
<PAGE>
 
                                                                    EXHIBIT 1.2



                           EQUITABLE RESOURCES, INC.

                                  $
                                   ----------

                          Medium-Term Notes, Series 
                                                    --

               Due from 9 months to [30] Years from Date of Issue

                             DISTRIBUTION AGREEMENT


                                                                       , 199
                                                            -----------     -

[Names and addresses of Agents]
 
- -----------------------------------------
- -----------------------------------------
- ----------------------------------------- 
 

Dear Sirs:

          Equitable Resources, Inc., a Pennsylvania corporation (the "Company"),
confirms its agreement with each of you with respect to the issue and sale from
time to time by the Company of its Medium-Term Notes, Series     due from 9
                                                             ---
months to [30] years from date of issue (the "Securities") in an aggregate
initial offering price of up to $           (or the equivalent thereof in one or
                                 ----------
more foreign currencies or composite currencies) [, as such amount shall be
reduced by the aggregate initial offering price of any other debt securities
issued by the Company, whether within or without the United States ("Other
Securities") pursuant to the registration statement referred to below,] and
agrees with each of you (individually, an "Agent", and collectively, the
"Agents", which term shall include any additional agents appointed pursuant to
Section 13 hereof) as set forth in this Agreement.  The Securities will be
issued under an indenture dated as of June    , 1996 (the "Indenture") between
                                           ---
the Company and Bank of Montreal Trust Company, a           , as trustee (the
                                                  ----------
"Trustee").  The Securities shall have the maturities, interest rates,
redemption provisions, if any, and other terms set forth in the Prospectus
referred to below as it may be amended or supplemented from time to time.  The
Securities will be issued, and the terms and rights thereof established, from
time to time by the Company in accordance with the Indenture.

          On the basis of the representations and warranties herein contained,
but subject to the terms and conditions stated herein and to the reservation by
the Company of the right to sell Securities directly to investors (other than
broker-dealers) on its own behalf, the Company hereby (i) appoints the Agents as
the exclusive agents of the Company for the purpose of soliciting and receiving
offers to purchase Securities from the Company by others pursuant to Section
2(a)
<PAGE>
 
hereof and (ii) agrees that, except as otherwise contemplated herein, whenever
it determines to sell Securities directly to any Agent as principal, it will
enter into a separate agreement (each such agreement a "Terms Agreement"),
substantially in the form of Exhibit A hereto, relating to such sale in
accordance with Section 2(b) hereof.

          The Company has prepared and filed two registration statements on Form
S-3 (Nos. 33-53,703 and 33-00,000) in respect of the Securities with the
Securities and Exchange Commission (the "Commission") in accordance with the
provisions of the Securities Act of 1933, as amended, and the rules and
regulations of the Commission thereunder (collectively, the "Securities Act").
The Company also has filed with, or proposes to file with, the Commission
pursuant to Rule 424 under the Securities Act supplements to the prospectus
included in those registration statements as of the date hereof that will
describe certain terms of the Securities.  Those registration statements,
including the exhibits thereto, as amended to the Commencement Date (as
hereinafter defined) are hereinafter referred to as the "Registration Statement"
and the prospectus in the form in which it appears in the Registration Statement
as of the date hereof is hereinafter referred to as the "Basic Prospectus".  The
Basic Prospectus as supplemented by the prospectus supplement or supplements
(each, a "Prospectus Supplement") specifically relating to the Securities in the
form filed with, or transmitted for filing to, the Commission pursuant to Rule
424 under the Securities Act is hereinafter referred to as the "Prospectus".
Any reference in this Agreement to the Registration Statement, the Basic
Prospectus, any preliminary form of the Prospectus (a "preliminary prospectus")
previously filed with the Commission pursuant to Rule 424 or the Prospectus
shall be deemed to refer to and include the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Securities Act which were
filed under the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission thereunder (collectively, the "Exchange Act") on
or before the date of this Agreement or the date of the Basic Prospectus, any
preliminary prospectus or the Prospectus, as the case may be; and any reference
to "amend", "amendment" or "supplement" with respect to the Registration
Statement, the Basic Prospectus, any preliminary prospectus or the Prospectus,
including any supplement to the Prospectus that sets forth only the terms of a
particular issue of the Securities (a "Pricing Supplement"), shall be deemed to
refer to and include any documents filed under the Exchange Act after the date
of this Agreement, or the date of the Basic Prospectus, any preliminary
prospectus or the Prospectus, as the case may be, which are deemed to be
incorporated by reference therein.

          1.  Representations.  The Company represents and warrants to, and
agrees with, each Agent as of the Commencement Date, as of each date on which
the Company accepts an offer to purchase Securities (including any purchase by
an Agent as principal pursuant to a Terms Agreement or otherwise), as of each
date the Company issues and sells 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 and warranties 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 been declared effective by the
     Commission under the Securities Act; no stop order suspending the
     effectiveness of the Registration Statement has been issued and no
     proceeding for that purpose has been instituted or, to the knowledge of the
     Company, threatened by the Commission; and the Registration Statement and
     Prospectus (as amended or supplemented if the Company shall have

                                      -2-
<PAGE>
 
     furnished any amendments or supplements thereto) comply, or will comply, as
     the case may be, in all material respects with the Securities Act and the
     Trust Indenture Act of 1939, as amended, and the rules and regulations of
     the Commission thereunder (collectively, the "Trust Indenture Act"), and do
     not and will not, as of the applicable effective date as to the
     Registration Statement and any amendment thereto and as of the date of the
     Prospectus and any amendment or supplement thereto, contain any untrue
     statement of a material fact or omit to state any material fact required to
     be stated therein or necessary to make the statements therein, in the light
     of the circumstances under which they were made, not misleading; except
     that the foregoing representations and warranties shall not apply to (i)
     statements or omissions in the Registration Statement or the Prospectus
     made in reliance upon and in conformity with information relating to any
     Agent furnished to the Company in writing by such Agent expressly for use
     therein, and (ii) that part of the Registration Statement which constitutes
     the Statement of Eligibility and Qualification (Form T-1) under the Trust
     Indenture Act of the Trustee;

          (b) The documents incorporated by reference in the Prospectus, when
     they became effective or were filed with the Commission, as the case may
     be, conformed in all material respects to the requirements of the
     Securities Act or the Exchange Act, as applicable, and none of such
     documents contained an untrue statement of a material fact or omitted to
     state a material fact required to be stated therein or necessary to make
     the statements therein, in the light of the circumstances under which they
     were made, not misleading; and any further documents so filed and
     incorporated by reference in the Prospectus, or any further amendment or
     supplement thereto, when such documents become effective or are filed with
     the Commission, as the case may be, will conform in all material respects
     to the requirements of the Securities Act or the Exchange Act, as
     applicable, and will not contain an 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, in the light of the circumstances under which
     they are made, not misleading;

          (c) The financial statements, and the related notes thereto, included
     or incorporated by reference in the Registration Statement and the
     Prospectus present fairly the consolidated financial position of the
     Company and its consolidated subsidiaries as of the dates indicated and the
     results of their operations and the changes in their consolidated cash
     flows for the periods specified; said financial statements have been
     prepared in conformity with generally accepted accounting principles
     applied on a consistent basis, and the supporting schedules included or
     incorporated by reference in the Registration Statement present fairly the
     information required to be stated therein[; and the pro forma financial
     information, and the related notes thereto, if any, included or
     incorporated by reference in the Registration Statement and the Prospectus
     has been prepared in accordance with the applicable requirements of the
     Securities Act and the Exchange Act, as applicable, and is based upon good
     faith estimates and assumptions believed by the Company to be reasonable];

          (d) Since the respective dates as of which information is given in the
     Registration Statement and the Prospectus, there has not been any change in
     the capital stock or long-term debt of the Company or any of its
     subsidiaries other than pursuant to the conversion of convertible
     securities or the exercise of stock options, in either case, set forth in
     the most recent financial statements of the Company included or
     incorporated in

                                      -3-
<PAGE>
 
     the Prospectus, or any material adverse change, or any development
     involving a prospective material adverse change, in or affecting the
     general affairs, business, prospects, management, financial position,
     stockholders' equity or results of operations of the Company and its
     subsidiaries, taken as a whole, otherwise than as set forth or contemplated
     in the Prospectus; and except as set forth or contemplated in the
     Prospectus neither the Company nor any of its subsidiaries has entered into
     any transaction or agreement (whether or not in the ordinary course of
     business) material to the Company and its subsidiaries taken as a whole;

          (e) The Company has been duly incorporated and is validly existing as
     a corporation in good standing under the laws of its jurisdiction of
     incorporation, with power and authority (corporate and other) to own its
     properties and conduct its business as described in the Prospectus, and has
     been duly qualified as a foreign corporation for the transaction of
     business and is in good standing under the laws of each other jurisdiction
     in which it owns or leases properties, or conducts any business, so as to
     require such qualification, other than where the failure to be so qualified
     or in good standing would not have a material adverse effect on the Company
     and its subsidiaries taken as a whole;

          (f) Each of the Company's subsidiaries has been duly incorporated and
     is validly existing as a corporation under the laws of its jurisdiction of
     incorporation, with power and authority (corporate and other) to own its
     properties and conduct its business as described in the Prospectus, and has
     been duly qualified as a foreign corporation for the transaction of
     business and is in good standing under the laws of each jurisdiction in
     which it owns or leases properties or conducts any business so as to
     require such qualification, other than where the failure to be so qualified
     or in good standing would not have a material adverse effect on the Company
     and its subsidiaries taken as a whole; and all the outstanding shares of
     capital stock of each subsidiary of the Company have been duly authorized
     and validly issued, are fully-paid and non-assessable, and (except in the
     case of foreign subsidiaries, for directors' qualifying shares) are owned
     by the Company, directly or indirectly, free and clear of all liens,
     encumbrances, security interests and claims;

          (g) Each of this Agreement and any applicable Terms Agreement has been
     duly authorized, executed and delivered by the Company and constitutes the
     valid and binding agreement of the Company, except as rights to indemnity
     and contribution hereunder or thereunder may be limited by applicable law;

          (h) The Indenture has been duly qualified under the Trust Indenture
     Act and 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 (i) the enforceability thereof may be limited by
     bankruptcy, insolvency or similar laws affecting creditors' rights
     generally and (ii) rights of acceleration and the availability of equitable
     remedies may be limited by equitable principles of general applicability;
     and the Indenture (including any amendments and supplements thereto)
     conforms with all requirements of the Trust Indenture Act and the
     applicable rules and regulations promulgated thereunder by the Commission;

                                      -4-
<PAGE>
 
          (i) The Securities have been duly authorized and, when executed and
     authenticated in accordance with the Indenture and delivered to and duly
     paid for by the purchasers thereof, will be entitled to the benefits of the
     Indenture and will be valid and binding obligations of the Company,
     enforceable in accordance with their terms except as (i) the enforceability
     thereof may be limited by bankruptcy, insolvency or similar laws affecting
     creditor's rights generally and (ii) rights of acceleration and the
     availability of equitable remedies may be limited by equitable principles
     of general applicability; the Securities, when executed and authenticated
     in accordance with the Indenture and delivered to and duly paid for by the
     purchasers thereof, will rank pari passu with all Securities (as defined in
                                   ---- -----                                   
     the Indenture) issued and to be issued under the Indenture and all other
     unsecured debt of the Company which is not expressly subordinated; and the
     Securities and the Indenture will conform to the description thereof in the
     Prospectus and the applicable Pricing Supplement;

          (j) Neither the Company nor any of its subsidiaries is, or with the
     giving of notice or lapse of time or both would be, in violation of or in
     default under, its Restated Articles of Incorporation or By-Laws or any
     indenture, mortgage, deed of trust, loan agreement or other agreement or
     instrument to which the Company or any of its subsidiaries is a party or by
     which it or any of them or any of their respective properties is bound,
     except for violations and defaults which individually and in the aggregate
     are not material to the Company and its subsidiaries taken as a whole or to
     the holders of the Securities; the issue and sale of the Securities and the
     performance by the Company of all of its obligations under the Securities,
     the Indenture, this Agreement and any Terms Agreement and the consummation
     of the transactions herein and therein contemplated will not conflict with
     or result in a breach of any of the terms or provisions of, or constitute a
     default under, any indenture, mortgage, deed of trust, loan agreement or
     other agreement or instrument to which the Company or any of its
     subsidiaries is a party or by which the Company or any of its subsidiaries
     is bound or to which any of the property or assets of the Company or any of
     its subsidiaries is subject, nor will such action result in any violation
     of the provisions of the Restated Articles of Incorporation or By-Laws of
     the Company or any applicable law or statute or any order, rule or
     regulation of any court or governmental agency or body having jurisdiction
     over the Company, its subsidiaries or any of their respective properties;
     and no consent, approval, authorization, order, license, registration or
     qualification of or with any such court or governmental agency or body is
     required for the issue and sale of the Securities or the consummation by
     the Company of the other transactions contemplated by this Agreement, any
     applicable Terms Agreement or the Indenture, except such consents,
     approvals, authorizations, orders, licenses, registrations or
     qualifications as have been, or will have been prior to the Commencement
     Date, obtained under the Securities Act or the Trust Indenture Act and as
     may be required under state securities or Blue Sky laws in connection with
     the offer and sale of the Securities or from the Pennsylvania Public
     Utility Commission and the Kentucky Public Service Commission in connection
     with the issuance and sale of the Securities;

          (k) Other than as set forth or contemplated in the Prospectus, there
     are no legal or governmental investigations, actions, suits or proceedings
     pending or, to the knowledge of the Company, threatened against or
     affecting the Company or any of its subsidiaries or any of their respective
     properties or to which the Company or any of its subsidiaries is or may be
     a party or to which any property of the Company or any of its

                                      -5-
<PAGE>
 
     subsidiaries or to which the Company or any of its subsidiaries is or may
     be subject which, if determined adversely to the Company or any of its
     subsidiaries, could individually or in the aggregate reasonably be expected
     to have a material adverse effect on the general affairs, business,
     prospects, management, consolidated financial position, stockholders'
     equity or results of operations of the Company and its subsidiaries taken
     as a whole, and, to the best of the Company's knowledge, no such
     proceedings are threatened or contemplated by governmental authorities or
     threatened by others; and there are no statutes, regulations, contracts or
     other documents that are required to be filed as an exhibit to the
     Registration Statement or required to be described in the Registration
     Statement or the Prospectus which are not filed or described as required;

          (l) The Company and its subsidiaries have good and marketable title in
     fee simple to all items of real property and good and marketable title to
     all personal property owned by them, in each case free and clear of all
     liens, encumbrances and defects except such as are described or referred to
     in the Prospectus or such as do not materially affect the value of such
     property and do not interfere with the use made or proposed to be made of
     such property by the Company and its subsidiaries; and any real property
     and buildings held under lease by the Company and its subsidiaries are held
     by them under valid, existing and enforceable leases with such exceptions
     as are not material and do not interfere with the use made or proposed to
     be made of such property and buildings by the Company or its subsidiaries;

          (m) No relationship, direct or indirect, exists between or among the
     Company or any of its subsidiaries on the one hand, and the directors,
     officers, stockholders, customers or suppliers of the Company or any of its
     subsidiaries on the other hand, which is required by the Securities Act to
     be described in the Registration Statement and the Prospectus which is not
     so described;

          (n) The Company is not and, after giving effect to the offering and
     sale of the Securities, will not be an "investment company" or entity
     "controlled" by an "investment company", as such terms are defined in the
     Investment Company Act of 1940, as amended (the "Investment Company Act");

          (o) The Company has complied with all provisions of Section 517.075,
     Florida Statutes (Chapter 92-198, Laws of Florida) relating to doing
     business with the Government of Cuba or with any person or affiliate
     located in Cuba;

          (p) The Company and its subsidiaries have filed all federal, state,
     local and foreign tax returns which have been required to be filed and have
     paid all taxes shown thereon and all assessments received by them or any of
     them to the extent that such taxes have become due and are not being
     contested in good faith; and, except as disclosed in the Registration
     Statement and the Prospectus, there is no tax deficiency which has been or
     might reasonably be expected to be asserted or threatened against the
     Company or any of its subsidiaries;

          (q) Each of the Company and its subsidiaries owns, possesses or has
     obtained all licenses, permits, certificates, consents, orders, approvals
     and other authorizations from, and has made all declarations and filings
     with, all federal, state, local and other

                                      -6-
<PAGE>
 
     governmental authorities (including foreign regulatory agencies), all self-
     regulatory organizations and all courts and other tribunals, domestic or
     foreign, necessary to own or lease, as the case may be, and to operate its
     properties and to carry on its business as conducted as of the date hereof,
     except where the failure to so own or possess or to have so obtained or
     made would not, singly or in the aggregate, have a material adverse effect
     on the Company and its subsidiaries taken as a whole, and neither the
     Company nor any such subsidiary has received any actual notice of any
     proceeding relating to revocation or modification of any such license,
     permit, certificate, consent, order, approval or other authorization,
     except as described in the Registration Statement and the Prospectus; and
     each of the Company and its subsidiaries is in compliance with all laws and
     regulations relating to the conduct of its business as conducted as of the
     date hereof, except where the failure to be in compliance would not, singly
     or in the aggregate, have a material adverse effect on the Company and its
     subsidiaries taken as a whole;

          (r) The Company and its subsidiaries (i) are in compliance with any
     and all applicable foreign, federal, state and local laws and regulations
     relating to the protection of human health and safety, the environment or
     hazardous or toxic substances or wastes, pollutants or contaminants
     ("Environmental Laws"), (ii) have received all permits, licenses or other
     approvals required of them under applicable Environmental Laws to conduct
     their respective businesses, (iii) are in compliance with all terms and
     conditions of any such permit, license or approval, except where such
     noncompliance with Environmental Laws, failure to receive required permits,
     licenses or other approvals or failure to comply with the terms and
     conditions of such permits, licenses or approvals would not, singly or in
     the aggregate, have a material adverse effect on the Company and its
     subsidiaries, taken as a whole, and (iv) are not aware of any
     administrative or judicial action being contemplated by governmental
     authorities relating to Environmental Laws; neither the Company nor any of
     its subsidiaries are subject to any consent decree or compliance or
     administrative order issued pursuant to, or are the subject of any pending
     investigation or litigation under, applicable Environmental Laws except for
     such actions, decrees, orders or investigations which do not and are not
     reasonably expected to have a material adverse effect on, or cause material
     changes to, the general affairs, business, prospects, management, financial
     position, stockholders' equity or results of operations of the Company and
     its subsidiaries, taken as a whole; and neither the Company nor any of its
     subsidiaries is a party to a governmental proceeding arising under any
     Environmental Law which involves potential monetary sanctions, exclusive of
     interest and costs, of $100,000 or more;

          (s) In the ordinary course of its business, the Company reviews the
     effect of Environmental Laws on the business, operations and properties of
     the Company and its subsidiaries, in the course of which it identifies and
     evaluates associated costs and liabilities (including, without limitation,
     any capital or operating expenditures required for clean-up, closure of
     properties or compliance with Environmental Laws or any permit, license or
     approval, any related constraints on operating activities and any potential
     liabilities to third parties); and, on the basis of such review, the
     Company has reasonably concluded that such associated costs and liabilities
     would not, singly or in the aggregate, have a material adverse effect on
     the Company and its subsidiaries, taken as a whole;

                                      -7-
<PAGE>
 
          (t) There are no existing or, to the best knowledge of the Company,
     threatened labor disputes with the employees of the Company or any of its
     subsidiaries which are likely to have a material adverse effect on the
     Company and its subsidiaries taken as a whole;

          (u) Each employee benefit plan, within the meaning of Section 3(3) of
     the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
     that is maintained, administered or contributed to by the Company or any of
     its affiliates for employees or former employees of the Company and its
     affiliates has been maintained in compliance with its terms and the
     requirements of any applicable statutes, orders, rules and regulations,
     including but not limited to ERISA and the Internal Revenue Code of 1986,
     as amended (the "Code").  No prohibited transaction, within the meaning of
     Section 406 of ERISA or Section 4975 of the Code has occurred with respect
     to any such plan excluding transactions effected pursuant to a statutory or
     administrative exemption.  For each such plan which is subject to the
     funding rules of Section 412 of the Code or Section 302 of ERISA no
     "accumulated funding deficiency" as defined in Section 412 of the Code has
     been incurred, whether or not waived, and the fair market value of the
     assets of each such plan (excluding for these purposes accrued but unpaid
     contributions) exceeded the present value of all benefits accrued under
     such plan determined using reasonable actuarial assumptions; and

          (v) Immediately after any sale of Securities by the Company hereunder
     or under any applicable Terms Agreement, the aggregate amount of Securities
     that will have been issued and sold by the Company hereunder or under any
     Terms Agreement and of any debt securities of the Company (other than the
     Securities) that will have been issued and sold pursuant to the
     Registration Statement will not exceed the amount of debt securities
     registered under the Registration Statement.

          2.   Solicitations as Agent; Purchases as Principal.

          (a) Solicitations as Agent.  On the basis of the representations and
     warranties herein contained, but subject to the terms and conditions herein
     set forth, each of the Agents hereby severally and not jointly agrees, as
     agent of the Company, to use its reasonable efforts to solicit offers to
     purchase Securities from the Company upon the terms and conditions set
     forth in the Prospectus as amended or supplemented from time to time.  So
     long as this Agreement remains in effect with respect to any Agent, the
     Company shall not, without the consent of such Agent, solicit or accept
     offers to purchase, or sell, Securities or any other debt securities with a
     maturity at the time of original issuance of 9 months to [30] years except
     pursuant to this Agreement and any Terms Agreement or except pursuant to a
     private placement not constituting a public offering under the Securities
     Act or except in connection with a firm commitment underwriting pursuant to
     an underwriting agreement that does not provide for a continuous offering
     of medium-term debt securities.  However, the Company reserves the right to
     sell, and may solicit and accept offers to purchase, Securities directly on
     its own behalf to investors (other than broker-dealers).

               The Company reserves the right, in its sole discretion, to
     instruct the Agents to suspend at any time, for any period of time or
     permanently, the solicitation of

                                      -8-
<PAGE>
 
     offers to purchase Securities.  Upon receipt of at least one business day's
     prior notice from the Company, each Agent will suspend solicitation of
     offers to purchase Securities from the Company until such time as the
     Company has advised such Agent or Agents that such solicitation may be
     resumed.  During the period of time that such solicitation is suspended,
     the Company shall not be required to deliver any opinions, letters or
     certificates in accordance with Sections 4(i), 4(j) and 4(k) hereof;
     provided, 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 a change in the interest rates, redemption
     provisions, amortization schedules or maturities offered for Securities or
     for a change that the Agents deem to be immaterial), no Agent shall be
     required to resume soliciting offers to purchase Securities until the
     Company has delivered such opinions, letters and certificates in accordance
     with Sections 4(i), 4(j) and 4(k) hereof as such Agent may reasonably
     request.

               The Company agrees to pay each Agent, as consideration for the
     sale of each Security resulting from a solicitation made or an offer to
     purchase received by such Agent, a commission in the form of a discount
     from the purchase price of such Security in an amount equal to the
     following applicable percentage of the principal amount of such Security
     sold:

<TABLE>
<CAPTION> 

                                              Commission percentage
                                              of aggregate principal
     Range of Maturities                      amount of Securities sold

<S>                                           <C>
From 9 months to less than 1 year                      ._____%
From 1 year to less than 18 months                     ._____%
From 18 months to less than 2 years                    ._____%
From 2 years to less than 3 years                      ._____%
From 3 years to less than 4 years                      ._____%
From 4 years to less than 5 years                      ._____%
From 5 years to less than 6 years                      ._____%
From 6 years to less than 7 years                      ._____%
From 7 years to less than 10 years                     ._____%
From 10 years to less than 15 years                    ._____%
From 15 years to less than 20 years                    ._____%
20 years and more                                      ._____%

</TABLE>

               The Agents are authorized to solicit offers to purchase
     Securities only in the principal amount of $                   (or, in the
                                                 ------------------
     case of Securities not denominated in U.S. dollars, the equivalent thereof
     in the applicable foreign currency or composite currency, rounded down to
     the nearest 1,000 units of such foreign currency or composite currency) or
     any amount in excess thereof which is an integral multiple of
     $                (or, in the case of Securities not denominated in U.S.
      ---------------
     dollars, 1,000 units of such foreign currency or composite currency).  Each
     Agent shall communicate to the Company, orally or in writing, each offer to
     purchase Securities received by such Agent as agent that in its judgment
     should be considered by the Company.  The Company shall have the sole right
     to accept offers to purchase Securities and may reject any such offer in
     whole or in part.  Each Agent shall have the right, in its

                                      -9-
<PAGE>
 
     sole discretion, to reject any offer to purchase Securities, in whole or in
     part, that it considers to be unacceptable and any such rejection shall not
     be deemed a breach of its agreements herein contained.  The procedural
     details relating to the issue and delivery of Securities sold by an Agent
     as agent and the payment therefor are set forth in the Administrative
     Procedures (as hereinafter defined).

          (b) Purchase as Principal.  Each sale of Securities to any Agent as
     principal shall be made in accordance with the terms of this Agreement and
     (unless such Agent shall otherwise agree) a Terms Agreement which will
     provide for the sale of such Securities to, and the purchase thereof by,
     such Agent.  A Terms Agreement will be substantially in the form of Exhibit
     A hereto but may take the form of an exchange of any standard form of
     written telecommunication between an Agent and the Company and may also
     specify certain provisions relating to the reoffering of such Securities by
     such Agent.  The commitment of any Agent to purchase Securities as
     principal, whether pursuant to any Terms Agreement or otherwise, 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 set forth herein and in the applicable Terms Agreement.  Each
     agreement by an Agent to purchase Securities as principal (pursuant to a
     Terms Agreement or otherwise) shall specify the principal amount of
     Securities to be purchased by such Agent pursuant thereto, the price to be
     paid to the Company for such Securities, the maturity date of such
     Securities, the interest rate or interest rate basis, if any, applicable to
     such Securities, any other terms of such Securities, the time and date and
     place of delivery of and payment for such Securities (the time and date of
     any and each such delivery and payment, being a "Time of Delivery"), any
     provisions relating to rights of, and default by, underwriters acting
     together with such Agent in the reoffering of Securities, and shall also
     specify any requirements for opinions of counsel, accountants' letters and
     officers' certificates pursuant to Section 4 hereof.  Unless otherwise
     specified in a Terms Agreement, the procedural details relating to the
     issue and delivery of Securities purchased by an Agent as principal and the
     payment therefor shall be set forth in the Administrative Procedures.

          (c) Obligations Several.  The Company acknowledges that the
     obligations of the Agents are several and not joint and, subject to the
     provisions of this Section 2, each Agent shall have complete discretion as
     to the manner in which it solicits purchasers for the Securities and as to
     the identity thereof.

          (d) Administrative Procedures.  The Agents and the Company agree to
     perform their respective duties and obligations specifically provided to be
     performed in the Medium-Term Notes Administrative Procedures (the
     "Administrative Procedures") attached hereto as Exhibit B, as the same may
     be amended from time to time.  The Administrative Procedures may be amended
     only by written agreement of the Company and the Agents.

          [(e)  Other Securities.  The Company agrees to notify each Agent of
     sales by the Company of Other Securities.]

          3.   Commencement Date.  The documents required to be delivered
pursuant to Section 6 hereof on the Commencement Date shall be delivered to the
Agents at the offices of

                                      -10-
<PAGE>
 
                            , New York, New York, at 11:00 a.m., New York City
- ----------------------------
time, on the date of this Agreement, which date and time of such delivery may be
postponed by agreement between the Agents and the Company but in no event shall
be later than the day prior to the earlier of the date on which solicitation of
offers to purchase Securities is commenced or the first date on which the
Company accepts an offer by any Agent to purchase Securities as principal (such
time and date being referred to herein as the "Commencement Date").

          4.   Covenants of the Company.  The Company covenants and agrees with
each Agent:

          (a)(i) To make no amendment or supplement to the Registration
     Statement or the Prospectus prior to the termination of the offering of the
     Securities pursuant to this Agreement or any Terms Agreement which shall be
     disapproved by any Agent after reasonable opportunity to comment thereon;
     provided, however, that the foregoing shall not apply to any of the
     Company's periodic filings with the Commission described in subsection
     (iii) below, copies of which filings the Company will cause to be delivered
     to the Agents promptly after their transmission to the Commission for
     filing; (ii), subject to the foregoing clause (i), promptly to 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 and to
     prepare, with respect to any Securities to be sold through or to any Agent
     pursuant to this Agreement, a Pricing Supplement with respect to such
     Securities in a form previously approved by such Agent and to file such
     Pricing Supplement in accordance with Rule 424(b) under the Securities Act;
     and (iii) promptly to file all reports and any definitive proxy or
     information statements required to be filed by the Company with the
     Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
     Act for so long as the delivery of a prospectus is required in connection
     with the offering or sale of Securities.  To advise each Agent (i) of the
     filing of any amendment or supplement to the Basic Prospectus or any
     amendment to the Registration Statement and of the effectiveness of any
     such amendment to the Registration Statement, (ii) of the issuance by the
     Commission of any stop order suspending the effectiveness of the
     Registration Statement or any order preventing or suspending the use of any
     prospectus relating to the Securities or the initiation or threatening of
     any proceeding for that purpose, or of any request by the Commission for
     any amendment or supplement of the Registration Statement or Prospectus or
     for additional information; and (iii) of the receipt by the Company of any
     notification with respect to any suspension of the qualification of the
     Securities for offering or sale in any jurisdiction or of the initiation or
     threatening of any proceeding for any such purpose.  To use its best
     efforts to prevent the issuance of any such stop order or of any such order
     preventing or suspending the use of any such prospectus or of any
     notification suspending any such qualification and, if issued, to use
     promptly its best efforts to obtain withdrawal thereof as soon as possible.
     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, no Agent shall be obligated to solicit offers to purchase
     Securities so long as it is not reasonably satisfied with such document.

          (b) To endeavor to qualify the Securities for offer and sale under the
     securities or Blue Sky laws of such jurisdictions as the Agents shall
     reasonably request and to continue such qualification in effect so long as
     reasonably required in connection with the

                                      -11-
<PAGE>
 
     distribution of the Securities and to pay all fees and expenses (including
     fees and disbursements of counsel to the Agents) reasonably incurred in
     connection with such qualification and in connection with the determination
     of the eligibility of the Securities for investment under the laws of such
     jurisdictions as any Agent may designate; provided, that the Company shall
     not be required to file a general consent to service of process or qualify
     to do business in any jurisdiction.

          (c) To furnish each Agent and counsel to the Agents, at the expense of
     the Company, a signed copy of the Registration Statement (as originally
     filed) and each amendment thereto, in each case including exhibits and
     documents incorporated by reference therein and, during the period
     mentioned in paragraph (d) below, to furnish each Agent as many copies of
     the Prospectus (including all amendments and supplements thereto) and
     documents incorporated by reference therein as such Agent may reasonably
     request.

          (d) If at any time when a prospectus relating to the Securities is
     required to be delivered under the Securities Act, any event shall occur 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 in order to make the statements therein, in the
     light of the circumstances when such Prospectus is delivered to a
     purchaser, not misleading, or, if in the opinion of the Agents or the
     Company, it is necessary at any time to amend or supplement the Prospectus
     to comply with law, to immediately notify the Agents by telephone (with
     confirmation in writing) and request each Agent (i) in its capacity as
     agent of the Company, to suspend solicitation of offers to purchase
     Securities from the Company (and, if so notified, such Agent shall cease
     such solicitations and cease using the Prospectus as soon as practicable,
     but in any event not later than one business day later); and (ii) to cease
     sales of any Securities such Agent may then own as principal.  If the
     Company shall decide to amend or supplement the Registration Statement or
     the Prospectus, as then amended or supplemented, to so advise each Agent
     promptly by telephone (with confirmation in writing) and, at its expense,
     to prepare and cause to be filed promptly with the Commission an amendment
     or supplement to the Registration Statement or the Prospectus, as then
     amended or supplemented, satisfactory in all respects to the Agents, that
     will correct such statement or omission or effect such compliance and to
     supply such amended or supplemented Prospectus to the Agents in such
     quantities as they may reasonably request.  If any such amendment or
     supplement and any documents, opinions, letters and certificates furnished
     to the Agents pursuant to Sections 4(e), 4(i), 4(j) and 4(k) hereof in
     connection with the preparation and filing of such amendment or supplement
     are satisfactory in all respects to the Agents, 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, the Agents
     shall resume the solicitation of offers to purchase Securities hereunder.
     Notwithstanding any other provision of this Section 4(d), until the
     distribution of any Securities any Agent may own as principal has been
     completed or in the event such Agent, in the opinion of its counsel, is
     otherwise required to deliver a prospectus in respect of a transaction in
     the Securities, if any event described in this Section 4(d) occurs the
     Company shall, at its own expense, promptly prepare and file with the
     Commission an amendment or supplement, satisfactory in all respects to such
     Agent, that will correct such statement or omission or effect such
     compliance, shall supply such amended or supplemented

                                      -12-
<PAGE>
 
     Prospectus to such Agent in such quantities as such Agent may reasonably
     request and shall furnish to such Agent pursuant to Sections 4(e), 4(i),
     4(j) and 4(k) hereof such documents, certificates, opinions and letters as
     it may request in connection with the preparation and filing of such
     amendment or supplement.

          (e) To furnish to the Agents during the term of this Agreement 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
     Indenture, the Securities, this Agreement, the Administrative Procedures,
     any applicable Terms Agreement and the performance by the Company of its
     obligations hereunder or thereunder as the Agents may from time to time
     reasonably request and to notify the Agents promptly in writing of any
     downgrading, or upon its receipt of any notice of (i) any intended or
     potential downgrading or (ii) any review or possible change that does not
     indicate an improvement in the rating accorded any securities of, or
     guaranteed by, the Company by any "nationally recognized statistical rating
     organization," as such term is defined for purposes of Rule 436(g)(2) under
     the Securities Act.

          (f) To make generally available to its security holders and to each
     Agent as soon as practicable earnings statements which satisfy the
     provisions of Section 11(a) of the Securities Act and Rule 158 of the
     Commission promulgated thereunder covering periods of at least twelve
     months beginning in each case with the first fiscal quarter of the Company
     occurring after the "effective date" (as defined in Rule 158) of the
     Registration Statement with respect to each sale of Securities.

          (g) Until the expiration of the fifth anniversary of the last sale of
     Securities in accordance with this Agreement, to furnish to each Agent
     copies of all reports or other communications (financial or other)
     furnished to holders of Securities and copies of any reports and financial
     statements furnished to or filed with the Commission or any national
     securities exchange.

          (h) From the date of any applicable Terms Agreement with an Agent or
     other agreement by such Agent to purchase Securities as principal and
     continuing to and including the business day following the related Time of
     Delivery, not to offer, sell, contract to sell or otherwise dispose of any
     debt securities of or guaranteed by the Company which are substantially
     similar to such Securities, without the prior written consent of such
     Agent.

          (i) Each time the Registration Statement or the Prospectus is amended
     or supplemented (other than by an amendment or supplement providing solely
     for a change in the interest rates, redemption provisions, amortization
     schedules or maturities offered on Securities or for a change the Agents
     deem to be immaterial) and each time the Company sells Securities to an
     Agent as principal pursuant to a Terms Agreement or other agreement and
     such Terms Agreement or other agreement requires the delivery of opinions
     under this Section 4(i) as a condition to the purchase of such Securities
     pursuant to such Terms Agreement or other agreement, to furnish or cause to
     be furnished forthwith to such Agent written opinions of the Chief Legal
     Officer of the Company and of Reed Smith Shaw & McClay or other counsel for
     the Company satisfactory to such

                                      -13-
<PAGE>
 
     Agent, dated the date of such amendment or supplement or the related Time
     of Delivery relating to such sale, as the case may be, in form satisfactory
     to such Agent, of the same tenor as the opinions referred to in Sections
     6(b) and 6(c) hereof but modified to relate to the Registration Statement
     and the Prospectus as amended and supplemented to the date of such
     opinions, or, in lieu of such opinions, counsel last furnishing such
     opinions may furnish to such Agent letters to the effect that such Agent
     may rely on the opinions of such counsel which were last furnished to such
     Agent to the same extent as though they were dated the date of such letters
     (except that the statements in such last opinions shall be deemed to relate
     to the Registration Statement and the Prospectus as amended or supplemented
     to the date of delivery of such letters).

          (j) Each time the Registration Statement or the Prospectus is amended
     or supplemented to include or incorporate amended or supplemented financial
     information and each time the Company sells Securities to such Agent as
     principal pursuant to a Terms Agreement or other agreement and such Terms
     Agreement or other agreement requires the delivery of a letter under this
     Section 4(j) as a condition to the purchase of Securities pursuant to such
     Terms Agreement or other agreement, to cause the independent certified
     public accountants who have certified the financial statements of the
     Company and its subsidiaries included or incorporated by reference in the
     Registration Statement forthwith to furnish such Agent a letter, dated the
     date of such amendment or supplement or the related Time of Delivery
     relating to such sale, as the case may be, in form satisfactory to such
     Agent, of the same tenor as the letter referred to in Section 6(e) hereof
     but modified to relate to the Registration Statement and the Prospectus as
     amended or supplemented to the date of such letter with such changes as may
     be necessary to reflect such amended or supplemented financial information
     included or incorporated by reference in the Registration Statement or the
     Prospectus as amended or supplemented; provided, however, that, with
     respect to any financial information or other matter, such letter may
     reconfirm as true and correct at such date, as though made at and as of
     such date, rather than repeat, statements with respect to such financial
     information or other matter made in the letter referred to in Section 6(e)
     hereof which was last furnished to such Agent.

          (k) Each time the Registration Statement or the Prospectus is amended
     or supplemented (other than by an amendment or supplement providing solely
     for a change in the interest rates, redemption provisions, amortization
     schedules or maturities offered on Securities or for a change the Agents
     deem to be immaterial), and each time the Company sells Securities to such
     Agent as principal pursuant to a Terms Agreement or other agreement and
     such Terms Agreement or other agreement requires the delivery of a
     certificate under this Section 4(k) as a condition to the purchase of
     Securities pursuant to such Terms Agreement or other agreement, to furnish
     or cause to be furnished forthwith to such Agent a certificate signed by an
     executive officer of the Company, dated the date of such amendment or
     supplement or the related Time of Delivery relating to such sale, as the
     case may be, in form satisfactory to such Agent, of the same tenor as the
     certificate referred to in Section 6(f) hereof but modified to relate to
     the Registration Statement and the Prospectus as amended and supplemented
     to the date of delivery of such certificate or to the effect that the
     statements contained in the certificate referred to in Section 6(f) hereof
     which was last furnished to such Agent are true and correct at such date as
     though

                                      -14-
<PAGE>
 
     made at and as of such date (except that such statements shall be deemed to
     relate to the Registration Statement and the Prospectus as amended or
     supplemented to such date).

          5.   Costs and Expenses.  The Company covenants and agrees with each
Agent that the Company will, whether or not any sale of Securities is
consummated, pay or cause to be paid all costs and expenses incident to the
performance of its obligations hereunder and under any applicable Terms
Agreement, including without limiting the generality of the foregoing, all costs
and expenses (i) incident to the preparation, issuance, execution,
authentication and delivery of the Securities, (ii) incident to the preparation,
printing and filing under the Securities Act of the Registration Statement, the
Prospectus and any preliminary prospectus (including in each case all exhibits,
amendments and supplements thereto), (iii) incurred in connection with the
registration or qualification and determination of eligibility for investment of
the Securities under the laws of such jurisdictions as the Agents (or in
connection with any Terms Agreement, the applicable Agent) may designate
(including fees of counsel for the Agents (or such Agent) and their
disbursements), [(iv) in connection with the listing of the Securities on any
stock exchange,] (v) related to any filing with the National Association of
Securities Dealers, Inc., (vi) in connection with the printing (including word
processing and duplication costs) and delivery of this Agreement, the Indenture,
any Blue Sky Memoranda and any Legal Investment Survey and the furnishing to the
Agents and dealers of copies of the Registration Statement and the Prospectus,
including mailing and shipping, as herein provided, (vii) payable to rating
agencies in connection with the rating of the Securities, (viii) the fees and
disbursements of the Company's counsel and accountants and of the Trustee and
its counsel, (ix) the fees and disbursements of counsel for the Agents incurred
in connection with the offering and sale of the Securities, including any
opinions to be rendered by such counsel hereunder, and (x) any advertising and
out-of-pocket expenses incurred by the Agents.

          6.   Conditions.  The obligation of any Agent, as agent of the
Company, at any time (a "Solicitation Time") to solicit offers to purchase the
Securities, the obligation of any Agent to purchase Securities as principal
pursuant to any Terms Agreement or otherwise, and the obligation of any other
purchaser to purchase Securities shall in each case be subject (1) to the
condition that all representations and warranties of the Company contained
herein and all statements of officers of the Company made in any certificate
furnished pursuant to the provisions hereof are true and correct (i) in the case
of an Agent's obligation to solicit offers to purchase Securities, at and as of
such Solicitation Time and (ii) in the case of any Agent's or any other
purchaser's obligation to purchase Securities, at and as of the time the Company
accepts the offer to purchase such Securities and at and as of the related Time
of Delivery or time of purchase, as the case may be; (2) to the condition that
at or prior to such Solicitation Time, time of acceptance, Time of Delivery or
time of purchase, as the case may be, the Company shall have complied with all
its agreements and all conditions on its part to be performed or satisfied
hereunder; and (3) to the following additional conditions when and as specified:

          (a) Prior to such Solicitation Time or Time of Delivery or time of
     purchase, as the case may be:

               (i) the Prospectus as amended or supplemented (including, if
          applicable, the Pricing Supplement) with respect to such Securities
          shall have been filed with the Commission pursuant to Rule 424(b)
          under the Securities Act within the applicable time period prescribed
          for such filing by the Securities Act; no stop

                                      -15-
<PAGE>
 
          order suspending the effectiveness of the Registration Statement or
          any part thereof nor any order suspending the qualification of the
          Securities for offering or sale in any jurisdiction shall be in effect
          and no proceeding for such purpose shall have been initiated or
          threatened by the Commission or any state or other regulatory body;
          and all requests for additional information on the part of the
          Commission shall have been complied with to the reasonable
          satisfaction of such Agent;

               (ii) there shall not have occurred any downgrading, nor shall any
          notice have been given of (A) any intended or potential downgrading or
          (B) any review or possible change that does not indicate an
          improvement, in the rating accorded any securities of or guaranteed by
          the Company by any "nationally recognized statistical rating
          organization", as such term is defined for purposes of Rule 436(g)(2)
          under the Securities Act;

               (iii)  there shall not have been any material adverse change or
          any development involving a prospective material adverse change in or
          affecting the general affairs, business, prospects, management,
          financial position, stockholders' equity or results of operations of
          the Company and its subsidiaries, taken as a whole, otherwise than as
          set forth or contemplated in the Prospectus, as amended or
          supplemented to such Solicitation Time or at the time such offer to
          purchase was made, the effect of which in the judgment of the
          applicable Agent makes it impracticable or inadvisable to market the
          Securities on the terms and in the manner contemplated in the
          Prospectus, as so amended or supplemented; and

               (iv)(A) trading generally shall not have been suspended or
          materially limited on or by, as the case may be, any of the New York
          Stock Exchange, the American Stock Exchange, the Philadelphia Stock
          Exchange, the National Association of Securities Dealers, Inc., the
          Chicago Board Options Exchange, the Chicago Mercantile Exchange or the
          Chicago Board of Trade, (B) trading of any securities of or guaranteed
          by the Company shall not have been suspended on any exchange or in any
          over-the-counter market, (C) a general moratorium on commercial
          banking activities in New York or in Pennsylvania shall not have been
          declared by either Federal or the relevant state authorities, or (D)
          there shall not have occurred any outbreak or escalation of
          hostilities or any change in financial markets or any calamity or
          crisis that, in the judgment of such Agent or Agents or of such other
          purchaser, is material and adverse and that, in the judgment of such
          Agent or Agents or of such other purchaser, makes it impracticable to
          market the Securities on the terms and in the manner contemplated in
          the Prospectus as amended or supplemented at the Solicitation Time or
          at the time such offer to purchase was made.

          (b) On the Commencement Date, and in the case of a purchase of
     Securities by an Agent as principal pursuant to a Terms Agreement or
     otherwise, if called for by the applicable Terms Agreement or other
     agreement, at the corresponding Time of Delivery, Augustine A. Mazzei, Jr.,
     Senior Vice President and Chief Legal Officer of the Company, shall have
     furnished to the relevant Agent or Agents his written opinion, dated

                                      -16-
<PAGE>
 
     the Commencement Date or Time of Delivery, as the case may be, in form and
     substance satisfactory to such Agent or Agents, to the effect that:

               (i) the Company has been duly incorporated and is validly
          existing as a corporation in good standing under the laws of the
          jurisdiction of its incorporation, with power and authority (corporate
          and other) to own its properties and conduct its business as described
          in the Prospectus as amended or supplemented;

               (ii) the Company has been duly qualified as a foreign corporation
          for the transaction of business and is in good standing under the laws
          of each other jurisdiction in which it owns or leases properties, or
          conducts any business, so as to require such qualifications, other
          than where the failure to be so qualified or in good standing would
          not have a material adverse effect on the Company and its subsidiaries
          taken as a whole;

               (iii)  each of the Company's subsidiaries has been duly
          incorporated and is validly existing as a corporation under the laws
          of its jurisdiction of incorporation with power and authority
          (corporate and other) to own its properties and conduct its business
          as described in the Prospectus, as amended or supplemented, and has
          been duly qualified as a foreign corporation for the transaction of
          business and is in good standing under the laws of each jurisdiction
          in which it owns or leases properties, or conducts any business, so as
          to require such qualification, other than where the failure to be so
          qualified and in good standing would not have a material adverse
          effect on the Company and its subsidiaries taken as a whole; and all
          of the issued shares of capital stock of each subsidiary have been
          duly and validly authorized and issued, are fully paid and non-
          assessable, and (except in the case of foreign subsidiaries, for
          directors' qualifying shares) are owned directly or indirectly by the
          Company, free and clear of all liens, encumbrances, equities or
          claims;

               (iv) other than as set forth or contemplated in the Prospectus,
          as amended or supplemented, there are no legal or governmental
          investigations, actions, suits or proceedings pending or, to the best
          of such counsel's knowledge, threatened against or affecting the
          Company or any of its subsidiaries or any of their respective property
          or to which the Company or any of its subsidiaries is or may be a
          party or to which any property of the Company or its subsidiaries is
          or may be subject which, if determined adversely to the Company or any
          of its subsidiaries, could individually or in the aggregate have, or
          reasonably be expected to have, a material adverse effect on the
          general affairs, business, prospects, management, financial position,
          stockholders' equity or results of operations of the Company and its
          subsidiaries taken as a whole; to the best of such counsel's
          knowledge, no such proceedings are threatened or contemplated by
          governmental authorities or threatened by others; and such counsel
          does not know of any statutes, regulations, contracts or other
          documents that are required to be filed as an exhibit to the
          Registration Statement or required to be described in the Registration
          Statement or the Prospectus, as amended or supplemented, which are not
          filed or described as required;

                                      -17-
<PAGE>
 
               (v)  neither the Company nor any of its subsidiaries is, or
          with the giving of notice or lapse of time or both would be, in
          violation of or in default under, its Restated Articles of
          Incorporation or By-Laws or any indenture, mortgage, deed of trust,
          loan agreement or other agreement or instrument known to such counsel
          to which the Company or any of its subsidiaries is a party or by which
          it or any of them or any of their respective properties is bound,
          except for violations and defaults which individually and in the
          aggregate are not material to the Company and its subsidiaries taken
          as a whole or to the holders of the Securities; the issue and sale of
          the Securities and the performance by the Company of its obligations
          under the Securities, the Indenture, this Agreement and any applicable
          Terms Agreement or other agreement pursuant to which an Agent
          purchases Securities as principal and the consummation of the
          transactions herein and therein contemplated will not conflict with or
          result in a breach of any of the terms or provisions of, or constitute
          a default under, any indenture, mortgage, deed of trust, loan
          agreement or other agreement or instrument known to such counsel to
          which the Company or any of its subsidiaries is a party or by which
          the Company or any of its subsidiaries is bound or to which any of the
          property or assets of the Company or any of its subsidiaries is
          subject, nor will any such action result in any violation of the
          provisions of the Restated Articles of Incorporation or the By-Laws of
          the Company or any applicable law or statute or any order, rule or
          regulation of any court or governmental agency or body having
          jurisdiction over the Company, its subsidiaries or any of their
          respective properties;

               (vi) no consent, approval, authorization, order, license,
          registration or qualification of or with any court or governmental
          agency or body is required for the issue and sale of the Securities or
          the consummation of the other transactions contemplated by this
          Agreement, any applicable Terms Agreement or other agreement pursuant
          to which an Agent purchases Securities as principal, or the Indenture,
          except such consents, approvals, authorizations, orders, licenses,
          registrations or qualifications as have been obtained under the
          Securities Act and the Trust Indenture Act and as may be required
          under state securities or Blue Sky laws in connection with offers and
          sales of the Securities from the Company and with purchases of
          Securities or from the Pennsylvania Public Utility Commission and the
          Kentucky Public Service Commission in connection with the issuance and
          sale of the Securities;

               (vii)  such counsel (A) is of the opinion that each document
          incorporated by reference in the Registration Statement and Prospectus
          as amended or supplemented (other than the financial statements and
          related schedules therein, as to which such counsel need express no
          opinion) complied as to form when filed with the Commission in all
          material respects with the Exchange Act, (B) believes that (except for
          the financial statements included therein as to which such counsel
          need express no belief) each part of the Registration Statement
          (including the documents incorporated by reference therein) filed with
          the Commission pursuant to the Securities Act relating to the
          Securities, when such part became effective, did not and, as of the
          date such opinion is delivered, does not, contain an untrue statement
          of a material fact or omit to state a material fact required to be
          stated

                                      -18-
<PAGE>
 
          therein or necessary to make the statements therein not misleading,
          (C) is of the opinion that the Registration Statement and the
          Prospectus and any amendments and supplements thereto (except for the
          financial statements included therein as to which such counsel need
          express no opinion) comply as to form in all material respects with
          the requirements of the Securities Act and the Trust Indenture Act and
          (D) believes that (except for the financial statements included
          therein as to which such counsel need express no belief) the
          Registration Statement and the Prospectus, as amended or supplemented,
          if applicable, as of the date such opinion is delivered does 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; provided, that in the case of an
          opinion delivered on the Commencement Date or pursuant to Section 4(i)
          hereof, the opinion and belief set forth in clauses (C) and (D) above
          shall be deemed not to cover information concerning an offering of
          particular Securities to the extent such information will be set forth
          in a supplement to the Basic Prospectus;

               (viii)   the Company is not and, after giving effect to any
          offering and sale of Securities, will not be an "investment company"
          or entity "controlled" by an "investment company", as such terms are
          defined in the Investment Company Act;

               (ix) each of the Company and its subsidiaries owns, possesses or
          has obtained all licenses, permits, certificates, consents, orders,
          approvals and other authorizations from, and has made all declarations
          and filings with, all federal, state, local and other governmental
          authorities (including foreign regulatory agencies), all self-
          regulatory organizations and all courts and other tribunals, domestic
          or foreign, necessary to own or lease, as the case may be, and to
          operate its properties and to carry on its business as conducted as of
          the Commencement Date or Time of Delivery, as the case may be, except
          where the failure to so own or possess or to have so obtained or made
          would not, singly or in the aggregate, have a material adverse effect
          on the Company and its subsidiaries taken as a whole, and neither the
          Company nor any such subsidiary has received any actual notice of any
          proceeding relating to revocation or modification of any such license,
          permit, certificate, consent, order, approval or other authorization,
          except as described in the Registration Statement and the Prospectus;
          and each of the Company and its subsidiaries is in compliance with all
          laws and regulations relating to the conduct of its business as
          conducted as of the Commencement Date or Time of Delivery, as the case
          may be, except where the failure to be in compliance would not, singly
          or in the aggregate, have a material adverse effect on the Company and
          its subsidiaries taken as a whole;

               (x) the Company and its subsidiaries have good and marketable
          title in fee simple to all real property and good and marketable title
          to all personal property owned by them, in each case free and clear of
          all liens, encumbrances and defects except such as are described or
          referred to in the Prospectus or such as do not materially affect the
          value of such property and do not interfere with the use made and
          proposed to be made of such property by the Company and its
          subsidiaries; and any real property and buildings held under lease by
          the Company

                                      -19-
<PAGE>
 
          and its subsidiaries are held by them under valid, existing and
          enforceable leases with such exceptions as are not material and do not
          interfere with the use made or proposed to be made of such property
          and buildings by the Company or its subsidiaries; and

               (xi) each of the Company and its subsidiaries is in compliance
          with all Environmental Laws, except, in each case, where
          noncompliance, individually or in the aggregate, would not have a
          material adverse effect on the Company and its subsidiaries taken as a
          whole; and there are no legal or governmental proceedings pending or,
          to the knowledge of such counsel, threatened against or affecting the
          Company or any of its subsidiaries under any Environmental Law which,
          individually or in the aggregate, could reasonably be expected to have
          a material adverse effect on the Company and its subsidiaries taken as
          a whole.

          In rendering such opinions, such counsel may rely (A) as to matters
     involving the application of the laws other than the laws of the United
     States and the Commonwealth of Pennsylvania, to the extent such counsel
     deems proper and to the extent specified in such opinion, if at all, upon
     an opinion or opinions (in form and substance reasonably satisfactory to
     the Agents' counsel) of other counsel reasonably acceptable to the Agents'
     counsel, familiar with the applicable laws; and (B) as to matters of fact,
     to the extent such counsel deems proper, on certificates of responsible
     officers of the Company and certificates or other written statements of
     officials of jurisdictions having custody of documents respecting the
     corporate existence or good standing of the Company.  The opinion of such
     counsel for the Company shall state that the opinion of any such other
     counsel upon which he relied is in form satisfactory to such counsel and,
     in such counsel's opinion, the Agents and he are justified in relying
     thereon.

          (c) On the Commencement Date, and in the case of a purchase of
     Securities by an Agent as principal pursuant to a Terms Agreement or
     otherwise, if called for by the applicable Terms Agreement or other
     agreement, at the corresponding Time of Delivery, Reed Smith Shaw & McClay,
     counsel to the Company, shall have furnished to the relevant Agent or
     Agents their written opinion, dated the Commencement Date or Time of
     Delivery, as the case may be, in form and substance satisfactory to such
     Agent or Agents, to the effect that:

               (i) the Company has been duly incorporated and is validly
          existing as a corporation in good standing under the laws of the
          jurisdiction of its incorporation, with power and authority (corporate
          and other) to own its properties and conduct its business as described
          in the Prospectus as amended or supplemented;

               (ii) this Agreement and any applicable Terms Agreement have been
          duly authorized, executed and delivered by the Company and are valid
          and binding agreements except as rights to indemnity and contribution
          hereunder and thereunder may be limited by applicable law;

               (iii)  the Securities have been duly authorized and, when
          executed and authenticated in accordance with the terms of the
          Indenture and delivered to and

                                      -20-
<PAGE>
 
          paid for by any purchaser of Securities sold through an Agent as agent
          or any Agent as principal pursuant to any Terms Agreement or other
          agreement, will constitute valid and binding obligations of the
          Company entitled to the benefits provided by the Indenture except as
          (A) the enforceability thereof may be limited by bankruptcy,
          insolvency or similar laws affecting creditors' rights generally and
          (B) rights of acceleration and the availability of equitable remedies
          may be limited by equitable principles of general applicability;

               (iv) the Indenture has been duly qualified under the Trust
          Indenture Act and has been duly authorized, executed and delivered by
          the Company and constitutes a valid and binding instrument of the
          Company except as (A) the enforceability thereof may be limited by
          bankruptcy, insolvency or similar laws affecting creditors' rights
          generally and (B) rights of acceleration and the availability of
          equitable remedies may be limited by equitable principles of general
          applicability;

               (v) the issue and sale of the Securities and the performance by
          the Company of its obligations under the Securities, the Indenture,
          this Agreement and any applicable Terms Agreement or other agreement
          pursuant to which an Agent purchases Securities as principal and the
          consummation of the transactions herein and therein contemplated will
          not conflict with or result in a breach of any of the terms or
          provisions of, or constitute a default under, any indenture, mortgage,
          deed of trust, loan agreement or other agreement or instrument known
          to such counsel to which the Company or any of its subsidiaries is a
          party or by which the Company or any of its subsidiaries is bound or
          to which any of the property or assets of the Company or any of its
          subsidiaries is subject, nor will any such action result in any
          violation of the provisions of the Restated Articles of Incorporation
          or the By-Laws of the Company or any applicable law or statute or any
          order, rule or regulation of any court or governmental agency or body
          having jurisdiction over the Company, its subsidiaries or any of their
          respective properties;

               (vi) no consent, approval, authorization, order, license,
          registration or qualification of or with any court or governmental
          agency or body is required for the issue and sale of the Securities or
          the consummation of the other transactions contemplated by this
          Agreement, any applicable Terms Agreement or other agreement pursuant
          to which an Agent purchases Securities as principal, or the Indenture,
          except such consents, approvals, authorizations, orders, licenses,
          registrations or qualifications as have been obtained under the
          Securities Act and the Trust Indenture Act and as may be required
          under state securities or Blue Sky laws in connection with offers and
          sales of the Securities from the Company and with purchases of
          Securities or from the Pennsylvania Public Utility Commission and the
          Kentucky Public Service Commission in connection with the issuance and
          sale of the Securities;

               (vii)  the statements in the Prospectus under "             ",
                                                              -------------
          "Description of the Debt Securities" and "Plan of Distribution", in
          the Prospectus incorporated by reference from Item 3 of Part 1 of the
          Company's Annual Report

                                      -21-
<PAGE>
 
          on Form 10-K most recently filed with the Commission, in the
          Prospectus incorporated by reference from Item 1 of Part II of the
          Company's Quarterly Reports on Form 10-Q, if any, filed with the
          Commission since such Annual Report, in the Prospectus incorporated by
          reference from Item 5 of the Company's Current Reports on Form 8-K, if
          any, filed with the Commission since such Annual Report and in the
          Registration Statement in Item 15, insofar as such statements
          constitute a summary of the legal matters, documents or proceedings
          referred to therein, fairly present the information called for with
          respect to such legal matters, documents or proceedings;

               (viii)   such counsel is of the opinion ascribed to it in the
          Prospectus under the caption "Taxation", if any; and

               (ix) such counsel (A) is of the opinion that the Registration
          Statement and the Prospectus and any amendments and supplements
          thereto (except for the financial statements included therein as to
          which such counsel need express no opinion) comply as to form in all
          material respects with the requirements of the Securities Act and the
          Trust Indenture Act and (B) believes that (except for the financial
          statements included therein as to which such counsel need express no
          belief) the Registration Statement and the Prospectus, as amended or
          supplemented, if applicable, as of the date such opinion is delivered
          does 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; provided, that in the case
          of an opinion delivered on the Commencement Date or pursuant to
          Section 4(i) hereof, the opinion and belief set forth above shall be
          deemed not to cover information concerning an offering of particular
          Securities to the extent such information will be set forth in a
          supplement to the Basic Prospectus;

          In rendering such opinions, such counsel may rely (A) as to matters
     involving the application of the laws other than the laws of the United
     States and the Commonwealth of Pennsylvania, to the extent such counsel
     deems proper and to the extent specified in such opinion, if at all, upon
     an opinion or opinions (in form and substance reasonably satisfactory to
     the Agents' counsel) of other counsel reasonably acceptable to the Agents'
     counsel, familiar with the applicable laws; and (B) as to matters of fact,
     to the extent such counsel deems proper, on certificates of responsible
     officers of the Company and certificates or other written statements of
     officials of jurisdictions having custody of documents respecting the
     corporate existence or good standing of the Company.  The opinion of such
     counsel for the Company shall state that the opinion of any such other
     counsel upon which they relied is in form satisfactory to such counsel and,
     in such counsel's opinion, the Agents and they are justified in relying
     thereon.  With respect to the matters to be covered in subparagraphs
     (c)(vii) and (c)(ix) above, counsel may state their opinion and belief is
     based upon their participation in the preparation of the Registration
     Statement and the Prospectus and any amendment or supplement thereto (other
     than the documents incorporated by reference therein) and review and
     discussion of the contents thereof (including the documents incorporated by
     reference therein) but is without independent check or verification except
     as specified.

                                      -22-
<PAGE>
 
          (d) On the Commencement Date and, in the case of a purchase of
     Securities by an Agent as principal pursuant to a Terms Agreement or
     otherwise, if called for by the applicable Terms Agreement or other
     agreement, at the corresponding Time of Delivery, Kirkpatrick & Lockhart
     LLP, counsel to the Agents, shall have furnished to the relevant Agent or
     Agents such opinion or opinions, dated the Commencement Date or Time of
     Delivery, as the case may be, with respect to the validity of the Indenture
     and the Securities, the Registration Statement, the Prospectus as amended
     or supplemented and other related matters as such Agent or Agents may
     reasonably request, and in each case such counsel shall have received such
     papers and information as they may reasonably request to enable them to
     pass upon such matters.

          (e) On the Commencement Date and, in the case of a purchase of
     Securities by an Agent as principal pursuant to a Terms Agreement or
     otherwise, if called for by the applicable Terms Agreement or other
     agreement, at the corresponding Time of Delivery, Ernst & Young LLP shall
     have furnished to the relevant Agents a letter or letters, dated as of the
     Commencement Date or such Time of Delivery, as the case may be, in form and
     substance satisfactory to such Agents, containing statements and
     information of the type customarily included in accountants' "comfort
     letters" to underwriters with respect to the financial statements and
     certain financial information contained in the Registration Statement and
     the Prospectus.

          (f) On the Commencement Date and, in the case of a purchase of
     Securities by an Agent as principal pursuant to a Terms Agreement or
     otherwise, if called for by the applicable Terms Agreement or other
     agreement, at the corresponding Time of Delivery, the relevant Agent or
     Agents shall have received a certificate or certificates signed by an
     executive officer of the Company, with specific knowledge about the
     Company's financial matters, dated the Commencement Date or Time of
     Delivery, as the case may be, satisfactory to such Agent or Agents to the
     effect set forth in Sections 6(a)(i) and (ii) above and to the further
     effect that (1) the representations and warranties of the Company contained
     herein are true and correct on and as of the Commencement Date or Time of
     Delivery, as the case may be, as if made on and as of such date, (2) the
     Company has complied with all agreements and all conditions on its part to
     be performed or satisfied hereunder or under the applicable Terms Agreement
     or other agreement at or prior to the Commencement Date or Time of
     Delivery, as the case may be, and (3) there has not occurred any material
     adverse change, or any development involving a prospective material adverse
     change, in or affecting the general affairs, business, prospects,
     management, financial position, stockholders' equity or results of
     operations of the Company and its subsidiaries taken as a whole from that
     set forth in or contemplated by the Registration Statement or the
     Prospectus.

          (g) On the Commencement Date and at each Time of Delivery, the Company
     shall have furnished to the relevant Agent or Agents such further
     certificates, information and documents as such Agent or Agents may
     reasonably request.

          7.   Indemnification and Contribution.  The Company agrees to
indemnify and hold harmless each Agent and each person, if any, who controls
such Agent within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act from and against any and all losses, claims,
damages and liabilities (including without limitation the legal

                                      -23-
<PAGE>
 
fees and other expenses incurred in connection with any suit, action or
proceeding or any claim asserted) caused by any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
the Prospectus (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) or any preliminary prospectus, or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with information relating to any Agent furnished
to the Company in writing by such Agent expressly for use therein.

          Each Agent agrees, severally and not jointly, to indemnify and hold
harmless the Company, its directors, its officers who sign the Registration
Statement and each person who controls the Company within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act to the same extent
as the foregoing indemnity from the Company to each Agent, but only with
reference to information relating to such Agent furnished to the Company in
writing by such Agent expressly for use in the Registration Statement, the
Prospectus, any amendment or supplement thereto, or any preliminary prospectus.

          If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such person (the "Indemnified Person") shall promptly
notify the person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding.  In any such proceeding,
any Indemnified Person shall have the right to retain its own counsel, but the
fees and expenses of such counsel shall be at the expense of such Indemnified
Person unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed to the contrary, (ii) the Indemnifying Person has failed within
a reasonable time to retain counsel reasonably satisfactory to the Indemnified
Person or (iii) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them.  It
is understood that the Indemnifying Person shall not, in connection with any
proceeding or related proceeding in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons, and that all such fees and expenses shall
be reimbursed as they are incurred.  Any such separate firm for the Agents and
such control persons of the Agents shall be designated in writing by [J.P.
Morgan Securities Inc.] or, if [J.P. Morgan Securities Inc.] is not an
Indemnified Party, by the Agents that are Indemnified Parties and any such
separate firm for the Company, its directors, its officers who sign the
Registration Statement and such control persons of the Company shall be
designated in writing by the Company.  The Indemnifying Person shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the Indemnifying Person agrees to indemnify any Indemnified
Person from and against any loss or liability by reason of such settlement or
judgment.  Notwithstanding the foregoing sentence, if at any time an Indemnified
Person shall have requested an Indemnifying Person to reimburse the Indemnified
Person for fees and expenses of counsel as

                                      -24-
<PAGE>
 
contemplated by the third sentence of this paragraph, the Indemnifying Person
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
days after receipt by such Indemnifying Person of the aforesaid request and (ii)
such Indemnifying Person shall not have reimbursed the Indemnified Person in
accordance with such request prior to the date of such settlement.  No
Indemnifying Person shall, without the prior written consent of the Indemnified
Person, effect any settlement of any pending or threatened proceeding in respect
of which any Indemnified Person is or could have been a party and indemnity
could have been sought hereunder by such Indemnified Person, unless such
settlement includes an unconditional release of such Indemnified Person from all
liability on claims that are the subject matter of such proceeding.

          If the indemnification provided for in the first and second paragraphs
of this Section 7 is unavailable to an Indemnified Person or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and each Agent on the other
from the offering of the Securities or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and each Agent
on the other in connection with the statements or omissions that resulted in
such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations.  The relative benefits received by the Company on the
one hand and each Agent on the other in connection with any offering of
Securities shall be deemed to be in the same respective proportions as the net
proceeds from the offering of such Securities (before deducting expenses)
received by the Company and the total discounts and commissions received by each
Agent in respect thereof bear to the aggregate offering price of such
Securities.  The relative fault of the Company on the one hand and of each Agent
on the other shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or by such Agent and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.

          The Company and each Agent agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
                                                                        --- ----
allocation (even if all Agents were treated as one entity for such purpose) or
by any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph.  The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to above in this Section 7 shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
incurred by such Indemnified Person in connection with investigating or
defending any such action or claim.  Notwithstanding the provisions of this
Section 7, in no event shall an Agent be required to contribute any amount in
excess of the amount by which the total price at which the relevant Securities
that were sold by or through such Agent exceeds the amount of any damages that
such Agent has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission.  No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such

                                      -25-
<PAGE>
 
fraudulent misrepresentation.  The obligation of each Agent to contribute
pursuant to this Section 7 is several in proportion to the principal amount of
the Securities the sale of which by or through such Agent gave rise to such
losses, claims, damages or liabilities bears to the aggregate principal amount
of the Securities the sale of which by or through any Agent gave rise to such
losses, claims, damages or liabilities and is not joint.

          The indemnity and contribution agreements contained in this Section 7
are in addition to any liability which any Indemnifying Person may otherwise
have at law or in equity to any Indemnified Persons referred to above.

          8.   Termination.

          (a) This Agreement may be terminated at any time (i) by the Company
     with respect to any or all of the Agents or (ii) by any Agent with respect
     to itself only, in each case upon the giving of written notice of such
     termination to each other party hereto.  Any Terms Agreement shall be
     subject to termination in the absolute discretion of the Agent or Agents
     that are parties thereto on the terms set forth or incorporated by
     reference therein.  The termination of this Agreement shall not require
     termination of any agreement by an Agent to purchase Securities as
     principal (whether pursuant to a Terms Agreement or otherwise) and the
     termination of such an agreement shall not require termination of this
     Agreement.  In the event that this Agreement is terminated with respect to
     any Agent, (x) this Agreement shall remain in full force and effect with
     respect to any Agent as to which such termination has not occurred, (y)
     this Agreement shall remain in full force and effect with respect to the
     rights and obligations of any party which have previously accrued or which
     relate to Securities which are already issued, agreed to be issued or the
     subject of a pending offer at the time of such termination and (z) in any
     event, the provisions of the fourth paragraph of Section 2(a), Section
     2(c), the last sentence of Section 4(d) and Sections 4(f), 4(g), 5, 7, 9,
     10, 12 and 15 hereof shall survive; provided, that if at the time of
     termination an offer to purchase Securities has been accepted by the
     Company but the time of delivery to the purchaser or its agent of such
     Securities has not yet occurred, the provisions of Sections 2(b), 2(d),
     4(a) through 4(e), 4(h) through 4(k) and 6 hereof shall also survive.  If
     any Terms Agreement is terminated, the provisions of the last sentence of
     Section 4(d) and Sections 2(b), 2(d), 4(a), 4(b), 4(e), 4(g) through 4(k),
     5, 6, 7, 9, 10, 12 and 15 hereof (which shall have been incorporated by
     reference in such Terms Agreement) shall survive.

          (b) If this Agreement or any Terms Agreement shall be terminated by an
     Agent or Agents because of any failure or refusal on the part of the
     Company to comply with the terms or to fulfill any of the conditions of
     this Agreement or any Terms Agreement or if for any reason the Company
     shall be unable to perform its obligations under this Agreement or any
     Terms Agreement or any condition of any Agent's obligations cannot be
     fulfilled, the Company agrees to reimburse such Agent or Agents as have so
     terminated this Agreement with respect to themselves, severally, for all
     out-of-pocket expenses (including the fees and expenses of their counsel)
     reasonably incurred by such Agent or Agents in connection with this
     Agreement or the offering of Securities.

                                      -26-
<PAGE>
 
          9.  Position of the Agents.  Each Agent, in soliciting offers to
purchase Securities from the Company and in performing the other obligations of
such Agent hereunder (other than in respect of any purchase by an Agent as
principal pursuant to a Terms Agreement or otherwise), is acting solely as agent
for the Company and not as principal and does not assume any obligation towards
or relationship of agency or trust with any purchaser of Securities.  Each Agent
will make reasonable efforts to assist the Company in obtaining performance by
each purchaser whose offer to purchase Securities from the Company was solicited
by such Agent and has been accepted by the Company, but such Agent shall not
have any liability to the Company in the event such purchase is not consummated
for any reason.  If the Company shall default on its obligation to deliver
Securities to a purchaser whose offer it has accepted, the Company shall (i)
hold the relevant Agent harmless against any loss, claim, damage or liability
arising from or as a result of such default by the Company and (ii)
notwithstanding such default, pay to the Agent that solicited such offer any
commission to which it would be entitled in connection with such sale.

          10.  Representations and Indemnities to Survive.  The respective
indemnities and contribution agreements, representations, warranties and other
statements of the Company, its officers and the Agents set forth in or made
pursuant to this Agreement or any agreement by an Agent to purchase Securities
as principal shall remain operative and in full force and effect regardless of
any termination of this Agreement or any such agreement, any investigation made
by or on behalf of any Agent or any controlling person of any Agent or the
Company or any officer or director or controlling person of the Company and
shall survive each delivery of and payment for any of the Securities.

          11.  Notices.  Except as otherwise specifically provided herein or in
the Administrative Procedures, all statements, requests, notices and advises
hereunder shall be in writing and effective only on receipt, and will be
delivered by hand, by mail (postage prepaid), by telegram (charges prepaid) or
by telex.  Communications to the Agents will be sent, in the case of J.P. Morgan
Securities Inc., to 60 Wall Street, New York, New York 10260 (telefax:   (212)
648-5909), Attention:  Medium-Term Note Desk, in the case of             , to
                                                             ------------
                   and, if sent to the Company, to it at 420 Boulevard of the
- ------------------
Allies, Pittsburgh, Pennsylvania 15219, Attention:  Jeffrey C. Swoveland, Vice
President-Finance, and Treasurer (telefax number: (412) 553-5875).

          12.  Successors.  This Agreement and any Terms Agreement shall be
binding upon, and inure to the benefit of, each Agent and the Company, their
respective successors and the officers, directors and controlling persons
referred to in Section 7 hereof and (to the extent expressly provided in Section
6 hereof) the purchasers of Securities, and no other person shall acquire or
have any right or obligation under or by virtue of this Agreement or any Terms
Agreement.

          13.  Amendments.  This Agreement may be amended or supplemented if,
but only if, such amendment or supplement is in writing and is signed by the
Company and each Agent; provided, that the Company may from time to time, on 7
days prior written notice to the Agents but without the consent of any Agent,
amend this Agreement to add as a party hereto one or more additional firms
registered under the Exchange Act, whereupon each such firm shall become an
Agent hereunder on the same terms and conditions as the other Agents that are
parties

                                      -27-
<PAGE>
 
hereto.  The Agents shall sign any amendment or supplement giving effect to the
addition of any such firm as an Agent under this Agreement.

          14.  Business Day.  Time shall be of the essence in this Agreement and
any Terms Agreement.  As used herein, the term "business day" shall mean any day
which is not a Saturday or Sunday or legal holiday or a day on which banks in
New York City or Pittsburgh, Pennsylvania are required or authorized by law or
executive order to close.

          15.  Applicable Law.  This Agreement and any Terms Agreement shall be
governed by and construed in accordance with the laws of the State of New York,
without giving effect to the conflicts of laws provisions thereof.

          16.  Counterparts.  This Agreement and any Terms Agreement may be
signed in counterparts, each of which shall be an original and all of which
together shall constitute one and the same instrument.

          17.  Headings.  The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.

                                      -28-
<PAGE>
 
          If the foregoing is in accordance with your understanding, please sign
and return to us counterparts hereof, whereupon this letter and the acceptance
by each of you thereof shall constitute a binding agreement between the Company
and each of you in accordance with its terms.

                                   Very truly yours,

                                   EQUITABLE RESOURCES, INC.



                                   By:
                                      -----------------------------
                                      Name:
                                      Title:


Accepted in New York, New York,
as of the date first above written:

 
- --------------------------------------


By:
   -----------------------------------
  Name:
  Title:

 
   -----------------------------------


By:
   -----------------------------------
  Name:
  Title:

                                      -29-
<PAGE>
  
                                                                       Exhibit A

                           EQUITABLE RESOURCES, INC.

                         MEDIUM TERM NOTES, SERIES ___

                                TERMS AGREEMENT



                                                     ____________________, 199__



Equitable Resources, Inc.
420 Boulevard of the Allies
Pittsburgh, PA  15219


Attention:  ________________________


     Re:  Distribution Agreement dated as of
                   , 199__ (the "Distribution Agreement")
          -----------------------------------------------

          The undersigned agrees to purchase your Medium-Term Notes, Series ___
having the following terms:

          Specified Currency:  _____________________________

          Principal Amount:  _______________________________

          Original Issue Date:  ____________________________

          Settlement Date, Time and Place:  ________________

          Maturity Date:  __________________________________

          Purchase Price:  _______% of Principal Amount, plus
          accrued interest, if any, from Settlement Date

          Price to Public:  ______% of Principal Amount, plus
          accrued interest, if any, from Settlement Date

          Redemption Date (Dates):           , commencing
<PAGE>
  
          Initial Redemption Price:

          Annual Redemption Price decrease:

          Repayment Date (Dates):

          Repayment Price:

          Initial accrual period OID:

          Original Yield to Maturity

     (For Fixed Rate Notes)

          Interest Rate:  __________________________________

          Applicability of modified payment
           upon acceleration:

          If yes, state issue price:

          Amortization schedule:


     (For Floating Rate Notes)

          Initial Interest Rate:  __________________________

          Interest Rate Basis (Commercial Paper, LIBOR,
           Treasury, _____________):  ______________________

          Index Maturity (30, 60, 90 days, 6 months, 1 year,
           other):  ________________________________________

          Interest Reset Period (monthly, quarterly,
           semiannually, annually):  _______________________

          Interest Payment Period (monthly, quarterly,
           semiannually, annually):  _______________________

          Spread:  _____________________________ points (+/-)

          Spread Multiplier:  _____________________________%

          Maximum Interest Rate:  _________________________%

                                      -2-
<PAGE>
  
          Minimum Interest Rate:  ________________________%
 
          Initial Interest Reset Date:  ____________________

          Interest Reset Dates:  ___________________________

          Interest Determination Dates:  ___________________

          Interest Payment Dates:  _________________________

          Calculation Agent:  ______________________________

          Other terms of Securities:  ______________________

          Provisions relating to underwriter default,
           if any:  ________________________________________

          The provisions of Sections 1, 2(b) and 2(d) and 4 through 7, 10, 11,
12 and 15 of the Distribution Agreement and the related definitions are
incorporated by reference herein and shall be deemed to have the same force and
effect as if set forth in full herein.

          This Agreement is subject to termination in our absolute discretion on
the terms incorporated by reference herein.  If this Agreement is so terminated,
the provisions set forth in the last sentence of Section 8 of the Distribution
Agreement shall survive for the purposes of this Agreement.

          [The certificate referred to in Section 4(k) of the Distribution
Agreement, the opinion referred to in Section 4(i) of the Distribution Agreement
and the accountants' letter referred to in Section 4(j) of the Distribution
Agreement will be required.]

                                    [Agent]



                                    By: ______________________
                                         Name:
                                         Title:

Accepted:

EQUITABLE RESOURCES, INC.


By: ______________________
     Name:
     Title:

                                      -3-
<PAGE>
  
                                                            Exhibit B



                           EQUITABLE RESOURCES, INC.

                          MEDIUM-TERM NOTES, SERIES __
                           ADMINISTRATIVE PROCEDURES

                           _________________________



          The Medium-Term Notes, Series ___ (the "Notes"), are to be offered on
a continuous basis by Equitable Resources, Inc. (the "Company").  Each of
_______________ and _______________ (each, an "Agent") has agreed to solicit
offers to purchase the Notes in registered form.  The Notes are being sold
pursuant to a Distribution Agreement dated as of __________ __, 199_ (the
"Agreement") between the Company and the Agents.  In the Agreement, each Agent
has agreed to use reasonable efforts to solicit purchases of the Notes.  Each
Agent, as principal, may purchase Notes for its own account and, if such Agent
so elects, the Company and such Agent will enter into a Terms Agreement, as
contemplated by the Agreement.  The Company may also solicit offers to purchase
and may sell Notes directly on its own behalf to investors (other than broker-
dealers).

          The Notes will be issued under an Indenture dated as of June __, 1996
(as supplemented or amended from time to time, the "Indenture") between the
Company and Bank of Montreal Trust Company, as trustee (the "Trustee").  The
Trustee will be the Registrar, Calculation Agent, Authenticating Agent and
Paying Agent for the Notes, and will perform the duties specified herein.  Notes
will bear interest at a fixed rate (the "Fixed Rate Notes"), which may be zero
in the case of certain original issue discount notes (the "OID Notes"), or at
floating rates (the "Floating Rate Notes").  Fixed Rate Notes may pay a level
amount in respect of both interest and principal amortized over the life of the
Notes ("Amortizing Notes").  Each Note will be represented by either a Global
Security (as defined below) delivered to the Trustee, as agent for The
Depository Trust Company ("DTC"), and recorded in the book-entry system
maintained by DTC (a "Book-Entry Note") or a certificate delivered to the holder
thereof or a person designated by such holder (a "Certificated Note").  Except
in limited circumstances, an owner of a Book-Entry Note will not be entitled to
receive a Certificated Note.

          Book-Entry Notes, which may be payable solely in U. S. dollars, will
be issued in accordance with the administrative procedures set forth in Part I
hereof as they may subsequently be amended as the result of changes in DTC's
operating procedures, and Certificated Notes will be issued in accordance with
the administrative procedures set forth in Part II hereof.  Unless otherwise
defined herein, terms defined in the Indenture or the Notes shall be used herein
as therein defined.
<PAGE>
  
            PART I:  ADMINISTRATIVE PROCEDURES FOR BOOK-ENTRY NOTES

          In connection with the qualification of the Book-Entry Notes for
eligibility in the book-entry system maintained by DTC, the Trustee will perform
the custodial, document control and administrative functions described below, in
accordance with its respective obligations under a Letter of Representation from
the Company and the Trustee to DTC, dated as of the date hereof (the "Letter of
Representation"), and a Medium-Term Note Certificate Agreement between the
Trustee and DTC, dated as of _____________ __, 19__, and its obligations as a
participant in DTC, including DTC's Same-Day Funds Settlement System ("SDFS").

Issuance:           On any date of settlement (as defined under "Settlement"
                    below) for one or more Book-Entry Notes, the Company will
                    issue a single global security in fully registered form
                    without coupons (a "Global Security") representing up to
                    U.S. $__________ principal amount of all such Notes that
                    have the same Maturity Date, redemption or repayment
                    provisions, Interest Payment Dates, Original Issue Date,
                    original issue discount provisions (if any), and, in the
                    case of Fixed Rate Notes, Interest Rate, modified payment
                    upon acceleration (if any), amortization schedule (if any)
                    or, in the case of Floating Rate Notes, Initial Interest
                    Rate, Interest Payment Dates, Interest Payment Period,
                    Calculation Agent, Base Rate, Index Maturity, Interest Reset
                    Period, Interest Reset Dates, Spread or Spread Multiplier
                    (if any), Alternative Rate Event Spread (if any), Minimum
                    Interest Rate (if any) and Maximum Interest Rate (if any)
                    and, in each case, any other relevant terms (collectively,
                    "Terms").  Each Global Security will be dated and issued as
                    of the date of its authentication by the Trustee.  Each
                    Global Security will bear an "Interest Accrual Date," which
                    will be (i) with respect to an original Global Security (or
                    any portion thereof), its original issuance date and (ii)
                    with respect to any Global Security (or any portion thereof)
                    issued subsequently upon exchange of a Global Security, or
                    in lieu of a destroyed, lost or stolen Global Security, the
                    most recent Interest Payment Date to which interest has been
                    paid or duly provided for on the predecessor Global Security
                    or Securities (or if no such payment or provision has been
                    made, the original issuance date of the predecessor Global
                    Security), regardless of the date of authentication of such
                    subsequently issued Global Security.  Book-Entry Notes may
                    only be denominated and payable in U.S. dollars.  No Global
                    Security will represent (i) both Fixed Rate and Floating
                    Rate Book-Entry Notes or (ii) any Certificated Note.  [No
                    Note issued between a Record Date and the related Interest
                    Payment Date will be issued as a Global Security within the
                    meaning of the Indenture.]

                                      -2-
<PAGE>
  
Identification      The Company has arranged with the CUSIP Service Bureau of
Numbers:            Standard & Poor's Corporation (the "CUSIP Service Bureau")
                    for Securities representing the Book-Entry Notes.  The
                    Company has obtained from the CUSIP Service Bureau a written
                    list of such series of reserved CUSIP numbers and has
                    delivered to the Trustee and DTC the written list of 900
                    CUSIP numbers of such series.  The Trustee will assign CUSIP
                    numbers to Global Securities as described below under
                    Settlement Procedure "B".  DTC will notify the CUSIP Service
                    Bureau periodically of the CUSIP numbers that the Trustee
                    has assigned to Global Securities.  At any time when fewer
                    than 100 of the reserved CUSIP numbers remain unassigned to
                    Global Securities, the Trustee will so advise the Company
                    and, if it deems necessary, the Company will reserve
                    additional CUSIP numbers for assignment to Global Securities
                    representing Book-Entry Notes.  Upon obtaining such
                    additional CUSIP numbers, the Company will deliver a list of
                    such additional CUSIP numbers to the Trustee and DTC.

Registration:       Each Global Security will be registered in the name of Cede
                    & Co., as nominee for DTC, on the security register
                    maintained under the Indenture.  The beneficial owner of a
                    Book-Entry Note (or one or more indirect participants in DTC
                    designated by such owner) will designate one or more
                    participants in DTC with respect to such Note (the
                    "Participants") to act as agent or agents for such owner in
                    connection with the book-entry system maintained by DTC and
                    DTC will record in book-entry form, in accordance with
                    instructions provided by such Participants, a credit balance
                    with respect to such beneficial owner in such Note in the
                    account of such Participants.  The ownership interest of
                    such beneficial owner in such Note will be recorded through
                    the records of such Participants or through the separate
                    records of such Participants and one or more indirect
                    participants in DTC.

Transfers:          Transfers of a Book-Entry Note will be accompanied by book
                    entries made by DTC and, in turn, by Participants (and in
                    certain cases, one or more indirect participants in DTC)
                    acting on behalf of beneficial transferors and transferees
                    of such Note.

Exchanges:          The Trustee may deliver to DTC and the CUSIP Service Bureau
                    at any time a written notice of consolidation specifying (i)
                    the CUSIP numbers of two or more Outstanding Global
                    Securities that represent Book-Entry Notes having the same
                    Terms and for which interest has been paid to the same date,
                    (ii) a date, occurring at least thirty days after such
                    written notice is delivered and at least thirty days before
                    the next Interest Payment Date for such Book-Entry Notes, on
                    which such Global

                                      -3-
<PAGE>
  
                    Securities will be exchanged for a single replacement Global
                    Security and (iii) a new CUSIP number to be assigned to such
                    replacement Global Security.  Upon receipt of such a notice,
                    DTC will send to its Participants (including the Trustee) a
                    written reorganization notice to the effect that such
                    exchange will occur on such date. Prior to the specified
                    exchange date, the Trustee will deliver to the CUSIP Service
                    Bureau a written notice setting forth such exchange date and
                    the new CUSIP number and stating that, as of such exchange
                    date, the CUSIP numbers of the Global Securities to be
                    exchanged will no longer be valid.  On the specified
                    exchange date, the Trustee will exchange such Global
                    Securities for a single Global Security bearing the new
                    CUSIP number and a new Interest Accrual Date, and the CUSIP
                    numbers of the exchanged Global Securities will, in
                    accordance with CUSIP Service Bureau procedures, be canceled
                    and not immediately reassigned.  Notwithstanding the
                    foregoing, if the Global Securities to be exchanged exceed
                    $__________ in aggregate principal amount, one Global
                    Security will be authenticated and issued to represent each
                    $__________ principal amount of the exchanged Global
                    Securities and an additional Global Security will be
                    authenticated and issued to represent any remaining
                    principal amount of such Global Securities (see
                    "Denominations" below).

Maturities:         Each Book-Entry Note will mature on a date from nine months
                    to [30] years from its date of issue.

Notice of           The Trustee will give notice to DTC prior to each Redemption
Redemption and      Date or Repayment Date (as specified in the Note), if any,
Repayment Dates:    at the time and in the manner set forth in the Letter of
                    Representation.

Denominations:      Book-Entry Notes will be issued in principal amounts of
                    $__________ or an integral multiple of $1,000 in excess
                    thereof.  Global Securities will be denominated in principal
                    amounts not in excess of $__________.  If one or more Book-
                    Entry Notes having an aggregate principal amount in excess
                    of $__________ would, but for the preceding sentence, be
                    represented by a  single Global Security, then one Global
                    Security will be issued to represent each $__________
                    principal amount of such Book-Entry Note or Notes and an
                    additional Global Security will be issued to represent any
                    remaining principal amount of such Book-Entry Note or Notes.
                    In such a case, each of the Global Securities representing
                    such Book-Entry Note or Notes will be assigned the same
                    CUSIP number.

Interest:           General.  Interest on each Book-Entry Note will accrue from
                    the Interest Accrual Date of the Global Security
                    representing such

                                      -4-
<PAGE>
  
                    Note.  Unless otherwise specified therein, each payment of
                    interest on a Book-Entry Note will include interest accrued
                    to but excluding the Interest Payment Date; provided, that
                    in the case of Floating Rate Notes with respect to which the
                    Interest Reset Period is daily or weekly, interest payable
                    on any Interest Payment Date [(other than interest payable
                    on any date on which the principal thereof is payable, and,
                    if the Note is a Book-Entry Gap Note (as defined below),
                    other than interest payable on the first Interest Payment
                    Date after the Original Issue Date thereof)] will include
                    interest accrued through and including the Record Date
                    immediately preceding the Interest Payment Date, except that
                    at maturity or earlier redemption or repayment, the interest
                    payable will include interest accrued to, but excluding, the
                    Maturity Date or the date of redemption or repayment, as the
                    case may be.  Interest payable at the maturity or upon
                    redemption or repayment of a Book-Entry Note will be payable
                    to the person to whom the principal of such Note is payable.
                    Standard & Poor's Corporation will use the information
                    received in the pending deposit message described under
                    Settlement Procedure "C" below in order to include the
                    amount of any interest payable and certain other information
                    regarding the related Global Security in the appropriate
                    weekly bond report published by Standard & Poor's
                    Corporation.

                    Record Dates.  The Record Date with respect to any Interest
                    Payment Date will be the date fifteen calendar days
                    immediately preceding such Interest Payment Date.

                    Fixed Rate Book-Entry Notes.  Unless otherwise specified
                    pursuant to Settlement Procedure "A" below, interest
                    payments on Fixed Rate Book-Entry Notes [, other than
                    Amortizing Notes,] will be made semiannually on
                    _____________ ___ and _____________ ___ of each year, and at
                    maturity or upon any earlier redemption or repayment [and
                    principal and interest payments on Book-Entry Amortizing
                    Notes will be made semiannually on __________ __ and
                    __________ __ of each year or quarterly on __________ __,
                    __________ __, __________ __ and __________ __ of each year,
                    and at maturity (or on any redemption or repayment date)];
                    provided, however, that in the case of a Fixed Rate Book-
                    Entry Note issued between a Record Date and an Interest
                    Payment Date or on an Interest Payment Date, the first
                    interest payment will be made on the Interest Payment Date
                    following the next succeeding Record Date.  If any Interest
                    Payment Date for a Fixed Rate Book-Entry Note is not a
                    Business Day, the payment due on such day will be made on
                    the next succeeding Business

                                      -5-
<PAGE>
  
                    Day and no interest will accrue on such payment for the
                    period from and after such Interest Payment Date.

                    Floating Rate Book-Entry Notes.  Interest payments will be
                    made on Floating Rate Book-Entry Notes monthly, quarterly,
                    semiannually or annually.  Unless otherwise specified
                    pursuant to Settlement Procedure "A" below, interest will be
                    payable, in the case of Floating Rate Book-Entry Notes with
                    a daily, weekly or monthly Interest Reset Date, on the third
                    Wednesday of each month or on the third Wednesday of
                    __________, __________, __________ and __________, as
                    specified pursuant to Settlement Procedure "A" below; in the
                    case of Floating Rate Book-Entry Notes with a quarterly
                    Interest Reset Date, on the third Wednesday of ____________,
                    __________, _________ and ___________ of each year; in the
                    case of Floating Rate Book-Entry Notes with a semiannual
                    Interest Reset Date, on the third Wednesday of the two
                    months specified pursuant to Settlement Procedure "A" below;
                    and in the case of Floating Rate Book-Entry Notes with an
                    annual Interest Reset Date, on the third Wednesday of the
                    month specified pursuant to Settlement Procedure "A" below;
                    provided however, that if an Interest Payment Date for
                    Floating Rate Book-Entry Notes would otherwise be a day that
                    is not a Business Day with respect to such Floating Rate
                    Book-Entry Notes, such Interest Payment Date will be the
                    next succeeding Business Day with respect to such Floating
                    Rate Book-Entry Notes, except in the case of a LIBOR Note
                    and such Business Day is in the next succeeding calendar
                    month, in which case such Interest Payment Date will be the
                    immediately preceding Business Day; and provided, further,
                    that in the case of a Floating Rate Book-Entry Note issued
                    between a Record Date and the related Interest Payment Date
                    (a "Book-Entry Gap Note"), the first interest payment will
                    be made on the Interest Payment Date following the next
                    succeeding Record Date, and in such case notwithstanding the
                    fact that an Interest Reset Date may occur prior to such
                    Interest Payment Date, the Initial Interest Rate will remain
                    in effect until the first Interest Reset Date occurring on
                    or subsequent to such Interest Payment Date.

                    Notice of Interest Payment and Record Dates.  On the first
                    Business Day of __________, __________, __________ and
                    __________ of each year, the Trustee will deliver to the
                    Company and DTC a written list of Record Dates and Interest
                    Payment Dates that will occur with respect to Book-Entry
                    Notes during the six-month period beginning on such first
                    Business Day.  Promptly after each date upon which interest
                    is determined for Floating Rate Notes issued in book-entry
                    form,

                                      -6-
<PAGE>
  
                    the Calculation Agent will notify the Company, the Trustee
                    and Standard & Poor's Corporation of the interest rates
                    determined on such dates.

Calculation of      Fixed Rate Book-Entry Notes.  Interest on Fixed Rate
Interest:           Book-Entry Notes (including interest for partial periods)
                    will be calculated on the basis of a year of twelve thirty-
                    day months.

                    Floating Rate Book-Entry Notes.  Interest rates on Floating
                    Rate Book-Entry Notes will be determined as set forth in the
                    form of such Notes.  Interest on Floating Rate Book-Entry
                    Notes will be calculated on the basis of actual days elapsed
                    and a year of 360 days, except that, in the case of Treasury
                    Rate Notes, interest will be calculated on the basis of the
                    actual number of days in the year.

Payments of         Payments of Interest Only.  Promptly following each Record
Principal and       Date, the Trustee will deliver to the Company and DTC a
Interest:           written notice specifying by CUSIP number the amount of
                    interest to be paid on each Global Security other than an
                    Amortizing Note on the following Interest Payment Date
                    (other than an Interest Payment Date coinciding with
                    maturity or earlier redemption or repayment) and the total
                    of such amounts. DTC will confirm the amount payable on each
                    such Global Security on such Interest Payment Date by
                    reference to the daily bond reports published by Standard &
                    Poor's Corporation.  In the case of Amortizing Notes, the
                    Trustee will provide separate written notice to the Company
                    and to DTC prior to each Interest Payment Date at the time
                    and in the manner set forth in the Letter of Representation.
                    The Company will pay to the Trustee, as paying agent, the
                    total amount of interest due on such Interest Payment Date
                    (and, in the case of an Amortizing Note, principal and
                    interest) (other than at maturity), and the Trustee will pay
                    such amount to DTC at the times and in the manner set forth
                    below under "Manner of Payment."

                    Payments at Maturity or Upon Redemption or Repayment.  On or
                    about the first Business Day of each month, the Trustee will
                    deliver to the Company and DTC a written list of principal
                    and interest to be paid on each Global Security other than
                    an Amortizing Note maturing either at maturity or on a
                    redemption or repayment date in the following month.  The
                    Company and DTC will confirm the amounts of such principal
                    and interest payments with respect to each such Global
                    Security on or about the fifth Business Day preceding the
                    Maturity Date or redemption or repayment date of such Global
                    Security.  In the case of Amortizing Notes, the Trustee will
                    provide separate

                                      -7-
<PAGE>
  
                    written notice to the Company and to DTC prior to the
                    Maturity Date and any redemption or repayment date, as the
                    case may be, at the times and in the manner set forth in the
                    Letter of Representation.  The Company will pay to the
                    Trustee, as the paying agent, the principal amount of such
                    Global Security, together with interest due at such Maturity
                    Date or redemption or repayment date.  The Trustee will pay
                    such amounts to DTC at the times and in the manner set forth
                    below under "Manner of Payment."

                    Payments Not on Business Days.  If any Interest Payment Date
                    or the Maturity Date or redemption or repayment date of a
                    Global Security representing Fixed Rate Book-Entry Notes is
                    not a Business Day, the payment due on such day will be made
                    on the next succeeding Business Day and no interest will
                    accrue on such payment for the period from and after such
                    Interest Payment Date, Maturity Date or redemption or
                    repayment date, as the case may be.  If any Interest Payment
                    Date or the Maturity Date or redemption or repayment date of
                    a Global Security representing a Floating Rate Book-Entry
                    Note would otherwise fall on a day that is not a Business
                    Day, the payment due on such day will be made on the next
                    succeeding day that is a Business Day with respect to such
                    Notes with the same effect as if such Business Day were the
                    Interest Payment Date, Maturity Date or date of redemption
                    or repayment, as the case may be, except that, in the case
                    of Book-Entry LIBOR Notes, if such Business Day is in the
                    next succeeding calendar month, such Interest Payment Date,
                    Maturity Date or redemption or repayment date will be the
                    immediately preceding day that is a Business Day with
                    respect to such Book-Entry LIBOR Notes.  Promptly after
                    payment to DTC of the principal and interest due on the
                    Maturity Date or redemption or repayment date of a Global
                    Security, the Trustee will cancel such Global Security in
                    accordance with the terms of the Indenture and deliver it to
                    the Company with a certificate of cancellation.  [Upon
                    request/ On the first Business Day of each month], the
                    Trustee will deliver to the Company a written statement
                    indicating the total principal amount of outstanding Book-
                    Entry Notes as of the immediately preceding Business Day.

                    Manner of Payment.  The total amount of any principal and
                    interest due on Global Securities on any Interest Payment
                    Date or at maturity or upon redemption or repayment will be
                    paid by the Company to the Trustee in funds available for
                    immediate use by the Trustee as of 9:30 a.m. (New York City
                    time) on such date.  The Company will make such payment on
                    such Global Securities by wire transfer to the Trustee or by
                    instructing the

                                      -8-
<PAGE>
  
                    Trustee to withdraw funds from an account maintained by the
                    Company at the Trustee.  The Company will confirm such
                    instructions in writing to the Trustee.  Prior to 10 a.m.
                    (New York City time) on each Maturity Date or redemption or
                    repayment date or, if either such date is not a Business
                    Day, as soon as possible thereafter, following receipt of
                    such funds from the Company the Trustee will pay by separate
                    wire transfer (using Fedwire message entry instructions in a
                    form previously specified by DTC) to an account at the
                    Federal Reserve Bank of New York previously specified by
                    DTC, in funds available for immediate use by DTC, each
                    payment of principal (together with interest thereon) due on
                    Global Securities on any Maturity Date or redemption or
                    repayment date.  On each Interest Payment Date or, if any
                    such date is not a Business Day, as soon as possible
                    thereafter, interest payments and, in the case of Amortizing
                    Notes, interest and principal payments will be made to DTC
                    in same day funds in accordance with existing arrangements
                    between the Trustee and DTC.  Thereafter on each such date,
                    DTC will pay, in accordance with its SDFS operating
                    procedures then in effect, such amounts in funds available
                    for immediate use to the respective Participants in whose
                    names the Book-Entry Notes represented by such Global
                    Securities are recorded in the book-entry system maintained
                    by DTC.  Neither the Company nor the Trustee will have any
                    responsibility or liability for the payment by DTC to such
                    Participants of the principal of and interest on the Book-
                    Entry Notes.

                    Withholding Taxes.  The amount of any taxes required under
                    applicable law to be withheld from any interest payment on a
                    Book-Entry Note will be determined and withheld by the
                    Participant, indirect participant in DTC or other person
                    responsible for forwarding payments directly to the
                    beneficial owner of such Note.

Preparation of      If any order to purchase a Book-Entry Note is accepted by or
Pricing             on behalf of the Company, the Company will prepare a pricing
Supplement:         supplement reflecting the terms of such Note and will
                    arrange to file such Pricing Supplement with the Commission
                    in accordance with the applicable paragraph of Rule 424(b)
                    under the Act and will deliver the number of copies of such
                    Pricing Supplement to the relevant Agent as such Agent
                    requests by the close of business on the following Business
                    Day. The relevant Agent will cause such Pricing Supplement
                    to be delivered to the purchaser of the Note.

                    In each instance that a Pricing Supplement is prepared, the
                    Agent receiving such Pricing Supplement will affix the
                    Pricing

                                      -9-
<PAGE>
  
                    Supplement to a Prospectus prior to their use.  Outdated
                    Pricing Supplements, and the Prospectuses to which they are
                    attached (other than those retained for files), will be
                    destroyed.

Settlement:         The receipt by the Company of immediately available funds in
                    payment for a Book-Entry Note and the authentication and
                    issuance of the Global Security representing such Note will
                    constitute "settlement" with respect to such Note.  All
                    orders accepted by the Company will be settled on the third
                    Business Day following such acceptance pursuant to the
                    timetable for settlement set forth below unless the Company
                    and the purchaser agree to settlement on another day, which
                    will be no earlier than the next Business Day.

Settlement          Settlement Procedures with regard to each Book-Entry Note
Procedures:         sold by the Company to or through an agent will be as
                    follows (unless otherwise specified pursuant to a Terms
                    Agreement):

                    A.   The relevant Agent will advise the Company by facsimile
                         transmission or other acceptable means that such Note
                         is a Book-Entry Note and of the following settlement
                         information:

                         1.   Principal amount.

                         2.   Maturity Date.

                         3.   In the case of a Fixed Rate Book-Entry Note, the
                              Interest Rate, whether such Note will pay interest
                              annually or semi-annually and whether such Note is
                              an Amortizing Note and, if so, the Amortization
                              Schedule, or, in the case of a Floating Rate Book-
                              Entry Note, the Initial Interest Rate (if known at
                              such time), Interest Payment Date(s), Interest
                              Payment Period, Calculation Agent, Base Rate,
                              Index Maturity, Interest Reset Period, Initial
                              Interest Reset Date, Interest Reset Dates, Spread
                              or Spread Multiplier (if any), Minimum Interest
                              Rate (if any), Maximum Interest Rate (if any) and
                              the Alternate Rate Event Spread (if any).

                         4.   Redemption or repayment provisions, if any.

                         5.   Settlement date and time.

                         6.   Price.

                                      -10-
<PAGE>
  
                         7.   Agent's commission, if any, determined as provided
                              in the Agreement.

                         8.   Net proceeds to the Company.

                         9.   Whether the Note is an OID Note, and if it is an
                              OID Note, the total amount of OID, the yield to
                              maturity, the initial accrual period OID and the
                              applicability of Modified Payment upon
                              Acceleration (and, if so, the Issue Price).

                         10.  Any other applicable Terms.

                    B.   The Company will advise the Trustee by facsimile
                         transmission or other acceptable means of the
                         information set forth in Settlement Procedure "A"
                         above.  The Trustee will then assign a CUSIP number to
                         the Global Security representing such Note and will
                         notify the Company and the Agent of such CUSIP number
                         by telephone or electronic transmission (confirmed in
                         writing) as soon as practicable.

                    C.   The Trustee will enter a pending deposit message
                         through DTC's Participant Terminal System, providing
                         the following settlement information to DTC, the
                         relevant Agent and Standard & Poor's Corporation:

                         1.   The information set forth in Settlement Procedure
                              "A".

                         2.   The Initial Interest Payment Date for such Note,
                              the number of days by which such date succeeds the
                              related DTC Record Date (which in the case of
                              Floating Rate Notes which reset daily or weekly,
                              will be the date five calendar days immediately
                              preceding the applicable Interest Payment Date
                              and, in the case of all other Notes, will be the
                              Record Date as defined in the Note) and, if known,
                              the amount of interest payable on such Initial
                              Interest Payment Date.

                         3.   The CUSIP number of the Global Security
                              representing such Note.

                         4.   Whether such Global Security will represent any
                              other Book-Entry Note (to the extent known at such
                              time) and whether such Note is an

                                      -11-
<PAGE>
  
                              Amortizing Note (by an appropriate notation in the
                              comments field of DTC's Participant Terminal
                              System).

                         5.   The DTC participant numbers of the institutions
                              through which the Participant will hold the Book-
                              Entry Note.

                    D.   The Trustee will complete and authenticate the Global
                         Security representing such Note in accordance with the
                         terms of the written order of the Company then in
                         effect.

                    E.   DTC will credit such Note to the Trustee's participant
                         account at DTC.

                    F.   The Trustee will enter an SDFS deliver order through
                         DTC's Participant Terminal System instructing DTC to
                         (i) debit such Note to the Trustee's participant
                         account and credit such Note to the relevant Agent's
                         participant account and (ii) debit such Agent's
                         settlement account and credit the Trustee's settlement
                         account for an amount equal to the price of such Note
                         less such Agent's commission, if any.  The entry of
                         such a deliver order will constitute a representation
                         and warranty by the Trustee to DTC that (a) the Global
                         Security representing such Book-Entry Note has been
                         issued and authenticated and (b) the Trustee is holding
                         such Global Security pursuant to the Medium-Term Note
                         Certificate Agreement between the Trustee and DTC.

                    G.   Unless the relevant Agent purchased such Note as
                         principal, such Agent will enter an SDFS deliver order
                         through DTC's Participant Terminal System instructing
                         DTC (i) to debit such Note to such Agent's participant
                         account and credit such Note to the participant account
                         of the Participant with respect to such Note and (ii)
                         to debit the settlement account of such Participant and
                         credit the settlement account of such Agent for an
                         amount equal to the price of such Note.

                    H.   Transfers of funds in accordance with SDFS deliver
                         orders described in Settlement Procedures "F" and "G"
                         will be settled in accordance with SDFS operating
                         procedures in effect on the settlement date.

                    I.   The Trustee, upon confirming receipt of such funds,
                         will credit to the U.S. dollar account of the Company

                                      -12-
<PAGE>
  
                         maintained at a bank in New York City, notified to the
                         Trustee from time to time, in funds available for
                         immediate use in the amount transferred to the Trustee,
                         in accordance with Settlement Procedure "F".

                    J.   Unless the relevant Agent purchased such Note as
                         principal, such Agent will confirm the purchase of such
                         Note to the purchaser either by transmitting to the
                         Participant with respect to such Note a confirmation
                         order through DTC's institutional delivery system or by
                         mailing a written confirmation to such purchaser.

                    K.   Monthly, the Trustee will send to the Company a
                         statement setting forth the principal amount of Notes
                         Outstanding as of that date under the Indenture and
                         setting forth a brief description of any sales of which
                         the Company has advised the Trustee but which have not
                         yet been settled.

Settlement:         For sales by the Company of Book-Entry Notes for settlement
                    on the first Business Day after the sale date, Settlement
                    Procedures "A" through "J" set forth above will be completed
                    as soon as possible but not later than the respective times
                    (New York City time) set forth below:

                         Settlement
                         Procedure            Time
                         ----------           ----

                            A            11:00 a.m. on the sale date
                            B            12:00 noon on the sale date
                            C             2:00 p.m. on the sale date
                            D             9:00 a.m. on settlement date
                            E            10:00 a.m. on settlement date
                            F-G           2:00 p.m. on settlement date
                            H             4:45 p.m. on settlement date
                            I-J           5:00 p.m. on settlement date

                    If a sale is to be settled more than one Business Day after
                    the sale date, Settlement Procedures "A", "B" and "C" will
                    be completed as soon as practicable but no later than 11:00
                    a.m., 12 noon and 2:00 p.m., respectively, on the first
                    Business Day after the sale date.  If the Initial Interest
                    Rate for a Floating Rate Book-Entry Note has not been
                    determined at the time that Settlement Procedure "A" is
                    completed, Settlement Procedures "B" and "C" will be
                    completed as soon as such rate has been determined but no
                    later than 12 noon and 2:00 p.m., respectively, on the
                    second Business Day before the settlement

                                      -13-
<PAGE>
  
                    date.  Settlement Procedure "H" is subject to extension in
                    accordance with any extension of Fedwire closing deadlines
                    and upon the occurrence of any of the other events specified
                    in the SDFS operating procedures in effect on the settlement
                    date.  If settlement of a Book-Entry Note is rescheduled or
                    canceled, the Trustee, after receiving notice from the
                    Company or the Agent, will deliver to DTC, through DTC's
                    Participant Terminal System, a cancellation message to such
                    effect by no later than 2:00 p.m. on the Business Day
                    immediately preceding the scheduled settlement date.

Failure to Settle:  If the Trustee fails to enter an SDFS deliver order with
                    respect to a Book-Entry Note pursuant to Settlement
                    Procedure "F", the Trustee may deliver to DTC, through DTC's
                    Participant Terminal System, as soon as practicable a
                    withdrawal message instructing DTC to debit such Note to the
                    Trustee's participant account; provided, that the Trustee's
                    participant account contains a principal amount of the
                    Global Security representing such Note that is at least
                    equal to the principal amount to be debited.  If a
                    withdrawal message is processed with respect to all the
                    Book-Entry Notes represented by a Global Security, the
                    Trustee will mark such Global Security "canceled," make
                    appropriate entries in the Trustee's records and send such
                    canceled Global Security to the Company.  The CUSIP number
                    assigned to such Global Security will, in accordance with
                    CUSIP Service Bureau procedures, be canceled and not
                    immediately reassigned.  If a withdrawal message is
                    processed with respect to one or more, but not all, of the
                    Book-Entry Notes represented by a Global Security, the
                    Trustee will exchange such Global Security for two Global
                    Securities, one of which will represent such Book-Entry Note
                    or Notes and will be canceled immediately after issuance and
                    the other of which will represent the remaining Book-Entry
                    Notes previously represented by the surrendered Global
                    Security and will bear the CUSIP number of the surrendered
                    Global Security.

                    If the purchase price for any Book-Entry Note is not timely
                    paid to the Participant with respect to such Note by the
                    beneficial purchaser thereof (or a person, including an
                    indirect participant in DTC, acting on behalf of such
                    purchaser), such Participant and, in turn, the relevant
                    Agent may enter SDFS deliver orders through DTC's
                    Participant Terminal System reversing the orders entered
                    pursuant to Settlement Procedures "F" and "G", respectively.
                    Thereafter, the Trustee will deliver the withdrawal message
                    and take the related actions described in the preceding
                    paragraph.

                                      -14-
<PAGE>
  
                    Notwithstanding the foregoing, upon any failure to settle
                    with respect to a Book-Entry Note, DTC may take any action
                    in accordance with its SDFS operating procedures then in
                    effect.

                    In the event of a failure to settle with respect to one or
                    more, but not all, of the Book-Entry Notes to have been
                    represented by a Global Security, the Trustee will provide,
                    in accordance with Settlement Procedures "D" and "F", for
                    the authentication and issuance of a Global Security
                    representing the Book-Entry Notes to be represented by such
                    Global Security and will make appropriate entries in its
                    records.

Posting Rates by    The Company and the Agents will discuss from time to time
Company:            the rates of interest per annum to be borne by and the
                    maturity of Securities that may be sold as a result of the
                    solicitation of offers by an Agent. The Company may
                    establish a fixed set of interest rates and maturities for
                    an offering period ("posting"). If the Company decides to
                    change already posted rates, it will promptly advise the
                    Agents to suspend solicitation of offers until the new
                    posted rates have been established with the Agents.

Trustee Not To      Nothing herein will be deemed to require the Trustee to
Risk Funds:         risk or expend its own funds in connection with any payments
                    to the Company, the Agents, DTC or any holders of Notes, it
                    being understood by all parties that payments made by the
                    Trustee to the Company, the Agents, DTC or any holders of
                    Notes will be made only to the extent that funds are
                    provided to the Trustee for such purpose.


          PART II:  ADMINISTRATIVE PROCEDURES FOR CERTIFICATED NOTES

          The Trustee will serve as registrar in connection with the
Certificated Notes.

Issuance:           Each Certificated Note will be dated and issued as of the
                    date of its authentication by the Trustee.  Each
                    Certificated Note will bear an Original Issue Date, which
                    will be (i) with respect to an original Certificated Note
                    (or any portion thereof), its original issuance date (which
                    will be the settlement date) and (ii) with respect to any
                    Certificated Note (or any portion thereof) issued
                    subsequently upon exchange of a Certificated Note, or in
                    lieu of a destroyed, lost or stolen Certificated Note, the
                    original issuance date of the predecessor Certificated Note,
                    regardless of the date of authentication of such
                    subsequently issued Certificated Note.  [No Note issued
                    between a Record Date and the related Interest Payment Date
                    will be issued as a Certificated Note within the meaning of
                    the Indenture.]

                                      -15-
<PAGE>
  
Registration:       Certificated Notes will be issued only in fully registered
                    form without coupons.

Transfers and       A Certificated Note may be presented for transfer or
Exchanges:          exchange at the principal corporate trust office of the
                    Trustee.  Certificated Notes will be exchangeable for other
                    Certificated Notes having identical terms but different
                    authorized denominations without service charge.
                    Certificated Notes will not be exchangeable for Book-Entry
                    Notes.

Maturities:         Each Certificated Note will mature on a date from nine
                    months to [30] years from its date of issue.

Currency:           The currency denomination with respect to any Certificated
                    Note and the currency of payment of interest and principal
                    with respect to any such Certificated Note will be as set
                    forth therein and in the applicable Pricing Supplement.

Denominations:      Unless otherwise provided in a Prospectus Supplement, the
                    denomination of any Certificated Note will be a minimum of
                    $__________ (or in the case of Notes not denominated in U.S.
                    dollars, the equivalent thereof in the applicable foreign
                    currency or composite currency, rounded down to the nearest
                    1,000 units of such foreign currency or composite currency)
                    or any amount in excess thereof that is an integral multiple
                    of $1,000 (or in the case of Notes not denominated in U.S.
                    dollars, 1,000 units of such foreign currency or composite
                    currency).

Interest:           General.  Interest on each Certificated Note will accrue
                    from the Original Issue Date of such Note for the first
                    interest period and from the most recent date to which
                    interest has been paid for all subsequent interest periods.
                    Unless otherwise specified therein, each payment of interest
                    on a Certificated Note will include interest accrued to but
                    excluding the Interest Payment Date; provided, that in the
                    case of Floating Rate Notes with respect to which the
                    Interest Reset Period is daily or weekly, interest payable
                    on any Interest Payment Date (other than interest payable on
                    any date on which principal thereof is payable, and, if the
                    Note is a Certificated Gap Note (as defined below), other
                    than interest payable on the first Interest Payment Date
                    after the Original Issue Date thereof) will include interest
                    accrued through and including the Record Date immediately
                    preceding the Interest Payment Date, except that at maturity
                    or earlier redemption or repayment, the interest payable
                    will include interest accrued to, but excluding, the
                    Maturity Date or the date of redemption or repayment, as the
                    case may be.

                                      -16-
<PAGE>
  
                    Record Dates.  The Record Date with respect to any Interest
                    Payment Date in respect of a Certificated Note will be the
                    date fifteen calendar days immediately preceding such
                    Interest Payment Date.

                    Fixed Rate Certificated Notes.  Unless otherwise specified
                    pursuant to Settlement Procedure "A" below, interest
                    payments on Fixed Rate Certificated Notes, other than
                    Amortizing Notes, will be made semiannually on
                    _______________ ___ and _______________ ___ of each year (or
                    if so indicated in such Note, annually on _______________ __
                    of each year), and at maturity or upon any earlier
                    redemption or repayment and principal and interest payments
                    on Amortizing Certificated Notes will be made semiannually
                    on _______________ __ and _______________ __ of each year or
                    quarterly on _______________ __, _______________ __,
                    _______________ __  and _______________ __ of each year, and
                    at maturity (or on any redemption or repayment date);
                    provided, however, that in the case of a Fixed Rate
                    Certificated Note issued between a Record Date and an
                    Interest Payment Date or on an Interest Payment Date, the
                    first interest payment will be made on the Interest Payment
                    Date following the next succeeding Record Date.

                    Floating Rate Certificated Notes.  Interest payments will be
                    made on Floating Rate Certificated Notes monthly, quarterly,
                    semiannually or annually.  Unless otherwise specified
                    pursuant to Settlement Procedure "A" below, interest will be
                    payable, in the case of Floating Rate Certificated Notes
                    with a daily, weekly or monthly Interest Reset Date, on the
                    third Wednesday of each month or on the third Wednesday of
                    _______________, _______________, _______________ and
                    _______________, as specified pursuant to Settlement
                    Procedure "A" below; in the case of Floating Rate
                    Certificated Notes with a quarterly Interest Reset Date, on
                    the third Wednesday of _______________, _______________,
                    _______________ and _______________ of each year; in the
                    case of Floating Rate Certificated Notes with a semiannual
                    Interest Reset Date, on the third Wednesday of the two
                    months specified pursuant to Settlement Procedure "A" below;
                    and in the case of Floating Rate Certificated Notes with an
                    annual Interest Reset Date, on the third Wednesday of the
                    month specified pursuant to Settlement Procedure "A" below;
                    provided, however, that if an Interest Payment Date for
                    Floating Rate Certificated Notes would otherwise be a day
                    that is not a Business Day with respect to such Floating
                    Rate Certificated Notes, such Interest Payment Date will be
                    the next succeeding Business Day with respect to such
                    Floating Rate Certificated

                                      -17-
<PAGE>
  
                    Notes, except in the case of a LIBOR Note and such Business
                    Day is in the next succeeding calendar month, in which case
                    such Interest Payment Date will be the immediately preceding
                    Business Day; and provided, further, that in the case of a
                    Floating Rate Certificated Note issued between a Record Date
                    and the related Interest Payment Date (a "Certificated Gap
                    Note"), the first interest payment will be made on the
                    Interest Payment Date following the next succeeding Record
                    Date, and in such case, notwithstanding the fact that an
                    Interest Reset Date may occur prior to such Interest Payment
                    Date, the Initial Interest Rate will remain in effect until
                    the first Interest Reset Date occurring on or subsequent to
                    such Interest Payment Date.

                    Notice of Interest Payment and Record Dates.  On the first
                    Business Day of _______________, _______________,
                    _______________ and _______________ of each year, the
                    Trustee will deliver to the Company a written list of Record
                    Dates and Interest Payment Dates that will occur with
                    respect to Certificated Notes during the six-month period
                    beginning on such first Business Day.  Promptly after each
                    date upon which interest is determined for Floating Rate
                    Notes issued in certificated form, the Calculation Agent
                    will notify the Company and the Trustee of the interest
                    rates determined on such dates.

Calculation of      Fixed Rate Certificated Notes.  Interest on Fixed Rate
Interest:           Certificated Notes (including interest for partial periods)
                    will be calculated on the basis of a year of twelve thirty-
                    day months.

                    Floating Rate Certificated Notes.  Interest rates on
                    Floating Rate Certificated Notes will be determined as set
                    forth in the form of such Notes.  Interest on Floating Rate
                    Certificated Notes will be calculated on the basis of actual
                    days elapsed and a year of 360 days, except that, in the
                    case of Treasury Rate Notes, interest will be calculated on
                    the basis of the actual number of days in the year.

Payments of         The Company will pay the Trustee, as paying agent, the
Principal and       principal amount of each Certified Note (other than the
Interest:           interest on an Amortizing Note), together with interest due
                    thereon, at its Maturity Date or upon redemption or
                    repayment of such Note in funds available for immediate use
                    by the Trustee. In the case of an Amortizing Note, the
                    Company will pay the Trustee, as paying agent, the principal
                    amount due on such Note on such date, together with interest
                    due thereon, at its Maturity Date or upon redemption or
                    repayment of such Note on such date in funds available for
                    immediate use by the Trustee. The Trustee will pay such
                    amount to the holder of such Note at its Maturity

                                      -18-
<PAGE>
  
                    Date or upon redemption or repayment of such Note upon
                    presentation and surrender of such Note to the Trustee.
                    Such payment, together with payment of interest due at
                    maturity or upon redemption or repayment, will be made in
                    funds available for immediate use by the holder of such
                    Note.  Promptly after such presentation and surrender, the
                    Trustee will cancel such Certificated Note in accordance
                    with the terms of the Indenture and deliver it to the
                    Company with a certificate of cancellation.  Unless
                    otherwise specified in the applicable Pricing Supplement,
                    all interest payments on a Certificated Note or, in the case
                    of an Amortizing Certificated Note, payments of principal
                    and interest (other than interest (or interest and
                    principal) due at maturity or upon redemption or repayment)
                    will be made by check drawn on the Trustee (or another
                    person appointed by the Trustee) and mailed by the Trustee
                    to the person entitled thereto as provided in such Note and
                    the Indenture; provided, however, that (i) the holder of
                    $___________ or more of Notes having the same Interest
                    Payment Date will be entitled to receive payment by wire
                    transfer of immediately available funds and (ii) unless
                    otherwise specified in the applicable Pricing Supplement or
                    unless alterative arrangements are made, payments on Notes
                    in a currency other than U.S. dollars will be made by wire
                    transfer of immediately available funds to an account
                    maintained by the payee with a bank located outside the
                    United States and, with respect to clauses (i) and (ii)
                    above, the holder of such Notes will provide the Trustee
                    with appropriate and timely wire transfer instructions.

                    Promptly after each Record Date, the Trustee will deliver to
                    the Company a written notice specifying the amount of
                    interest to be paid on each Certificated Note other than an
                    Amortizing Note on the following Interest Payment Date
                    (other than an Interest Payment Date coinciding with
                    maturity or any earlier redemption or repayment date) and
                    the total of such amounts.  In the case of Amortizing Notes,
                    the Trustee will provide separate written notice to the
                    Company specifying the amount of interest and principal to
                    be paid on each Amortizing Note on the following Interest
                    Payment Date (other than an Interest Payment Date coinciding
                    with maturity or any earlier redemption or repayment date)
                    and the total of such amounts. Interest at maturity or upon
                    redemption or repayment will be payable to the person to
                    whom the payment of principal is payable.  On or about the
                    first Business Day of each month, the Trustee will deliver
                    to the Company a written list of principal and interest, to
                    the extent ascertainable, to be paid on each Certificated
                    Note including Amortizing Notes maturing or to be redeemed
                    or repaid in the following month.  The Trustee will be
                    responsible for

                                      -19-
<PAGE>
  
                    withholding taxes on interest paid on Certificated Notes as
                    required by applicable law.

                    If any Interest Payment Date or the Maturity Date or
                    redemption or repayment date of a Fixed Rate Certificated
                    Note is not a Business Day, the payment due on such day will
                    be made on the next succeeding Business Day and no interest
                    will accrue on such payment for the period from and after
                    such Interest Payment Date, Maturity Date or redemption or
                    repayment date, as the case may be.  If any Interest Payment
                    Date or the Maturity Date or redemption or repayment date of
                    a Floating Rate Certificated Note would otherwise fall on a
                    day that is not a Business Day with respect to such Note,
                    the payment due on such day will be made on the next
                    succeeding day that is a Business Day with respect to such
                    Note with the same effect as if such Business Day were the
                    stated Interest Payment Date, Maturity Date or date of
                    redemption or repayment, as the case may be, except that, in
                    the case of Certificated LIBOR Notes, if such Business Day
                    is in the next succeeding calendar month, such Interest
                    Payment Date, Maturity Date or redemption or repayment date
                    will be the immediately preceding day that is a Business 
                    Day with respect to such Certificated LIBOR Notes.

Preparation of      If any order to purchase a Certified Note is accepted by or
Pricing             on behalf of the Company, the Company will prepare a Pricing
Supplement:         Supplement reflecting the terms of such Note and will
                    arrange to file such Pricing Supplement with the Commission
                    in accordance with the applicable paragraph of Rule 424(b)
                    under the Act and will deliver the number of copies of such
                    Pricing Supplement to the relevant Agent as such Agent will
                    request by the close of business on the following Business
                    Day. The relevant Agent will cause such Pricing Supplement
                    to be delivered to the purchaser of the Note.

                    In each instance that a Pricing Supplement is prepared, the
                    Agent receiving such Pricing Supplement will affix the
                    Pricing Supplement to a Prospectus prior to their use.
                    Outdated Pricing Supplements, and the Prospectuses to which
                    they are attached (other than those retained for files),
                    will be destroyed.

Settlement:         The receipt by the Company of immediately available funds in
                    payment for an authenticated Certificated Note delivered to
                    the relevant Agent and such Agent's delivery of such Note
                    against receipt of immediately available funds will
                    constitute"settlement" with respect to such Note.  All
                    orders accepted by the Company will be settled on the third
                    Business Day following such

                                      -20-
<PAGE>
  
                    acceptance pursuant to the timetable for settlement set
                    forth below unless the Company and the purchaser agree to
                    settlement on another day, which will be no earlier than the
                    next Business Day.

Settlement          Settlement Procedures with regard to each Certificated Note
Procedures:         sold by the Company to or through an Agent will be as
                    follows (unless otherwise specified pursuant to a Terms
                    Agreement):

                    A.   The relevant Agent will advise the Company by facsimile
                         transmission or other acceptable means that such Note
                         is a Certificated Note and of the following settlement
                         information:

                         1. Name in which such Note is to be registered
                            ("Registered Owner").

                         2. Address of the Registered Owner and address for
                            payments of principal and interest.

                         3. Taxpayer identification number of the Registered
                            Owner (if available).

                         4. Currency or currency unit, principal amount and, if
                            different, currency in which payments of principal
                            and interest may be made.

                         5. Maturity Date.

                         6. In the case of a Fixed Rate Certificated Note, the
                            Interest Rate, whether such Note will pay interest
                            annually or semi-annually and whether such Note is
                            an Amortizing Note and, if so, the Amortization
                            Schedule, or, in the case of a Floating Rate
                            Certificated Note, the Initial Interest Rate (if
                            known at such time), Interest Payment Date(s),
                            Interest Payment Period, Calculation Agent, Base
                            Rate, Index Maturity, Interest Reset Period, Initial
                            Interest Reset Date, Interest Reset Dates, Spread or
                            Spread Multiplier (if any), Minimum Interest Rate
                            (if any), Maximum Interest Rate (if any) and the
                            Alternate Rate Event Spread (if any).

                         7. Redemption or repayment provisions, if any.

                         8. Settlement date and time.

                                      -21-
<PAGE>
  
                         9. Price.

                         10. Agent's commission, if any, determined as provided
                            in the Agreement.

                         11. Denominations.

                         12. Net proceeds to the Company.

                         13. Whether the Note is an OID Note, and if it is an
                             OID Note, the total amount of OID, the yield to
                             maturity, the initial accrual period OID and the
                             applicability of Modified Payment upon Acceleration
                             (and, if so, the Issue Price).

                         14. Any other applicable Terms.

                    B.   The Company will advise the Trustee by facsimile
                         transmission or other acceptable means of the
                         information set forth in Settlement Procedure "A"
                         above.

                    C.   The Company will deliver to the Trustee a pre-printed
                         four-ply packet for such Note, which packet will
                         contain the following documents in forms that have been
                         approved by the Company, the relevant Agent and the
                         Trustee:

                         1. Note with customer confirmation.

                         2. Stub One - For the Trustee.

                         3. Stub Two - For the relevant Agent.

                         4. Stub Three - For the Company.

                    D.   The Trustee will complete such Note and authenticate
                         such Note and deliver it (with the confirmation) and
                         Stubs One and Two to the relevant Agent, and such Agent
                         will acknowledge receipt of the Note by stamping or
                         otherwise marking Stub One and returning it to the
                         Trustee.  Such delivery will be made only against such
                         acknowledgment of receipt and evidence that
                         instructions have been given by such Agent for payment
                         to the account of the Company maintained at the
                         Trustee, New York, New York (or, with respect to Notes
                         payable in a Specified Currency other than U.S.
                         dollars, to an account maintained at a bank selected by
                         the Company notified to

                                      -22-
<PAGE>
  
                         the relevant Agent from time to time in writing) in
                         funds available for immediate use, of an amount equal
                         to the price of such Note less such Agent's commission,
                         if any.  In the event that the instructions given by
                         such Agent for payment to the account of the Company
                         are revoked, the Company will as promptly as possible
                         wire transfer to the account of such Agent an amount of
                         immediately available funds equal to the amount of such
                         payment made.

                    E.   Unless the relevant Agent purchased such Note as
                         principal, such Agent will deliver such Note (with
                         confirmation) to the customer against payment in
                         immediately available funds.  Such Agent will obtain
                         the acknowledgment of receipt of such Note by retaining
                         Stub Two.

                    F.   The Trustee will send Stub Three to the Company by
                         first-class mail.  Periodically, the Trustee will also
                         send to the Company a statement setting forth the
                         principal amount of the Notes outstanding as of that
                         date under the Indenture and setting forth a brief
                         description of any sales of which the Company has
                         advised the Trustee but which have not yet been
                         settled.

Settlement          For sales by the Company of Certificated Notes to or through
Procedures          an Agent (unless otherwise specified pursuant to a Terms
Timetables:         Agreement), Settlement Procedures "A" through "F" set forth
                    above will be completed on or before the respective times
                    (New York City time) set forth below:

                         Settlement
                         Procedure            Time
                         ----------           ----

                            A         2:00 p.m.  on day before settlement date
                            B         3:00 p.m.  on day before settlement date
                            C-D       2:15 p.m.  on settlement date
                            E         3:00 p.m.  on settlement date
                            F         5:00 p.m.  on settlement date

Failure to          If a purchaser fails to accept delivery of and make payment
Settle:             for any Certificated Note, the relevant Agent will notify
                    the Company and the Trustee by telephone and return such
                    Note to the Trustee. Upon receipt of such notice, the
                    Company will immediately wire transfer to the account of
                    such Agent an amount equal to the amount previously credited
                    thereto in respect of such Note. Such wire transfer will be
                    made on the

                                      -23-
<PAGE>
  
                    settlement date, if possible, and in any event not later
                    than the Business Day following the settlement date.  If the
                    failure has occurred for any reason other than a default by
                    such Agent in the performance of its obligations hereunder
                    and under the Agreement, then the Company will reimburse
                    such Agent or the Trustee, as appropriate, on an equitable
                    basis for its loss of the use of the funds during the period
                    when they were credited to the account of the Company (such
                    reimbursement for loss of the use of such funds to be based
                    on the federal funds effective rate then in effect).
                    Immediately upon receipt of the Certificated Note in respect
                    of which such failure occurred, the Trustee will mark such
                    Note "canceled", make appropriate entries in the Trustee's
                    records and send such Note to the Company.

Posting Rates       The Company and the Agents will discuss from time to time
by Company:         the rates of interest per annum to be borne by and the
                    maturity of Securities that may be sold as a result of the
                    solicitation of offers by an Agent. The Company may
                    establish a fixed set of interest rates and maturities for
                    an offering period ("posting"). If the Company decides to
                    change already posted rates, it will promptly advise the
                    Agents to suspend solicitation of offers until the new
                    posted rates have been established with the Agents.

Trustee Not to      Nothing herein shall be deemed to require the Trustee to
Risk Funds:         risk or expend its own funds in connection with any payments
                    to the Company, the Agents or any holders of Notes, it being
                    understood by all parties that payments made by the Trustee
                    to the Company, the Agents or any holders of Notes will be
                    made only to the extent that funds are provided to the
                    Trustee for such purpose.

                                      -24-
