject to reduction as a result of the

sale of the Company's (i) Global Medium-Term Notes, Series F, to be sold

primarily inside the United States, (ii) Global Units, Series F, to be sold

primarily inside the United States, and (iii) the sale of certain of the

Company's other debt securities, warrants, common stock, preferred stock,

purchase contracts and units and of capital securities of certain Morgan Stanley

Capital Trusts. The Series G Notes are intended to be admitted to listing on the

Official List of the Financial Services Authority (the "UK Listing Authority")

in its capacity as competent authority for the purposes of Part VI of the

Financial Services and Markets Act 2000 (the "FSMA"), and to trading on the

London Stock Exchange plc (the "London Stock Exchange") or admitted to listing,

trading and/or quotation by any other listing authority, stock exchange and/or

quotation system, if so required by Section 3(j) hereof. Application may, in

certain circumstances described in the Prospectus Supplement (as defined below),

be made to admit the Series G Units to the Official List of the UK Listing

Authority and to trading on the London Stock

 

 

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Exchange. The Series H Notes and the Series H Units will not be listed on any

stock exchange.

 

         The Notes may be issued as senior indebtedness (the "Senior Notes") or

as subordinated indebtedness (the "Subordinated Notes") of the Company. The

Senior Notes will be issued, either alone or as part of a Unit, pursuant to the

provisions of an amended and restated senior indenture dated as of November 1,

2004, between the Company and JPMorgan Chase Bank, N.A. (formerly known as

JPMorgan Chase Bank), as trustee (the "Senior Debt Trustee") (as may be

supplemented or amended from time to time, the "Senior Debt Indenture"). The

Subordinated Notes will be issued pursuant to the provisions of a subordinated

indenture dated as of October 1, 2004, between the Company and J.P. Morgan Trust

Company, National Association, as trustee (the "Subordinated Debt Trustee") (as

may be supplemented or amended from time to time, the "Subordinated Debt

Indenture"). The Senior Debt Indenture and the Subordinated Debt Indenture are

sometimes hereinafter referred to individually as an "Indenture" and

collectively as the "Indentures," and the Senior Debt Trustee and the

Subordinated Debt Trustee are sometimes hereinafter referred to individually as

a "Trustee" and collectively as the "Trustees." Purchase contracts ("Purchase

Contracts") that require holders to satisfy their obligations thereunder when

such Purchase Contracts are issued are referred to as "Pre-paid Purchase

Contracts." Pre-paid Purchase Contracts that settle in cash ("Cash-settled

Pre-paid Purchase Contracts") generally will be issued under an Indenture.

Pre-paid Purchase Contracts that do not settle in cash ("Physically-settled

Pre-paid Purchase Contracts") generally will be issued under the Unit Agreement

or the Unit Agreement Without Holders' Obligations (each as defined below).

 

         The Units will be issued either pursuant to the Unit Agreement dated as

of November 1, 2004, among the Company, JPMorgan Chase Bank, N.A. (formerly

known as JPMorgan Chase Bank), as Unit Agent, as Collateral Agent, as Trustee

and Paying Agent under the Indenture referred to therein, and as Warrant Agent

under the Warrant Agreement referred to therein, and the holders from time to

time of the Units described therein (as may be amended from time to time, the

"Unit Agreement") or, if the Units do not include Purchase Contracts (or include

only Pre-paid Purchase Contracts), pursuant to a Unit Agreement among the

Company and JPMorgan Chase Bank, N.A. (formerly known as JPMorgan Chase Bank),

as Unit Agent, as Trustee and Paying Agent under the Indenture referred to

therein, and as Warrant Agent under the Warrant Agreement referred to therein,

in the form of such agreement filed as an exhibit to the Registration Statement

referred to below (each such agreement, a "Unit Agreement Without Holders'

Obligations").(1) Units may include one or more (i) Senior Notes, (ii) warrants

 

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     (1) The Unit Agreement Without Holders' Obligations shall include

additional provisions to allow for the issuance of Pre-paid Purchase Contracts

that are not issued under the Indentures.

 

 

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("Warrants") entitling the holders thereof to purchase or sell (a) securities

issued by the Company or by an entity not affiliated with the Company (or

securities issued by an entity affiliated with the Company in the case of Series

H Units), a basket of such securities, an index or indices of such securities or

any combination of the above, (b) currencies or (c) commodities, (iii) Purchase

Contracts, including Pre-paid Purchase Contracts, requiring the holders thereof

to purchase or sell (a) securities issued by the Company or by an entity not

affiliated with the Company (or securities issued by an entity affiliated with

the Company in the case of Series H Units), a basket of such securities, an

index or indices of such securities or any combination of the above, (b)

currencies or (c) commodities or (iv) any combination thereof. The applicable

prospectus supplement will specify whether Notes, Warrants and Purchase

Contracts comprised by a Unit may or may not be separated from any series of

Units. Warrants issued as part of a Unit will be issued pursuant to the Warrant

Agreement dated as of November 1, 2004 (as may be amended from time to time, the

"Warrant Agreement") between the Company and JPMorgan Chase Bank, N.A. (formerly

known as JPMorgan Chase Bank), as Warrant Agent. Purchase Contracts, other than

Pre-paid Purchase Contracts ("Non-Pre-paid Purchase Contracts"), entered into by

the Company and the holders thereof will be governed by the Unit Agreement.

 

         The Notes, whether issued alone or as part of a Unit, will have the

maturities, interest rates, redemption provisions, if any, and other terms as

set forth in supplements to the Basic Prospectus referred to below. The Warrants

will have the exercise prices, exercise dates, expiration dates and other terms

as set forth in supplements to the Basic Prospectus. The Purchase Contracts will

have the closing dates, purchase or sale prices and other terms as set forth in

supplements to the Basic Prospectus. The Company has initially appointed (i)

JPMorgan Chase Bank, N.A. (formerly known as JPMorgan Chase Bank), London

Branch, at its principal office in London, as principal paying agent for the

Senior Notes (in such capacity, the "Senior Principal Paying Agent") and (ii)

the Subordinated Debt Trustee (acting through JPMorgan Chase Bank, N.A.

(formerly known as JPMorgan Chase Bank), London Branch, at its principal office

in London, as its sub-agent) as principal paying agent for the Subordinated

Notes (in such capacity, the "Subordinated Principal Paying Agent"). References

herein to the "Principal Paying Agent" are to the Senior Principal Paying Agent

(in the case of duties relating to the Senior Notes) or to the Subordinated

Principal Paying Agent (in the case of duties relating to the Subordinated

Notes).

 

         The Notes will be issued in bearer form or in definitive registered

form without coupons (the "Registered Notes"), the Units will be issued in

bearer form or in definitive registered form (the "Registered Units") and the

securities included in a Unit will be in the form of such Unit. The Program

Securities issued in bearer form will be represented initially by, in the case

of the Notes, a temporary global Note and, in the case of the Units, a temporary

global Unit, each

 

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of which will be delivered to a common depositary located outside the United

States for Euroclear Bank S.A./N.V., as operator of the Euroclear System (the

"Euroclear Operator"), Clearstream Banking, societe anonyme ("Clearstream"), or

any other relevant clearing system. Beneficial interests in a temporary global

Note or a temporary global Unit will be exchangeable for beneficial interests

in, in the case of a temporary global Note, a permanent global Note and, in the

case of a temporary global Unit, a permanent global Unit. Beneficial interests

in a permanent global Note will be exchangeable in whole, but not in part, for

definitive Notes in bearer form, with interest coupons attached, upon receipt of

the Principal Paying Agent of an initial request to so exchange by any holder of

a beneficial interest in such permanent global Note (such temporary global Note,

permanent global Note and definitive Notes in bearer form are collectively

referred to as the "Bearer Notes"), and Bearer Notes, if the applicable Pricing

Supplement so specifies, will be exchangeable in whole or in part for Registered

Notes. Beneficial interests in a permanent global Unit (including an interest in

the securities included in such Unit) will be exchangeable in whole, but not in

part, for definitive Units in bearer form upon receipt of the Unit Agent of an

initial request to so exchange by any holder of a beneficial interest in such

permanent global Unit (such temporary global Unit, permanent global Unit and

definitive Units in bearer form are collectively referred to as the "Bearer

Units") and Bearer Units, if the applicable Pricing Supplement so specifies,

will be exchangeable in whole or in part for Registered Units. As used in this

Agreement, the term "Note" includes any temporary global Note or permanent

global Note issued pursuant to the Indentures and the term "Unit" includes any

temporary global Unit or permanent global Unit issued pursuant to the Unit

Agreement.

 

         The Company hereby appoints you as its exclusive agents for the purpose

of soliciting and receiving offers to purchase Program Securities from the

Company by others and, on the basis of the representations and warranties herein

contained, but subject to the terms and conditions herein set forth, you agree

to use reasonable efforts to solicit and receive offers to purchase Program

Securities upon terms acceptable to the Company at such times and in such

amounts as the Company shall from time to time specify. In addition, you may

also purchase Program Securities as principal pursuant to the terms of a terms

agreement relating to such sale (in the case of Notes, a "Notes Terms Agreement"

and, in the case of Units, a "Units Terms Agreement") in accordance with the

provisions of Section 2(b) hereof.

 

         The Company has filed with the Securities and Exchange Commission (the

"Commission") a registration statement, including a prospectus, relating to the

Program Securities. Such registration statement, including the exhibits thereto,

as amended at the Commencement Date (as hereinafter defined), is hereinafter

referred to as the "Registration Statement." The Company proposes to file with

the Commission from time to time, pursuant to Rule 424 under the Securities Act

of 1933, as amended (the "Securities Act"), supplements to the prospectus

 

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relating to the Program Securities included in the Registration Statement that

will describe certain terms of the Program Securities. The prospectus relating

to the Program Securities in the form in which it appears in the Registration

Statement is hereinafter referred to as the "Basic Prospectus." The term

"Prospectus" means the Basic Prospectus together with the prospectus supplement

or supplements (each, a "Prospectus Supplement") specifically relating to the

Program Securities, as filed with, or transmitted for filing to, the Commission

pursuant to Rule 424 under the Securities Act. As used herein, the terms "Basic

Prospectus" and "Prospectus" shall include in each case the documents, if any,

incorporated by reference therein. The terms "supplement," "amendment" and

"amend" as used herein shall include all documents deemed to be incorporated by

reference in the Prospectus that are filed subsequent to the date of the Basic

Prospectus by the Company with the Commission pursuant to the Securities

Exchange Act of 1934, as amended (the "Exchange Act"). If the Company has filed

an abbreviated registration statement to register additional Program Securities

pursuant to Rule 462(b) under the Securities Act (a "Rule 462 Registration

Statement"), then any reference herein to the term "Registration Statement"

shall be deemed to include such Rule 462 Registration Statement.

 

     1. Representations and Warranties. The Company represents and warrants to

and agrees with you as of the Commencement Date, as of each date on which you

solicit offers to purchase Program Securities, as of each date on which the

Company accepts an offer to purchase Program Securities (including any purchase

by you as principal pursuant to a Notes Terms Agreement or a Units Terms

Agreement), as of each date the Company issues and delivers Program Securities

and as of each date the Registration Statement or the Basic Prospectus is

amended or supplemented, as follows (it being understood that such

representations, warranties and agreements shall be deemed to relate to the

Registration Statement, the Basic Prospectus and the Prospectus, each as amended

or supplemented to each such date):

 

          (a) The Registration Statement has become effective, no stop order

     suspending the effectiveness of the Registration Statement is in effect,

     and no proceedings for such purpose are pending before or threatened by the

     Commission.

 

          (b) (i) Each document, if any, filed or to be filed pursuant to the

     Exchange Act and incorporated by reference in the Prospectus complied or

     will comply when so filed in all material respects with the Exchange Act

     and the applicable rules and regulations of the Commission thereunder, (ii)

     each part of the Registration Statement, when such part became effective,

     did not contain and each such part, as amended or supplemented, if

     applicable, will not contain any untrue statement of a material fact or

     omit to state a material fact required to be stated therein or necessary to

     make the statements therein not misleading, (iii) the

 

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     Registration Statement and the Prospectus comply and, as amended or

     supplemented, if applicable, will comply in all material respects with the

     Securities Act and the applicable rules and regulations of the Commission

     thereunder and the Prospectus does not contain and, as amended or

     supplemented, if applicable, will not contain any untrue statement of a

     material fact or omit to state a material fact necessary to make the

     statements therein, in the light of the circumstances under which they were

     made, not misleading, except that (1) the representations and warranties

     set forth in this Section 1(b) do not apply (A) to statements or omissions

     in the Registration Statement or the Prospectus based upon information

     relating to you furnished to the Company in writing by you expressly for

     use therein or (B) to those parts of the Registration Statement that

     constitute the Statements of Eligibility (Form T-1) under the Trust

     Indenture Act of 1939, as amended (the "Trust Indenture Act"), of the

     Trustees and (2) the representations and warranties set forth in clauses

     (iii) and (iv) above, when made as of the Commencement Date or as of any

     date on which you solicit offers to purchase Program Securities or on which

     the Company accepts an offer to purchase Program Securities, shall be

     deemed not to cover information concerning an offering of particular

     Program Securities to the extent such information will be set forth in a

     supplement to the Basic Prospectus.

 

          (c) The Company has been duly incorporated, is validly existing as a

     corporation in good standing under the laws of the State of Delaware, has

     the corporate power and authority to own its property and to conduct its

     business as described in the Prospectus and is duly qualified to transact

     business and is in good standing in each jurisdiction in which the conduct

     of its business or its ownership or leasing of property requires such

     qualification, except to the extent that the failure to be so qualified or

     be in good standing would not have a material adverse effect on the Company

     and its consolidated subsidiaries, taken as a whole.

 

          (d) Each subsidiary of the Company has been duly incorporated, is

     validly existing as a corporation in good standing under the laws of the

     jurisdiction of its incorporation, has the corporate power and authority to

     own its property and to conduct its business as described in the Prospectus

     and is duly qualified to transact business and is in good standing in each

     jurisdiction in which the conduct of its business or its ownership or

     leasing of property requires such qualification, except to the extent that

     the failure to be so qualified or be in good standing would not have a

     material adverse effect on the Company and its consolidated subsidiaries,

     taken as a whole.

 

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          (e) Each of this Agreement and any applicable Written Notes Terms

     Agreement or Written Units Terms Agreement (each as hereinafter defined)

     has been duly authorized, executed and delivered by the Company.

 

          (f) Each Indenture has been duly qualified under the Trust Indenture

     Act and each of the Senior Indenture, the Subordinated Indenture, the Unit

     Agreement and the Warrant Agreement has been duly authorized, executed and

     delivered by the Company and is a valid and binding agreement of the

     Company, enforceable in accordance with its terms except as the

     enforceability thereof (i) may be limited by bankruptcy, insolvency,

     reorganization, liquidation, moratorium and other similar laws affecting

     creditors' rights generally and (ii) is subject to general principles of

     equity, regardless of whether such enforceability is considered at a

     proceeding in equity or at law.

 

          (g) The form of Unit Agreement Without Holders' Obligations has been

     duly authorized by the Company and, when a Unit Agreement Without Holders'

     Obligations has been duly executed and delivered by the Company, the Unit

     Agreement Without Holders' Obligations will be a valid and binding

     agreement of the Company, enforceable in accordance with its terms except

     as the enforceability thereof (i) may be limited by bankruptcy, insolvency,

     reorganization, liquidation, moratorium and other similar laws affecting

     creditors' rights generally and (ii) is subject to general principles of

     equity, regardless of whether such enforceability is considered at a

     proceeding in equity or at law.

 

          (h) The forms of Notes (including the form of Cash-settled Pre-paid

     Purchase Contracts), whether issued alone or as part of a Unit, have been

     duly authorized and established in conformity with the provisions of the

     relevant Indenture and, when the Notes (and the Cash-settled Pre-paid

     Purchase Contracts) have been executed and authenticated in accordance with

     the provisions of the relevant Indenture and delivered to and duly paid for

     by the purchasers thereof, the Notes (and the Cash-settled Pre-paid

     Purchase Contracts) will be entitled to the benefits of such Indenture and

     will be valid and binding obligations of the Company, enforceable in

     accordance with their respective terms except as the enforceability thereof

     (i) may be limited by bankruptcy, insolvency, reorganization, liquidation,

     moratorium and other similar laws affecting creditors' rights generally and

     (ii) is subject to general principles of equity, regardless of whether such

     enforceability is considered at a proceeding in equity or at law.

 

          (i) The forms of Units under the Unit Agreement, including the forms

     of Warrants, Physically-settled Pre-paid Purchase Contracts and

 

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     Non-Pre-paid Purchase Contracts, have been duly authorized and established

     in conformity with the provisions of (i) in the case of such Units,

     Physically-settled Pre-paid Purchase Contracts and Non-Pre-paid Purchase

     Contracts, the Unit Agreement and (ii) in the case of Warrants, the Warrant

     Agreement. When such Units have been delivered to and duly paid for by the

     purchasers thereof and (A) any Physically-settled Pre-paid Purchase

     Contracts and Non-Pre-paid Purchase Contracts included in such Units have

     been executed by the Company and countersigned by the Unit Agent and (B)

     any Warrants included in such Units have been executed by the Company and

     countersigned by the Warrant Agent, such Units (including any such

     Physically-settled Pre-paid Purchase Contracts, Non-Pre-paid Purchase

     Contracts or Warrants contained therein) will be entitled to the benefits

     of the Unit Agreement and, in the case of the Warrants, the Warrant

     Agreement and will be valid and binding obligations of the Company,

     enforceable in accordance with their respective terms except as the

     enforceability thereof (i) may be limited by bankruptcy, insolvency,

     reorganization, liquidation, moratorium and other similar laws affecting

     creditors' rights generally and (ii) is subject to general principles of

     equity, regardless of whether such enforceability is considered at a

     proceeding in equity or at law.

 

          (j) When a Unit Agreement Without Holders' Obligations has been

     executed and delivered by the Company, the Units to be issued thereunder

     will have been duly authorized and when such Units have been established in

     conformity with the provisions of the Unit Agreement Without Holders'

     Obligations and delivered to and duly paid for by the purchasers thereof,

     and any Warrants included in such Units have been executed by the Company

     and countersigned by the Warrant Agent, such Units (including any such

     Warrants contained therein) will be entitled to the benefits of the Unit

     Agreement Without Holders' Obligations and will be valid and binding

     obligations of the Company, enforceable in accordance with their respective

     terms except as the enforceability thereof (i) may be limited by

     bankruptcy, insolvency, reorganization, liquidation, moratorium and other

     similar laws affecting creditors' rights generally and (ii) is subject to

     general principles of equity, regardless of whether such enforceability is

     considered at a proceeding in equity or at law.

 

          (k) The execution and delivery by the Company of this Agreement, the

     Notes and Pre-paid Purchase Contracts (whether issued alone or as part of a

     Unit), the Units (including any Purchase Contracts and Warrants included

     therein), the Indentures, the Unit Agreement, any Unit Agreement Without

     Holders' Obligations, the Warrant Agreement and any applicable Written

     Notes Terms Agreement or Written Units Terms Agreement and the performance

     by the Company of its obligations under this Agreement, the Notes, the

     Pre-paid Purchase Contracts, the

 

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     Units (including any Purchase Contracts or Warrants included therein), the

     Indentures, the Unit Agreement, any Unit Agreement Without Holders'

     Obligations, the Warrant Agreement and any applicable Notes Terms Agreement

     or Units Terms Agreement will not contravene any provision of applicable

     law or the certificate of incorporation or by-laws of the Company or any

     agreement or other instrument binding upon the Company or any of its

     subsidiaries that is material to the Company and its consolidated

     subsidiaries, taken as a whole, or any judgment, order or decree of any

     governmental body, agency or court having jurisdiction over the Company or

     any of its consolidated subsidiaries, and no consent, approval,

     authorization or order of, or qualification with, any governmental body or

     agency is required for the performance by the Company of its obligations

     under this Agreement, the Notes, the Pre-paid Purchase Contracts, the Units

     (including any Purchase Contracts or Warrants included therein), the

     Indentures, the Unit Agreement, any Unit Agreement Without Holders'

     Obligations, the Warrant Agreement and any applicable Notes Terms Agreement

     or Units Terms Agreement, except such as may be required by the securities

     or Blue Sky laws of the various states in connection with the offer and

     sale of the Program Securities; provided, however, that no representation

     is made or warranty given as to whether the purchase of the Program

     Securities constitutes a "prohibited transaction" under Section 406 of the

     Employee Retirement Income Security Act of 1974, as amended, or Section

     4975 of the Internal Revenue Code of 1986, as amended.

 

          (l) There has not occurred any material adverse change, or any

     development involving a prospective material adverse change, in the

     condition, financial or otherwise, or in the earnings, business or

     operations of the Company and its subsidiaries, taken as a whole, from that

     set forth in the Prospectus.

 

          (m) There are no legal or governmental proceedings pending or

     threatened to which the Company or any of its consolidated subsidiaries is

     a party or to which any of the properties of the Company or any of its

     consolidated subsidiaries is subject that are required to be described in

     the Registration Statement or the Prospectus and are not so described or

     any statutes, regulations, contracts or other documents that are required

     to be described in the Registration Statement or the Prospectus or to be

     filed or incorporated by reference as exhibits to the Registration

     Statement that are not described, filed or incorporated as required.

 

          (n) Each of the Company and its consolidated subsidiaries has all

     necessary consents, authorizations, approvals, orders, certificates and

     permits of and from, and has made all declarations and filings with, all

     federal, state, local and other governmental authorities, all

     self-regulatory

 

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     organizations and all courts and other tribunals, to own, lease, license

     and use its properties and assets and to conduct its business in the manner

     described in the Prospectus, except to the extent that the failure to

     obtain or file would not have a material adverse effect on the Company and

     its consolidated subsidiaries, taken as a whole.

 

          (o) Morgan Stanley DW Inc. is registered as a broker-dealer and

     investment adviser with the Commission, is registered with the Commodity

     Futures Trading Commission as a futures commission merchant and is a member

     of the New York Stock Exchange, Inc. and the National Association of

     Securities Dealers, Inc.

 

          (p) Morgan Stanley & Co. Incorporated is registered as a broker-dealer

     and investment adviser with the Commission, is registered with the

     Commodity Futures Trading Commission as a futures commission merchant and

     is a member of the New York Stock Exchange, Inc. and the National

     Association of Securities Dealers, Inc.

 

          (q) The Company is not, and after giving effect to the offering and

     sale of the Program Securities and the application of the proceeds thereof

     as described in the Prospectus, will not be required to register as, an

     "investment company" as such term is defined in the Investment Company Act

     of 1940, as amended.

 

         Notwithstanding the foregoing, it is understood and agreed that the

representations and warranties set forth in Section 1(b)(iii) and 1(b)(iv), 1(h)

(except as to due authorization of the Notes and Cash-settled Pre-paid Purchase

Contracts), 1(i) (except as to due authorization of the Units, Warrants,

Physically-settled Pre-paid Purchase Contracts and Non-Pre-paid Purchase

Contracts), 1(j) (except as to due authorization of the Units and Warrants) and

1(k), when made as of the Commencement Date, or as of any date on which you

solicit offers to purchase Program Securities, with respect to any Program

Securities the payments of principal or interest on which, or any other payments

with respect to which, will be determined by reference to one or more currency

exchange rates, commodity prices, securities of entities affiliated or

unaffiliated with the Company, baskets of such securities, equity indices or

other factors, shall be deemed not to address the application of the Commodity

Exchange Act, as amended, or the rules, regulations or interpretations of the

Commodity Futures Trading Commission.

 

     2. Solicitations as Agents; Purchases as Principals.

 

     (a) Solicitations as Agents. In connection with your actions as agents

hereunder, you agree to use reasonable efforts to solicit offers to purchase

Program Securities upon the terms and conditions set forth in the Prospectus as

then amended or supplemented.

 

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         The Company reserves the right, in its sole discretion, to instruct you

to suspend at any time, for any period of time or permanently, the solicitation

of offers to purchase Program Securities. Upon receipt of at least one business

day's prior notice from the Company, you will forthwith suspend solicitations of

offers to purchase Program Securities from the Company until such time as the

Company has advised you that such solicitation may be resumed. While such

solicitation is suspended, the Company shall not be required to deliver any

certificates, opinions or letters in accordance with Sections 5(a), 5(b) and

5(c); provided, however, that if the Registration Statement or Prospectus is

amended or supplemented during the period of suspension (other than by an

amendment or supplement providing solely for (i) in the case of Notes issued

alone or as part of a Unit, a change in the interest rates, redemption

provisions, amortization schedules or maturities offered on the Notes, (ii) in

the case of Units, a change in the exercise price, exercise date or period or

expiration of an underlying Warrant or a change in the settlement date or

purchase or sale price of an underlying Purchase Contract or (iii) for a change

you deem to be immaterial), you shall not be required to resume soliciting

offers to purchase Program Securities until the Company has delivered such

certificates, opinions and letters as you may request.

 

         The Company agrees to pay to you, as consideration for the sale of each

Program Security resulting from a solicitation made or an offer to purchase

received by you, a commission in the form of a discount from the purchase price

of such Program Security equal to between .125% and .750% (depending upon such

Note's maturity or, in the case of Units, any underlying Note's maturity or the

terms of the Units and of the securities comprised by such Units) of the

principal amount of such Note or, in the case of Units, the face amount of such

Unit (provided that the commission for Notes having, or Units including Notes or

other securities having, a maturity of 30 years or greater will be negotiated)

or such other discount as may be specified in the Prospectus Supplement relating

to such Note or Unit.

 

         You shall communicate to the Company, orally or in writing, each offer

to purchase Program Securities received by you as agent that in your judgment

should be considered by the Company. The Company shall have the sole right to

accept offers to purchase Program Securities and may reject any offer in whole

or in part. You shall have the right to reject any offer to purchase Program

Securities that you consider to be unacceptable, and any such rejection shall

not be deemed a breach of your agreements contained herein. The procedural

details relating to the issue and delivery of Program Securities sold by you as

agent and the payment therefor shall be as set forth in the Administrative

Procedures (as hereinafter defined).

 

(b) Purchases as Principals. Each sale of Program Securities to you as

principals shall be made in accordance with the terms of this Agreement. In

connection with each such sale, the Company will enter into a Notes Terms

 

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Agreement or Units Terms Agreement that will provide for the sale of such

Program Securities to and the purchase thereof by you. Each Notes Terms

Agreement or Units Terms Agreement will take the form of either (i) a written

agreement between you and the Company, which may be substantially in the form of

Exhibit A or Exhibit A-1 (as applicable) hereto (in the case of Notes, a

"Written Notes Terms Agreement," and in the case of Units, a "Written Units

Terms Agreement"), or (ii) an oral agreement between you and the Company

confirmed in writing by you to the Company.

 

         Your commitment to purchase Program Securities as principal pursuant to

a Notes Terms Agreement or Units Terms Agreement shall be deemed to have been

made on the basis of the representations and warranties of the Company herein

contained and shall be subject to the terms and conditions herein set forth.

Each (i) Notes Terms Agreement shall specify the principal amount of Notes to be

purchased by you pursuant thereto, the maturity date of such Notes, the price to

be paid to the Company for such Notes, the interest rate and interest rate

formula, if any, applicable to such Notes and any other terms of such Notes and

(ii) Units Terms Agreement shall specify (a) the information set forth in (i)

above with respect to any Notes issued as part of a Unit, (b) with respect to

any Warrants issued as part of a Unit, the exercise price, the exercise date or

period, the expiration date and any other terms of such Warrants and (c) with

respect to any Purchase Contracts issued as part of a Unit, the settlement date,

the purchase or sale price or any other terms of such Purchase Contracts. Each

such Notes Terms Agreement or Units Terms Agreement may also specify any

requirements for officers' certificates, opinions of counsel and letters from

the independent auditors of the Company pursuant to Section 4 hereof. A Notes

Terms Agreement and a Unit Terms Agreement may also specify certain provisions

relating to the reoffering of such Notes or Units, as the case may be, by you.

 

         Each Notes Terms Agreement and each Units Terms Agreement shall specify

the time and place of delivery of and payment for such Notes or Units, as the

case may be. Unless otherwise specified in a Notes Terms Agreement or a Units

Terms Agreement, the procedural details relating to the issue and delivery of

Notes or Units, as the case may be, purchased by you as principal and the

payment therefor shall be as set forth in the Administrative Procedures. Each

date of delivery of and payment for Program Securities to be purchased by you as

principal pursuant to a Notes Terms Agreement or a Units Terms Agreement, as the

case may be, is referred to herein as a "Settlement Date."

 

         Unless otherwise specified in a Notes Terms Agreement or a Units Terms

Agreement, if you are purchasing Program Securities as principal you may resell

such Program Securities to other dealers. Any such sales may be at a discount,

which shall not exceed the amount set forth in the Prospectus Supplement

relating to such Notes or Units.

 

                                       12

 

 

<PAGE>

 

 

     (c) Administrative Procedures. You and the Company agree to perform the

respective duties and obligations specifically provided to be performed in the

Global Medium-Term Notes, Series G and Series H and Global Units, Series G and

Series H, Administrative Procedures (attached hereto as Exhibit B) (the

"Administrative Procedures"), as amended from time to time. The Administrative

Procedures may be amended only by written agreement of the Company and you.

 

     (d) Delivery. The documents required to be delivered by Section 4 of this

Agreement as a condition precedent to your obligation to begin soliciting offers

to purchase Program Securities as agents of the Company shall be delivered at

the office of Davis Polk & Wardwell, your counsel, not later than 4:00 p.m., New

York City time, on the date hereof, or at such other time and/or place as you

and the Company may agree upon in writing, but in no event later than the day

prior to the earlier of (i) the date on which you begin soliciting offers to

purchase Program Securities and (ii) the first date on which the Company accepts

any offer by you to purchase Program Securities as principal. The date of

delivery of such documents is referred to herein as the "Commencement Date."

 

     3. Agreements. The Company agrees with you that:

 

          (a) Prior to the termination of the offering of the Program Securities

     pursuant to this Agreement or pursuant to any Notes Terms Agreement or

     Units Terms Agreement, the Company will not file any Prospectus Supplement

     relating to the Program Securities or any amendment to the Registration

     Statement relating to the Program Securities unless the Company has

     previously furnished to you a copy thereof for your review and will not

     file any such proposed supplement or amendment to which you reasonably

     object; provided, however, that the foregoing requirement shall not apply

     to any of the Company's periodic filings with the Commission required to be

     filed pursuant to Section 13(a), 13(c), 13(f), 14 or 15(d) of the Exchange

     Act, copies of which filings the Company will cause to be delivered to you

     promptly after being transmitted for filing with the Commission. Subject to

     the foregoing sentence, the Company will promptly cause each Prospectus

     Supplement to be filed with or transmitted for filing to the Commission in

     accordance with Rule 424(b) under the Securities Act. The Company will

     promptly advise you of the filing of any amendment or supplement to the

     Basic Prospectus, of the filing and effectiveness of any amendment to the

     Registration Statement, of any request by the Commission for any amendment

     to the Registration Statement or any amendment or supplement to the Basic

     Prospectus or for any additional information, (iv) of the issuance by the

     Commission of any stop order suspending the effectiveness of the

     Registration Statement or the institution or threatening of any proceeding

     for that purpose, (v) of the receipt by the Company of

 

                                       13

 

 

<PAGE>

 

 

     any notification with respect to the suspension of the qualification of the

     Program Securities for sale in any jurisdiction or the initiation or

     threatening of any proceeding for such purpose and (vi) of the issuance by

     any non-United States regulatory authority of any request for information

     relating to the Program Securities or suspension of the listing, trading

     and/or quotation of any Program Securities then admitted to listing,

     trading and/or quotation by any listing authority, stock exchange and/or

     quotation system. The Company will use its best efforts to prevent the

     issuance of any such stop order or notice of suspension of qualification or

     listing and, if issued, to obtain as soon as possible the withdrawal

     thereof. If the Basic Prospectus is amended or supplemented as a result of

     the filing under the Exchange Act of any document incorporated by reference

     in the Prospectus, you shall not be obligated to solicit offers to purchase

     Program Securities so long as you are not reasonably satisfied with such

     document.

 

          (b) If, at any time when a prospectus relating to the Program

     Securities is required to be delivered under the Securities Act or made

     available to purchasers of the Program Securities, any event occurs or

     condition exists as a result of which the Prospectus, as then amended or

     supplemented, would include an untrue statement of a material fact, or omit

     to state any material fact necessary to make the statements therein, in the

     light of the circumstances when the Prospectus, as then amended or

     supplemented, is delivered to a purchaser, not misleading, or if, in your

     opinion or in the opinion of the Company, it is necessary at any time to

     amend or supplement the Prospectus, as then amended or supplemented, to

     comply with applicable law, the Company will immediately notify you by

     telephone (with confirmation in writing) to suspend solicitation of offers

     to purchase Program Securities and, if so notified by the Company, you

     shall forthwith suspend such solicitation and cease using the Prospectus,

     as then amended or supplemented. If the Company shall decide to amend or

     supplement the Registration Statement or Prospectus, as then amended or

     supplemented, it shall so advise you promptly by telephone (with

     confirmation in writing) and, at its expense, shall prepare and cause to be

     filed promptly with the Commission an amendment or supplement to the

     Registration Statement or Prospectus, as then amended or supplemented,

     satisfactory in all respects to you, that will correct such statement or

     omission or effect such compliance and will supply such amended or

     supplemented Prospectus to you in such quantities as you may reasonably

     request. If any documents, certificates, opinions and letters furnished to

     you pursuant to paragraph (e) below and Sections 5(a), 5(b) and 5(c) in

     connection with the preparation and filing of such amendment or supplement

     are satisfactory in all respects to you, upon the filing with the

     Commission of such amendment or supplement to the Prospectus or upon the

     effectiveness of an amendment to the Registration Statement, you will

 

                                       14

 

 

<PAGE>

 

 

     resume the solicitation of offers to purchase Program Securities hereunder.

     Notwithstanding any other provision of this Section 3(b), until the

     distribution of any Program Securities you may own as principal has been

     completed, if any event described above in this paragraph (b) occurs, the

     Company will, at its own expense, forthwith prepare and cause to be filed

     promptly with the Commission an amendment or supplement to the Registration

     Statement or Prospectus, as then amended or supplemented, satisfactory in

     all respects to you, will supply such amended or supplemented Prospectus to

     you in such quantities as you may reasonably request and shall furnish to

     you pursuant to paragraph (e) below and Sections 5(a), 5(b) and 5(c) such

     documents, certificates, opinions and letters as you may request in

     connection with the preparation and filing of such amendment or supplement.

 

          (c) The Company will make generally available to its security holders

     and to you as soon as practicable earning statements that satisfy the

     provisions of Section 11(a) of the Securities Act and the rules and

     regulations of the Commission thereunder covering twelve month periods

     beginning, in each case, not later than the first day of the Company's

     fiscal quarter next following the "effective date" (as defined in Rule 158

     under the Securities Act) of the Registration Statement with respect to

     each sale of Program Securities. If such fiscal quarter is the first fiscal

     quarter of the Company's fiscal year, such earning statement shall be made

     available not later than 90 days after the close of the period covered

     thereby and in all other cases shall be made available not later than 45

     days after the close of the period covered thereby.

 

          (d) The Company will furnish in New York City, without charge, (i) to

     each Agent, a signed copy of the Registration Statement, including exhibits

     and all amendments thereto, and as many copies of the Prospectus, any

     documents incorporated by reference therein and any supplements and

     amendments thereto as you may reasonably request and (ii) to each Agent

     that purchases Program Securities pursuant to a Notes Terms Agreement or

      Units Terms Agreement or solicits an offer to purchase Program Securities

     that is accepted by the Company, prior to 10:00 a.m. New York City time on

     the business day next succeeding the date of such Notes Terms Agreement or

     Units Terms Agreement or the acceptance of such offer, as many copies of

     the Prospectus, as then amended or supplemented (including the Prospectus

     Supplement relating to the Program Securities to be purchased pursuant to

     such Notes Terms Agreement or Units Terms Agreement or accepted offer), as

     such Agent may reasonably request.

 

                                       15

 

 

<PAGE>

 

 

          (e) During the term of this Agreement, the Company shall furnish to

     you such relevant documents and certificates of officers of the Company

     relating to the business, operations and affairs of the Company, the

     Registration Statement, the Basic Prospectus, any amendments or supplements

     thereto, the Indentures, the Unit Agreement, any Unit Agreement Without

     Holders' Obligations, the Warrant Agreement, the Notes, the Units, the

     Warrants, the Purchase Contracts, this Agreement, the Administrative

     Procedures, any Notes Terms Agreement or Units Terms Agreement and the

     performance by the Company of its obligations hereunder or thereunder as

     you may from time to time reasonably request.

 

          (f) The Company shall notify you promptly in writing of any

     downgrading, or of its receipt of any notice of any intended or potential

     downgrading or of any review for possible change that does not indicate the

     direction of the possible change, in the rating accorded the Company or any

     of the Company's securities by any "nationally recognized statistical

     rating organization," as such term is defined for purposes of Rule

     436(g)(2) under the Securities Act.

 

          (g) The Company will, whether or not any sale of Program Securities is

     consummated, pay all expenses incident to the performance of its

     obligations under this Agreement and any Notes Terms Agreement or Units

     Terms Agreement, including: (i) the preparation and filing of the

     Registration Statement and the Prospectus and all amendments and

     supplements thereto, (ii) the preparation, issuance and delivery of the

     Program Securities, (iii) the fees and disbursements of the Company's

     counsel and accountants, of the Trustees and their counsel, of the Unit

     Agent and its counsel, of the Warrant Agent and its counsel and of the

     Principal Paying Agent and its counsel and any paying agents for the

     Program Securities appointed by the Company, (iv) the fees and expenses

     incurred with respect to the admission of the Series G Notes (and the

     Series G Units, if application for such admission is made) to the Official

     List of the UK Listing Authority and to trading on the London Stock

     Exchange or to listing, trading and/or quotation by any other listing

     authority, stock exchange and/or quotation system if so required by Section

     3(j), (v) the printing and delivery to you in quantities as hereinabove

     stated of copies of the Registration Statement and all amendments thereto

     and of the Prospectus and any amendments or supplements thereto, (vi) the

     printing and delivery to you of copies of the Indentures, the Unit

     Agreement, any Unit Agreement Without Holders' Obligations and the Warrant

     Agreement, (vii) any fees charged by rating agencies for the rating of the

     Program Securities, (viii) the fees and expenses, if any, incurred with

     respect to any filing with the National Association of Securities Dealers,

     Inc., the fees and disbursements of your counsel incurred in connection

     with the offering and sale of the

 

                                       16

 

 

<PAGE>

 

 

     Program Securities, including any opinions to be rendered by such counsel

     hereunder, and (x) any out-of-pocket expenses incurred by you; provided

     that any advertising expenses incurred by you shall have been approved by

     the Company.

 

          (h) During the period beginning on the date of any Notes Terms

     Agreement or Units Terms Agreement relating to either Notes or Units, as

     the case may be, and continuing to and including the Settlement Date with

     respect to such Notes Terms Agreement or Units Terms Agreement, the Company

     will not, without your prior consent, offer, sell, contract to sell or

     otherwise dispose of (i) in the case of Notes, any debt securities of the

     Company substantially similar to the Notes set forth in such Notes Terms

     Agreement (other than (A) the Notes that are to be sold pursuant to such

     Notes Terms Agreement, (B) Notes previously agreed to be sold by the

     Company and (C) commercial paper issued in the ordinary course of business)

     or (ii) in the case of Units, any securities substantially similar to such

     Units (other than (A) the Units that are sold pursuant to such Units Terms

     Agreement or (B) Units previously agreed to be sold by the Company), in

     each case, except as may otherwise be provided in the applicable Notes

     Terms Agreement or Units Terms Agreement.

 

          (i) The Company will indemnify and hold you harmless against any

     documentary, stamp or similar transfer or issue tax, including any interest

     and penalties, on the issue of the Program Securities in accordance with

     the terms of this Agreement, on the execution and delivery of this

     Agreement, any Written Notes Terms Agreement or Written Units Terms

     Agreement and on the exchange of any temporary global Notes for definitive

     Notes or permanent global Notes, of any temporary global Units for

     definitive Units or permanent global Units, of any permanent global bearer

     Notes for definitive bearer Notes or of any permanent global bearer Units

     for definitive bearer Units, that are or may be required to be paid under

     the laws of the United Kingdom, the United States or any political

     subdivision or taxing authority thereof or therein.

 

          (j) In connection with any application to admit the Series G Notes or

     Series G Units to the Official List of the UK Listing Authority and to

     trading on the London Stock Exchange, the Company will furnish from time to

     time any and all documents, instruments, information and undertakings and

     publish all advertisements or other material that may be necessary in order

     to effect such listing and trading and will maintain such listing and

     trading until, (i) in the case of the Notes, none of the Series G Notes is

     outstanding, either as part of a Unit or otherwise, or until such time as

     payment of principal, premium, if any, and interest in respect of all the

     Series G Notes, whether issued alone or as part of a Unit, has been duly

     provided for, whichever is earlier and (ii) in the case of the Units,

 

                                       17

 

 

<PAGE>

 

 

     none of the Series G Units is outstanding; provided, however, that if the

     Company can no longer reasonably maintain such listing and trading,

     including, but not limited to, in circumstances where obtaining or the

     maintenance of such listing would require preparation of financial

     statements in accordance with accounting standards other than U.S. GAAP or

     where the proposed European Union Transparency Obligations Directive (the

     "Directive") is implemented in a manner that, in the Company's opinion, is

     burdensome, it will consider obtaining and maintaining the quotation for,

     or listing and trading of, the Series G Notes and Series G Units by such

     other listing authority, stock exchange and/or quotation system (in the

     case of a delisting in response to the Directive, outside the European

     Union) as you shall reasonably request. However, if such an alternative

     listing is not available to the Company or is, in the Company's opinion,

     burdensome, an alternative listing for the Series G Notes and Series G

     Units need not be considered by the Company. In addition, for so long as

     the Series G Notes and Series G Units are admitted to listing, trading

     and/or quotation by a listing authority, stock exchange and/or quotation

     system, and such listing authority, stock exchange and/or quotation system

     so requires, the Company will maintain in London, or in such other place as

     the Series G Notes and Series G Units are listed (if the Series G Notes and

     Series G Units are no longer listed on the London Stock Exchange), a paying

     agent in respect of the Series G Notes or Series G Units, as required.

 

          (k) In respect of any Notes which have a maturity of less than one

     year where either (a) the issue proceeds of such Notes are received by the

     Company in the United Kingdom or (b) the activity of issuing such Notes is

     carried on from an establishment maintained by the Company in the United

     Kingdom, the Company will issue such Notes only if the following conditions

     apply (or the Notes can otherwise be issued without contravention of

     Section 19 of the FSMA): (i) you represent, warrant and agree in the terms

     relating to the Notes set out in Section 7(b)(v); and (ii) the redemption

     value of each such Note is not less than (pound)100,000 (or an amount of

     equivalent value denominated wholly or partly in a currency other than

     sterling), and no part of any Note may be transferred unless the redemption

     value of that part is not less than (pound)100,000 (or such an equivalent

     amount).

 

     4. Conditions of the Obligations of the Agents. Your obligation to solicit

offers to purchase Program Securities as agents of the Company, your obligation

to purchase Program Securities as principals pursuant to any Notes Terms

Agreement or Units Terms Agreement and the obligation of any other purchaser to

purchase Program Securities will be subject to the accuracy of the

representations and warranties on the part of the Company herein, to the

accuracy of the statements of the Company's officers made in each certificate

furnished

 

 

                                       18

<PAGE>

 

 

pursuant to the provisions hereof and to the performance and observance by the

Company of all covenants and agreements herein contained on its part to be

performed and observed (in the case of your obligation to solicit offers to

purchase Program Securities, at the time of such solicitation, and, in the case

of your or any other purchaser's obligation to purchase Program Securities, at

the time the Company accepts the offer to purchase such Program Securities and

at the time of issuance and delivery) and (in each case) to the following

additional conditions precedent when and as specified:

 

          (a) Prior to such solicitation or purchase, as the case may be:

 

               (i) there shall not have occurred any change, or any development

          involving a prospective change, in the condition, financial or

          otherwise, or in the earnings, business or operations of the Company

          and its subsidiaries, taken as a whole, from that set forth in the

          Prospectus, as amended or supplemented at the time of such

          solicitation or at the time such offer to purchase was made, that, in

          your judgment, is material and adverse and that makes it, in your

          judgment, impracticable to market the Program Securities on the terms

          and in the manner contemplated by the Prospectus, as so amended or

          supplemented;

 

               (ii) there shall not have occurred such a change in national or

          international financial, political or economic conditions or currency

          exchange rates or exchange controls as would in your view be likely to

          prejudice materially the success of the offering and distribution of

          the Program Securities or dealings in the Program Securities in the

          secondary market; and

 

               (iii) there shall not have occurred any downgrading, nor shall

          any notice have been given of any intended or potential downgrading or

          of any review for a possible change that does not indicate the

          direction of the possible change, in the rating accorded the Company

          or any of the Company's securities by any "nationally recognized

          statistical rating organization," as such term is defined for purposes

          of Rule 436(g)(2) under the Securities Act;

 

(A) except, in each case described in paragraph (i), (ii) or (iii) above, as

disclosed to you in writing by the Company prior to such solicitation or, in the

case of a purchase of Program Securities, before the offer to purchase such

Program Securities was made or (B) unless in each case described in (ii) above,

the relevant event shall have occurred and been known to you prior to such

solicitation or, in the case of a purchase of Program Securities, before the

offer to purchase such Program Securities was made.

 

 

                                       19

<PAGE>

 

 

     (b) On the Commencement Date and, if called for by any Notes Terms

Agreement or Units Terms Agreement, on the corresponding Settlement Date, you

shall have received:

 

          (i) The opinion, dated as of such date, of Sidley Austin Brown & Wood

     LLP, counsel to the Company, or of other counsel satisfactory to you and

     who may be an officer of the Company, to the following effect that:

 

               (A) the Company has been duly incorporated, is validly existing

          as a corporation in good standing under the laws of the State of

          Delaware, has the corporate power and authority to own its property

          and to conduct its business as described in the Prospectus, as amended

          or supplemented, and is duly qualified to transact business and is in

           good standing in each jurisdiction in which the conduct of its

          business or its ownership or leasing of property requires such

          qualification, except to the extent that the failure to be so

          qualified or be in good standing would not have a material adverse

          effect on the Company and its consolidated subsidiaries, taken as a

          whole;

 

               (B) each of Morgan Stanley DW Inc., Discover Bank, Morgan Stanley

          & Co. Incorporated and Morgan Stanley International Holdings Inc.

          (each a "Material Subsidiary") has been duly incorporated, is validly

          existing as a corporation in good standing under the laws of the

          jurisdiction of its incorporation, has the corporate power and

          authority to own its property and to conduct its business as described

          in the Prospectus, as amended or supplemented, and is duly qualified

          to transact business and is in good standing in each jurisdiction in

          which the conduct of its business or its ownership or leasing of

          property requires such qualification, except to the extent that the

          failure to be so qualified or be in good standing would not have a

          material adverse effect on the Company and its consolidated

          subsidiaries, taken as a whole;

 

               (C) each of the Company and its Material Subsidiaries has all

          necessary consents, authorizations, approvals, orders, certificates

          and permits of and from, and has made all declarations and filings

          with, all federal, state, local and other governmental authorities,

          all self-regulatory organizations and all courts and other

 

 

                                       20

<PAGE>

 

 

           tribunals, to own, lease, license and use its properties and assets

          and to conduct its business in the manner described in the Prospectus,

          as amended or supplemented, except to the extent that the failure to

          obtain or file would not have a material adverse effect on the Company

          and its consolidated subsidiaries, taken as a whole;

 

               (D) each of this Agreement and any applicable Written Notes Terms

          Agreement or Written Units Terms Agreement has been duly authorized,

          executed and delivered by the Company;

 

               (E) each Indenture has been duly qualified under the Trust

          Indenture Act and each of the Senior Indenture, the Subordinated

          Indenture, the Unit Agreement and the Warrant Agreement has been duly

          authorized, executed and delivered by the Company and is a valid and

          binding agreement of the Company, enforceable in accordance with its

          terms except as the enforceability thereof (i) may be limited by

          bankruptcy, insolvency, reorganization, liquidation, moratorium and

          other similar laws affecting creditors' rights generally and (ii) is

          subject to general principles of equity, regardless of whether such

          enforceability is considered at a proceeding in equity or at law;

 

               (F) the Unit Agreement Without Holders' Obligations, if any, has

          been duly authorized, executed and delivered by the Company and is a

          valid and binding agreement of the Company, enforceable in accordance

          with its terms except as the enforceability thereof (i) may be limited

          by bankruptcy, insolvency, reorganization, liquidation, moratorium and

          other similar laws affecting creditors' rights generally and (ii) is

          subject to general principles of equity, regardless of whether such

          enforceability is considered at a proceeding in equity or at law;

 

               (G) the forms of Notes (including the form of Cash-settled

          Pre-paid Purchase Contracts), whether issued alone or as part of a

          Unit, have been duly authorized and established in conformity with the

          provisions of the relevant Indenture and, if the Notes and the

           Cash-settled Pre-paid Purchase Contracts had been executed by the

          Company and authenticated by the

 

 

                                       21

<PAGE>

 

 

          relevant Trustee or its duly appointed agent in accordance with the

          provisions of the relevant Indenture and delivered to and duly paid

          for by the purchasers thereof on the date of such opinion, such Notes

          and the Cash-settled Pre-paid Purchase Contracts would be entitled to

          the benefits of such Indenture and would be valid and binding

          obligations of the Company, enforceable in accordance with their

          respective terms except as the enforceability thereof (i) may be

          limited by bankruptcy, insolvency, reorganization, liquidation,

          moratorium and other similar laws affecting creditors' rights

          generally and (ii) is subject to general principles of equity,

          regardless of whether such enforceability is considered at a

          proceeding in equity or at law;

 

               (H) the forms of Units under the Unit Agreement, including the

          forms of Warrants, Physically-settled Pre-paid Purchase Contracts and

          Non-Pre-paid Purchase Contracts, have been duly authorized and

          established in conformity with the provisions of (i) in the case of

          Units under the Unit Agreement, Physically-settled Pre-paid Purchase

          Contracts and Non-Pre-paid Purchase Contracts, the Unit Agreement and

          (ii) in the case of the Warrants, the Warrant Agreement. If such Units

          (including the Warrants, the Physically-settled Pre-paid Purchase

          Contracts and the Non-Pre-paid Purchase Contracts) had been delivered

          to and duly paid for by the purchasers thereof (and any Purchase

          Contracts included therein had been executed by the Company and

          countersigned by the Unit Agent and any Warrants included therein had

          been executed by the Company and countersigned by the Warrant Agent)

          on the date of such opinion, such Units (including the

          Physically-settled Pre-paid Purchase Contracts, the Non-pre-paid

          Purchase Contracts and the Warrants contained therein) would be

          entitled to the benefits of the Unit Agreement and, in the case of the

          Warrants, the Warrant Agreement, and would be valid and binding

          obligations of the Company, enforceable in accordance with their

          respective terms except as the enforceability thereof (i) may be

          limited by bankruptcy, insolvency, reorganization, liquidation,

          moratorium and other similar laws affecting creditors' rights

          generally and (ii) is subject to general principles of equity,

          regardless of whether such enforceability is considered at a

          proceeding in equity or at law;

 

 

                                       22

<PAGE>

 

 

               (I) the Units under the Unit Agreement Without Holders'

          Obligations have been duly authorized (and the forms of any Warrants

          included therein have been duly authorized and established in

          conformity with the provisions of the Warrant Agreement), and if such

          Units (including any such Warrants included therein) had been

          delivered to and duly paid for by the purchasers thereof (and any

          Warrants included therein had been executed by the Company and

          countersigned by the Warrant Agent) on the date of such opinion, such

          Units (including the Warrants contained therein) would be entitled to

          the benefits of the Unit Agreement Without Holders' Obligations and in

          the case of the Warrants, the Warrant Agreement, and would be valid

          and binding obligations of the Company, enforceable in accordance with

          their respective terms except as the enforceability thereof (i) may be

          limited by bankruptcy, insolvency, reorganization, liquidation,

          moratorium and other similar laws affecting creditors' rights

          generally and (ii) is subject to general principles of equity,

          regardless of whether such enforceability is considered at a

          proceeding in equity or at law;

 

               (J) the execution and delivery by the Company of the Notes and

          Cash-settled Pre-paid Purchase Contracts (whether issued alone or as

          part of a Unit), the Units (including any Purchase Contract or Warrant

          included therein), the Indentures, the Unit Agreement, any Unit

           Agreement Without Holders' Obligations, the Warrant Agreement and any

          applicable Written Notes Terms Agreement or Written Units Terms

          Agreement and the performance by the Company of its obligations under

          this Agreement, the Notes, the Units, the Indentures, the Unit

          Agreement, any Unit Agreement Without Holders' Obligations, the

          Warrant Agreement and any applicable Notes Terms Agreement or Units

          Terms Agreement will not contravene any provision of applicable law or

          the certificate of incorporation or by-laws of the Company or, to the

          best of such counsel's knowledge, any agreement or other instrument

          binding upon the Company or any of its subsidiaries that is material

          to the Company and its consolidated subsidiaries, taken as a whole,

          or, to the best of such counsel's knowledge, any judgment, order or

          decree of any U.S. governmental body, agency or court having

          jurisdiction

 

                                       23

 

 

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          over the Company or any of its consolidated subsidiaries, and no

          consent, approval, authorization or order of or qualification with any

          U.S. governmental body or agency is required for the performance by

          the Company of its obligations under this Agreement, the Notes, the

          Cash-settled Pre-paid Purchase Contracts, the Units (including any

          Purchase Contracts or Warrants included therein), the Indentures, the

          Unit Agreement, any Unit Agreement Without Holders' Obligations, the

          Warrant Agreement and any applicable Notes Terms Agreement or Units

          Terms Agreement; provided, however, that no opinion is expressed on

          whether the purchase of the Program Securities constitutes a

          "prohibited transaction" under Section 406 of the Employee Retirement

          Income Security Act of 1974, as amended, or Section 4975 of the

          Internal Revenue Code of 1986, as amended;

 

               (K) the statements (1) in the Prospectus, as then amended or

          supplemented, under the captions "Description of Notes" (in the

          Prospectus Supplement), "Description of Debt Securities" (in the Basic

          Prospectus), "Description of Units" (in the Prospectus Supplement and

          in the Basic Prospectus), "Plan of Distribution" (in the Prospectus

          Supplement and in the Basic Prospectus), "Description of Purchase

          Contracts" (in the Basic Prospectus) and "Description of Warrants" (in

          the Basic Prospectus), (2) in the Registration Statement, as then

          amended or supplemented, under Item 15, (3) in "Item 3. Legal

          Proceedings" of the most recent annual report on Form 10-K

          incorporated by reference in the Prospectus and (4) in "Item 1. Legal

          Proceedings" of Part II of the quarterly reports on Form 10-Q, if any,

          filed since such annual report and incorporated by reference in the

           Prospectus, in each case insofar as such statements constitute

          summaries of the legal matters, documents or proceedings referred to

          therein, fairly present the information called for with respect to

          such legal matters, documents and proceedings and fairly summarize the

          matters referred to therein;

 

               (L) after due inquiry, such counsel does not know of any legal or

          governmental proceedings pending or threatened to which the Company or

           any of its consolidated subsidiaries is a party or to which any of the

          properties of the Company or any of its consolidated

 

 

                                       24

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          subsidiaries is subject that are required to be described in the

          Registration Statement or the Prospectus, as then amended or

          supplemented, and are not so described or of any U.S. federal or state

          statutes, regulations, contracts or other documents governed by U.S.

          federal or state law that are required to be described in the

          Registration Statement or the Prospectus, as then amended or

          supplemented, or to be filed or incorporated by reference as exhibits

          to such Registration Statement that are not described, filed or

          incorporated by reference as required;

 

               (M) the Company is not, and after giving effect to the offering

          and sale of the Program Securities and the application of the proceeds

          thereof as described in the Prospectus, will not be required to

          register as, an "investment company" as such term is defined in the

          Investment Company Act of 1940, as amended; and

 

               (N) such counsel (1) believes that each document, if any, filed

          pursuant to the Exchange Act and incorporated by reference in the

          Prospectus as then amended or supplemented (except as to financial

          statements and schedules and other financial and statistical data

          included therein, as to which such counsel need not express any

          belief) complied when so filed as to form in all material respects

          with the Exchange Act and the applicable rules and regulations of the

          Commission thereunder, (2) has no reason to believe that any part of

          the Registration Statement (except as to financial statements and

          schedules and other financial and statistical data included therein,

          as to which such counsel need not express any belief, and except for

          that part of the Registration Statement that constitutes the Forms T-1

          heretofore referred to), as then amended, if applicable, when such

          part became effective contained, and the Registration Statement

           (except as to financial statements and schedules and other financial

          and statistical data included therein, as to which such counsel need

          not express any belief, and except for the part of the Registration

          Statement that constitutes the Forms T-1) as of the date such opinion

          is delivered contains, any untrue statement of a material fact or

          omitted or omits to state a material fact required to be stated

          therein or necessary to make the statements therein not misleading,

          (3) believes that the Registration Statement and Prospectus, as then

 

 

                                       25

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          amended or supplemented, if applicable (except as to financial

          statements and schedules and other financial and statistical data

          included therein, as to which such counsel need not express any

          belief), complied as to form in all material respects with the

          Securities Act and the applicable rules and regulations of the

          Commission thereunder and (4) has no reason to believe that the

          Prospectus, as then amended or supplemented, if applicable (except as

          to financial statements and schedules and other financial and

          statistical data included therein, as to which such counsel need not

          express any belief), as of the date such opinion is delivered contains

          any untrue statement of a material fact or omits to state a material

          fact necessary in order to make the statements therein, in the light

          of the circumstances under which they were made, not misleading;

          provided that in the case of an opinion delivered on the Commencement

          Date or pursuant to Section 5(b), the opinion and belief set forth in

          clauses (3) and (4) above shall be deemed not to cover information

          concerning an offering of particular Notes or Units to the extent such

          information will be set forth in a supplement to the Basic Prospectus.

 

          (ii) The opinion, dated as of such date, of Davis Polk & Wardwell,

     your special counsel, covering the matters in subparagraphs (D), (E), (F),

     (G), (H), (I) and (K) (with respect to statements in the Prospectus, as

     then amended or supplemented, under the captions "Description of Notes" (in

     the Prospectus Supplement), "Description of Debt Securities" (in the Basic

     Prospectus), "Description of Units" (in the Prospectus Supplement and the

     Basic Prospectus), "Plan of Distribution" (in the Prospectus Supplement and

     in the Basic Prospectus), "Description of Purchase Contracts" (in the Basic

     Prospectus) and "Description of Warrants" (in the Basic Prospectus)) and

     clauses (2), (3) and (4) of subparagraph (N) in paragraph (b)(i) above.

 

         The opinions described in subparagraphs (F) and (I) need only be

contained in an opinion delivered on a Settlement Date related to an offering of

Units under a Unit Agreement Without Holders' Obligations to be executed on or

prior to such Settlement Date.

 

         Notwithstanding the foregoing, the opinions described in subparagraphs

(G) (except as to due authorization of the Notes and Cash-settled Pre-paid

Purchase Contracts), (H) (except as to due authorization of the Units, Warrants,

Physically-settled Pre-paid Purchase Contracts and Non-Pre-paid Purchase

 

 

                                       26

<PAGE>

 

 

Contracts), (I) (except as to due authorization of the Units and Warrants), (J),

(K)(1) and (N)(3) and (4) of paragraph (b)(i) above, when contained in an

opinion delivered on the Commencement Date or pursuant to Section 5(b), shall be

deemed not to address the application of the Commodity Exchange Act, as amended,

or the rules, regulations or interpretations of the Commodity Futures Trading

Commission to Program Securities the payments of principal or interest on which,

or any other payments with respect to which, will be determined by reference to

one or more currency exchange rates, commodity prices, securities of entities

affiliated or unaffiliated with the Company, baskets of such securities, equity

indices or other factors.

 

         With respect to subparagraph (N) of paragraph (b)(i) above, if such

opinion is given by counsel who is also an officer of the Company, such counsel

may state that his or her opinion and belief are based upon his or her

participation, or the participation of someone under his or her supervision, in

the preparation of the Registration Statement and Prospectus and any amendments

or supplements thereto and documents incorporated therein by reference and

review and discussion of the contents thereof, but are without independent check

or verification, except as specified. With respect to subparagraph (N) of

paragraph (b)(i) above, Davis Polk & Wardwell and, if Sidley Austin Brown & Wood

LLP is giving such opinion, Sidley Austin Brown & Wood LLP may state that their

opinion and belief are based upon their participation in the preparation of the

Registration Statement and Prospectus and any amendments or supplements thereto

(but not including documents incorporated therein by reference) and review and

discussion of the contents thereof (including documents incorporated therein by

reference), but are without independent check or verification, except as

specified.

 

                    (iii) The opinion, dated as of such date, of Sidley Austin

               Brown & Wood LLP, special counsel to the Company, to the effect

               that the statements set forth under the caption "United States

               Federal Taxation" in the Prospectus Supplement and under the

               caption "Forms of Securities-Limitations on Issuance of Bearer

               Securities" in the Basic Prospectus, insofar as such statements

               relate to statements of law or legal conclusions under the laws

               of the United States or matters of United States law, fairly

               present the information called for and fairly summarize the

               matters referred to therein.

 

         The opinion of Sidley Austin Brown & Wood LLP described in paragraph

(b)(iii) above and in paragraph (b)(i) above, if such opinion is given by Sidley

Austin Brown & Wood LLP, shall be rendered to you at the request of the Company

and shall so state therein.

 

 

                                       27

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          (c) On the Commencement Date and, if called for by any Notes Terms

     Agreement or Units Terms Agreement, on the corresponding Settlement Date,

     you shall have received a certificate, dated the Commencement Date or such

     Settlement Date, as the case may be, and signed by an executive officer of

     the Company to the effect set forth in subparagraph (a)(iii) above and to

     the effect that the representations and warranties of the Company contained

     in this Agreement are true and correct as of such date and that the Company

     has complied with all of the agreements and satisfied all of the conditions

     on its part to be performed or satisfied on or before such date.

 

The officer signing and delivering such certificate may rely upon the best of

his knowledge as to proceedings threatened.

 

          (d) On the Commencement Date and, if called for by any Notes Terms

     Agreement or Units Terms Agreement, on the corresponding Settlement Date,

     the Company's independent auditors shall have furnished to you a letter or

     letters, dated as of the Commencement Date or such Settlement Dat