MORGAN STANLEY CAPITAL TRUST VIII
(Fully and unconditionally guaranteed, to the extent described herein,
by Morgan Stanley)
April 19, 2007
To the Managers named in Schedule I hereto
for the Underwriters named in Schedule II hereto
Ladies and Gentlemen:
Morgan Stanley Capital Trust VIII, a statutory trust created under the Delaware Statutory Trust Act (the “Issuer Trust”), proposes to issue and sell to the underwriters named in Schedule II hereto (the “Underwriters”), for whom you are acting as managers (the “Managers”), the number of its capital securities identified in Schedule I hereto (the “Firm Capital Securities”). The Issuer Trust also proposes to issue and sell to the Underwriters not more than any additional number of Capital Securities identified in Schedule I hereto (the “Additional Capital Securities”) if and to the extent that you shall have determined to exercise, on behalf of the Underwriters, the right to purchase such Additional Capital Securities granted to the Underwriters herein. The Firm Capital Securities and the Additional Capital Securities are hereinafter collectively referred to as the “Capital Securities.” If the firm or firms listed in Schedule II hereto include only the Managers listed in Schedule I hereto, then the terms “Underwriters” and “Managers” as used herein shall each be deemed to refer to such firm or firms.
The Capital Securities will be guaranteed by Morgan Stanley, a Delaware corporation (the “Company”), to the extent described in the Time of Sale Prospectus (as defined below) with respect to distributions and amounts payable upon liquidation or redemption pursuant to a Capital Securities Guarantee Agreement, to be dated as of April 26, 2007, and executed and delivered by the Company and The Bank of New York, as trustee (the “Guarantee Trustee”), for the benefit of the holders from time to time of the Capital Securities (the “Guarantee”).
The Issuer Trust will use the proceeds from the sale of the Capital Securities and the sale of Common Securities (as defined below) to purchase from the Company an aggregate principal amount of its Junior Subordinated Deferrable Interest Debentures (the “Junior Subordinated Debentures”) equal to the aggregate liquidation amount of the Capital Securities and Common Securities. The Junior Subordinated Debentures will be issued under a Junior Subordinated Indenture dated as of October 12, 2006 between the Company and The Bank of New York, as trustee (the “Debt Securities Trustee”) (the “Junior Subordinated Debt Indenture”). The Company will be the holder of one hundred percent of the common securities representing
undivided beneficial interests in the assets of the Issuer Trust (the “Common Securities” and, together with the Capital Securities, the “Trust Securities”). The Issuer Trust has been created under Delaware law pursuant to the filing of a Certificate of Trust (the “Certificate of Trust”) with the Secretary of State of the State of Delaware and, at the time of issuance of Trust Securities, will be governed by an Amended and Restated Trust Agreement (the “Trust Agreement”) among the Company, as depositor, The Bank of New York, as Property Trustee (the “Property Trustee”), The Bank of New York (Delaware), as Delaware Trustee (the “Delaware Trustee”) (collectively, the “Issuer Trustees”), and the Administrators (as defined below) and the holders from time to time of the Trust Securities. The Company, as holder of the Common Securities of the Issuer Trust, has appointed the Issuer Trustees and two individuals who are employees or officers of or affiliated with the Company to act as administrators with respect to the Issuer Trust (the “Administrators”). The Bank of New York, as Property Trustee, will act as Indenture Trustee for the purposes of the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”).