EURO DISTRIBUTION AGREEMENT

EXHIBIT 1-e

MORGAN STANLEY

Global Medium-Term Notes, Series G and Series H

Global Units, Series G and Series H

EURO DISTRIBUTION AGREEMENT

[ ], 2005

Morgan Stanley & Co. International Limited

c/o Morgan Stanley & Co. International

Limited

25 Cabot Square

Canary Wharf London E14 4QA

United Kingdom

Dear Sirs:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Authority and to trading on the London Stock

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

stock exchange.

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

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

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

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

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

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

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

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

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

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

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

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

sometimes hereinafter referred to individually as an "Indenture" and

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

Subordinated Debt Trustee are sometimes hereinafter referred to individually as

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

that are not issued under the Indentures.

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

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

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

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

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

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

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

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

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

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

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

prospectus supplement will specify whether Notes, Warrants and Purchase

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Notes).

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

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

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

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

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

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

global Unit, each

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

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

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

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

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

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

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

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

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

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

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

permanent global Note and definitive Notes in bearer form are collectively

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

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

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

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

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

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

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

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

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

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

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

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

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

Agreement.

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

of soliciting and receiving offers to purchase Program Securities from the

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

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

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

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

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

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

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

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

provisions of Section 2(b) hereof.

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

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

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

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

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

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

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

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relating to the Program Securities included in the Registration Statement that

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

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

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

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

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

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

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

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

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

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

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

Prospectus by the Company with the Commission pursuant to the Securities

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

an abbreviated registration statement to register additional Program Securities

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

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

shall be deemed to include such Rule 462 Registration Statement.

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

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

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

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

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

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

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

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

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

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

or supplemented to each such date):

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

suspending the effectiveness of the Registration Statement is in effect,

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

Commission.

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

Exchange Act and incorporated by reference in the Prospectus complied or

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

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

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

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

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

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

make the statements therein not misleading, (iii) the

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Registration Statement and the Prospectus comply and, as amended or

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

Securities Act and the applicable rules and regulations of the Commission

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

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

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

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

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

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

in the Registration Statement or the Prospectus based upon information

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

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

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

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

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

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

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

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

deemed not to cover information concerning an offering of particular

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

supplement to the Basic Prospectus.

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

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

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

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

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

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

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

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

and its consolidated subsidiaries, taken as a whole.

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

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

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

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

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

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

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

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

material adverse effect on the Company and its consolidated subsidiaries,

taken as a whole.

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

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

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

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

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

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

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

Company, enforceable in accordance with its terms except as the

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

reorganization, liquidation, moratorium and other similar laws affecting

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

equity, regardless of whether such enforceability is considered at a

proceeding in equity or at law.

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

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

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

Agreement Without Holders' Obligations will be a valid and binding

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

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

reorganization, liquidation, moratorium and other similar laws affecting

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

equity, regardless of whether such enforceability is considered at a

proceeding in equity or at law.

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

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

duly authorized and established in conformity with the provisions of the

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

Purchase Contracts) have been executed and authenticated in accordance with

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

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

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

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

accordance with their respective terms except as the enforceability thereof

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

moratorium and other similar laws affecting creditors' rights generally and

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

enforceable in accordance with their respective terms except as the

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

reorganization, liquidation, moratorium and other similar laws affecting

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

equity, regardless of whether such enforceability is considered at a

proceeding in equity or at law.

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

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

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

conformity with the provisions of the Unit Agreement Without Holders'

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

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

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

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

Agreement Without Holders' Obligations and will be valid and binding

obligations of the Company, enforceable in accordance with their respective

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

bankruptcy, insolvency, reorganization, liquidation, moratorium and other

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

general principles of equity, regardless of whether such enforceability is

considered at a proceeding in equity or at law.

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

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

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

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

Holders' Obligations, the Warrant Agreement and any applicable Written

Notes Terms Agreement or Written Units Terms Agreement and the performance

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

Pre-paid Purchase Contracts, the

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

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

Obligations, the Warrant Agreement and any applicable Notes Terms Agreement

or Units Terms Agreement will not contravene any provision of applicable

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

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

subsidiaries that is material to the Company and its consolidated

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

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

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

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

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

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

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

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

Obligations, the Warrant Agreement and any applicable Notes Terms Agreement

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

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

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

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

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

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

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

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

development involving a prospective material adverse change, in the

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

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

set forth in the Prospectus.

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

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

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

consolidated subsidiaries is subject that are required to be described in

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

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

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

filed or incorporated by reference as exhibits to the Registration

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

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

necessary consents, authorizations, approvals, orders, certificates and

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

federal, state, local and other governmental authorities, all

self-regulatory

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

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

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

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

its consolidated subsidiaries, taken as a whole.

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

investment adviser with the Commission, is registered with the Commodity

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

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

Securities Dealers, Inc.

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

and investment adviser with the Commission, is registered with the

Commodity Futures Trading Commission as a futures commission merchant and

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

Association of Securities Dealers, Inc.

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

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

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

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

of 1940, as amended.

Notwithstanding the foregoing, it is understood and agreed that the

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

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

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

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

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

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

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

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

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

exchange rates, commodity prices, securities of entities affiliated or

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

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

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

Commodity Futures Trading Commission.

2. Solicitations as Agents; Purchases as Principals.

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

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

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

then amended or supplemented.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

offers to purchase Program Securities until the Company has delivered such

certificates, opinions and letters as you may request.

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

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

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

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

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

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

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

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

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

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

to such Note or Unit.

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

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

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

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

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

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

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

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

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

Procedures (as hereinafter defined).

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

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

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

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

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

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

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

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

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

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

confirmed in writing by you to the Company.

Your commitment to purchase Program Securities as principal pursuant to

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Each Notes Terms Agreement and each Units Terms Agreement shall specify

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

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

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

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

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

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

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

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

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

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

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

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

relating to such Notes or Units.

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

respective duties and obligations specifically provided to be performed in the

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

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

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

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

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

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

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

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

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

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

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

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

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

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

3. Agreements. The Company agrees with you that:

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

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

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

relating to the Program Securities or any amendment to the Registration

Statement relating to the Program Securities unless the Company has

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

file any such proposed supplement or amendment to which you reasonably

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

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

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

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

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

the foregoing sentence, the Company will promptly cause each Prospectus

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

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

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

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

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

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

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

Commission of any stop order suspending the effectiveness of the

Registration Statement or the institution or threatening of any proceeding

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

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

Program Securities for sale in any jurisdiction or the initiation or

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

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

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

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

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

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

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

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

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

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

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

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

document.

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

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

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

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

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

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

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

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

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

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

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

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

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

shall forthwith suspend such solicitation and cease using the Prospectus,

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

supplement the Registration Statement or Prospectus, as then amended or

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

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

filed promptly with the Commission an amendment or supplement to the

Registration Statement or Prospectus, as then amended or supplemented,

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

omission or effect such compliance and will supply such amended or

supplemented Prospectus to you in such quantities as you may reasonably

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

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

connection with the preparation and filing of such amendment or supplement

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

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

effectiveness of an amendment to the Registration Statement, you will

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<PAGE>

resume the solicitation of offers to purchase Program Securities hereunder.

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

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

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

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

promptly with the Commission an amendment or supplement to the Registration

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

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

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

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

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

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

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

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

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

regulations of the Commission thereunder covering twelve month periods

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

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

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

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

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

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

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

days after the close of the period covered thereby.

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

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

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

documents incorporated by reference therein and any supplements and

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

that purchases Program Securities pursuant to a Notes Terms Agreement or

Units Terms Agreement or solicits an offer to purchase Program Securities

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

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

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

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

Supplement relating to the Program Securities to be purchased pursuant to

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

such Agent may reasonably request.

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<PAGE>

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

you such relevant documents and certificates of officers of the Company

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

Registration Statement, the Basic Prospectus, any amendments or supplements

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

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

Warrants, the Purchase Contracts, this Agreement, the Administrative

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

performance by the Company of its obligations hereunder or thereunder as

you may from time to time reasonably request.

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

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

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

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

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

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

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

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

consummated, pay all expenses incident to the performance of its

obligations under this Agreement and any Notes Terms Agreement or Units

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

Registration Statement and the Prospectus and all amendments and

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

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

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

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

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

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

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

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

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

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

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

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

stated of copies of the Registration Statement and all amendments thereto

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

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

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

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

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

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

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

with the offering and sale of the

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<PAGE>

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

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

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

the Company.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Terms Agreement or Units Terms Agreement.

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

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

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

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

Agreement, any Written Notes Terms Agreement or Written Units Terms

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

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

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

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

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

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

subdivision or taxing authority thereof or therein.

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

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

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

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

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

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

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

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

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

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

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

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<PAGE>

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

Company can no longer reasonably maintain such listing and trading,

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

maintenance of such listing would require preparation of financial

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

where the proposed European Union Transparency Obligations Directive (the

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

equivalent value denominated wholly or partly in a currency other than

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

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

amount).

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

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

to purchase Program Securities as principals pursuant to any Notes Terms

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

purchase Program Securities will be subject to the accuracy of the

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

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

furnished

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

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

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

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

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

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

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

additional conditions precedent when and as specified:

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

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

involving a prospective change, in the condition, financial or

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

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

Prospectus, as amended or supplemented at the time of such

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

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

judgment, impracticable to market the Program Securities on the terms

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

supplemented;

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

international financial, political or economic conditions or currency

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

prejudice materially the success of the offering and distribution of

the Program Securities or dealings in the Program Securities in the

secondary market; and

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

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

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

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

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

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

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

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

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

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

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

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

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

offer to purchase such Program Securities was made.

19

<PAGE>

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

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

shall have received:

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

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

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

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

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

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

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

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

good standing in each jurisdiction in which the conduct of its

business or its ownership or leasing of property requires such

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

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

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

whole;

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

& Co. Incorporated and Morgan Stanley International Holdings Inc.

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

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

jurisdiction of its incorporation, has the corporate power and

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

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

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

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

property requires such qualification, except to the extent that the

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

material adverse effect on the Company and its consolidated

subsidiaries, taken as a whole;

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

necessary consents, authorizations, approvals, orders, certificates

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

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

all self-regulatory organizations and all courts and other

20

<PAGE>

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

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

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

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

and its consolidated subsidiaries, taken as a whole;

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

Agreement or Written Units Terms Agreement has been duly authorized,

executed and delivered by the Company;

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

Indenture Act and each of the Senior Indenture, the Subordinated

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

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

binding agreement of the Company, enforceable in accordance with its

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

bankruptcy, insolvency, reorganization, liquidation, moratorium and

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

subject to general principles of equity, regardless of whether such

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

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

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

valid and binding agreement of the Company, enforceable in accordance

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

by bankruptcy, insolvency, reorganization, liquidation, moratorium and

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

subject to general principles of equity, regardless of whether such

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

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

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

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

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

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

Company and authenticated by the

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relevant Trustee or its duly appointed agent in accordance with the

provisions of the relevant Indenture and delivered to and duly paid

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

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

the benefits of such Indenture and would be valid and binding

obligations of the Company, enforceable in accordance with their

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

limited by bankruptcy, insolvency, reorganization, liquidation,

moratorium and other similar laws affecting creditors' rights

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

regardless of whether such enforceability is considered at a

proceeding in equity or at law;

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

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

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

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

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

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

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

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

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

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

Contracts included therein had been executed by the Company and

countersigned by the Unit Agent and any Warrants included therein had

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

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

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

Purchase Contracts and the Warrants contained therein) would be

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

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

obligations of the Company, enforceable in accordance with their

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

limited by bankruptcy, insolvency, reorganization, liquidation,

moratorium and other similar laws affecting creditors' rights

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

regardless of whether such enforceability is considered at a

proceeding in equity or at law;

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

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

included therein have been duly authorized and established in

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

Units (including any such Warrants included therein) had been

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

Warrants included therein had been executed by the Company and

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

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

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

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

and binding obligations of the Company, enforceable in accordance with

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

limited by bankruptcy, insolvency, reorganization, liquidation,

moratorium and other similar laws affecting creditors' rights

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

regardless of whether such enforceability is considered at a

proceeding in equity or at law;

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

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

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

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

Agreement Without Holders' Obligations, the Warrant Agreement and any

applicable Written Notes Terms Agreement or Written Units Terms

Agreement and the performance by the Company of its obligations under

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

Agreement, any Unit Agreement Without Holders' Obligations, the

Warrant Agreement and any applicable Notes Terms Agreement or Units

Terms Agreement will not contravene any provision of applicable law or

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

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

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

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

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

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

jurisdiction

23

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

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

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

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

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

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

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

Warrant Agreement and any applicable Notes Terms Agreement or Units

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

whether the purchase of the Program Securities constitutes a

"prohibited transaction" under Section 406 of the Employee Retirement

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

Internal Revenue Code of 1986, as amended;

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

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

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

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

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

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

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

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

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

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

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

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

filed since such annual report and incorporated by reference in the

Prospectus, in each case insofar as such statements constitute

summaries of the legal matters, documents or proceedings referred to

therein, fairly present the information called for with respect to

such legal matters, documents and proceedings and fairly summarize the

matters referred to therein;

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

governmental proceedings pending or threatened to which the Company or

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

properties of the Company or any of its consolidated

24

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subsidiaries is subject that are required to be described in the

Registration Statement or the Prospectus, as then amended or

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

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

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

Registration Statement or the Prospectus, as then amended or

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

to such Registration Statement that are not described, filed or

incorporated by reference as required;

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

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

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

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

Investment Company Act of 1940, as amended; and

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

pursuant to the Exchange Act and incorporated by reference in the

Prospectus as then amended or supplemented (except as to financial

statements and schedules and other financial and statistical data

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

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

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

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

the Registration Statement (except as to financial statements and

schedules and other financial and statistical data included therein,

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

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

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

part became effective contained, and the Registration Statement

(except as to financial statements and schedules and other financial

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

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

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

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

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

therein or necessary to make the statements therein not misleading,

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

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amended or supplemented, if applicable (except as to financial

statements and schedules and other financial and statistical data

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

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

Securities Act and the applicable rules and regulations of the

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

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

to financial statements and schedules and other financial and

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

prior to such Settlement Date.

Notwithstanding the foregoing, the opinions described in subparagraphs

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

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

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

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

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

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

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

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

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

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

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

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

indices or other factors.

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

opinion is given by counsel who is also an officer of the Company, such counsel

may state that his or her opinion and belief are based upon his or her

participation, or the participation of someone under his or her supervision, in

the preparation of the Registration Statement and Prospectus and any amendments

or supplements thereto and documents incorporated therein by reference and

review and discussion of the contents thereof, but are without independent check

or verification, except as specified. With respect to subparagraph (N) of

paragraph (b)(i) above, Davis Polk & Wardwell and, if Sidley Austin Brown & Wood

LLP is giving such opinion, Sidley Austin Brown & Wood LLP may state that their

opinion and belief are based upon their participation in the preparation of the

Registration Statement and Prospectus and any amendments or supplements thereto

(but not including documents incorporated therein by reference) and review and

discussion of the contents thereof (including documents incorporated therein by

reference), but are without independent check or verification, except as

specified.

(iii) The opinion, dated as of such date, of Sidley Austin

Brown & Wood LLP, special counsel to the Company, to the effect

that the statements set forth under the caption "United States

Federal Taxation" in the Prospectus Supplement and under the

caption "Forms of Securities-Limitations on Issuance of Bearer

Securities" in the Basic Prospectus, insofar as such statements

relate to statements of law or legal conclusions under the laws

of the United States or matters of United States law, fairly

present the information called for and fairly summarize the

matters referred to therein.

The opinion of Sidley Austin Brown & Wood LLP described in paragraph

(b)(iii) above and in paragraph (b)(i) above, if such opinion is given by Sidley

Austin Brown & Wood LLP, shall be rendered to you at the request of the Company

and shall so state therein.

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(c) On the Commencement Date and, if called for by any Notes Terms

Agreement or Units Terms Agreement, on the corresponding Settlement Date,

you shall have received a certificate, dated the Commencement Date or such

Settlement Date, as the case may be, and signed by an executive officer of

the Company to the effect set forth in subparagraph (a)(iii) above and to

the effect that the representations and warranties of the Company contained

in this Agreement are true and correct as of such date and that the Company

has complied with all of the agreements and satisfied all of the conditions

on its part to be performed or satisfied on or before such date.

The officer signing and delivering such certificate may rely upon the best of

his knowledge as to proceedings threatened.

(d) On the Commencement Date and, if called for by any Notes Terms

Agreement or Units Terms Agreement, on the corresponding Settlement Date,

the Company's independent auditors shall have furnished to you a letter or

letters, dated as of the Commencement Date or such Settlement Date, as the

case may be, in form and substance satisfactory to you containing

statements and information of the type ordinarily included in accountants'

"comfort letters" to underwriters with respect to the financial statements

and certain financial information contained in or incorporated by reference

into the Prospectus, as then amended or supplemented; provided that each

letter so furnished shall use a "cut-off date" no more than three business

days prior to the date of such letter.

(e) On the Commencement Date and on each Settlement Date, the Company

shall have furnished to you such appropriate further information,

certificates and documents as you may reasonably request.

(f) On the Commencement Date, application to admit the Series G Notes

issued by the Company during the twelve months following the date of the

approval of such application to listing on the Official List of the UK

Listing Authority and to trading on the London Stock Exchange shall have

been made and, prior to the issuance of the first Series G Note offered

pursuant to this Agreement, such admission to listing and to trading shall

have been granted, subject to official notice of issuance.

5. Additional Agreements of the Company. Each time the Registration

Statement or Prospectus is amended or supplemented (other than by an amendment

or supplement providing solely for (i) in the case of Notes, a change in the

interest rates, redemption provisions, amortization schedules or maturities

offered on the Notes issued alone or as part of a Unit, (ii) in the case of

Units, (x) a change in the exercise price, exercise date or period or expiration

of an underlying Warrant or (y) a change in the settlement date or purchase or

sale

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price of an underlying Purchase Contract or (iii) a change you deem to be

immaterial), the Company will deliver or cause to be delivered forthwith to you

a certificate signed by an executive officer of the Company, dated the date of

such amendment or supplement, as the case may be, in form reasonably

satisfactory to you, of the same tenor as the certificate referred to in Section

4(c) relating to the Registration Statement or the Prospectus as amended or

supplemented to the time of delivery of such certificate.

(b) Each time the Company furnishes a certificate pursuant to Section 5(a)

(other than any amendment or supplement to the Registration Statement or

Prospectus caused by the filing of a Current Report on Form 8-K unless you shall

reasonably request based on disclosure included or omitted from such Report),

the Company will furnish or cause to be furnished forthwith to you a written

opinion of counsel for the Company. Any such opinion shall be dated the date of

such amendment or supplement, as the case may be, shall be in a form

satisfactory to you and shall be of the same tenor as the opinions referred to

in Section 4(b), but modified to relate to the Registration Statement and the

Prospectus as amended and supplemented to the time of delivery of such opinion.

In lieu of such opinion, counsel last furnishing such an opinion to you may

furnish to you a letter to the effect that you may rely on such last opinion to

the same extent as though it were dated the date of such letter (except that

statements in such last opinion will be deemed to relate to the Registration

Statement and the Prospectus as amended or supplemented to the time of delivery

of such letter.)

(c) Each time the Registration Statement or the Prospectus is amended or

supplemented to set forth amended or supplemental financial information or such

amended or supplemental information is incorporated by reference in the

Prospectus, the Company shall cause its independent auditors forthwith to

furnish you with a letter, dated the date of such amendment or supplement, as

the case may be, in form satisfactory to you, of the same tenor as the letter

referred to in Section , with regard to the amended or supplemental financial

information included or incorporated by reference in the Registration Statement

or the Prospectus as amended or supplemented to the date of such letter;

provided that each letter so furnished shall use a "cut-off date" no more than

three business days prior to the date of such letter.

6. Indemnification and Contribution. (a) The Company agrees to indemnify

and hold harmless you and each person, if any, who controls you 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, any legal or other expenses reasonably incurred

in connection with defending or investigating any such action or claim) caused

by any untrue statement or alleged untrue statement of a material fact contained

in the Registration Statement or any amendment thereof or the Prospectus (as

amended or supplemented if the Company shall have furnished any amendments

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or supplements thereto), 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 such untrue statement or omission or

alleged untrue statement or omission based upon information relating to you

furnished to the Company in writing by you expressly for use therein.

(b) You agree to indemnify and hold harmless the Company, its directors,

its officers who sign the Registration Statement and each person, if any, who

controls the Company within the meaning of either Section 15 of the Securities

Act or Section 20 of the Exchange Act to the same extent as the foregoing

indemnity from the Company to you, but only with reference to information

relating to you furnished to the Company in writing by you expressly for use in

the Registration Statement or the Prospectus or any amendments or supplements

thereto.

(c) In case any proceeding (including any governmental investigation) shall

be instituted involving any person in respect of which indemnity may be sought

pursuant to either paragraph (a) or (b) above, such person (the "indemnified

party") shall promptly notify the person against whom such indemnity may be

sought (the "indemnifying party") in writing and the indemnifying party, upon

request of the indemnified party, shall retain counsel reasonably satisfactory

to the indemnified party to represent the indemnified party and any others the

indemnifying party may designate in such proceeding and shall pay the fees and

disbursements of such counsel related to such proceeding. In any such

proceeding, any indemnified party 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 party unless (i) the indemnifying party and the indemnified

party shall have mutually agreed to the retention of such counsel or (ii) the

named parties to any such proceeding (including any impleaded parties) include

both the indemnifying party and the indemnified party 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 party

shall not, in respect of the legal expenses of any indemnified party in

connection with any proceeding or related proceedings 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 such indemnified parties and that all such fees

and expenses shall be reimbursed as they are incurred. Such firm shall be

designated in writing by you, in the case of parties indemnified pursuant to

paragraph (a) above, and by the Company, in the case of parties indemnified

pursuant to paragraph (b) above. The indemnifying party shall not be liable for

any settlement of any proceeding effected without its written consent, but if

settled with such consent or if there were to be a final judgment for the

plaintiff, the indemnifying party agrees to indemnify the indemnified party from

and against any loss or liability by reason of such settlement or judgment.

Notwithstanding the foregoing sentence, if at any

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time an indemnified party shall have requested an indemnifying party to

reimburse the indemnified party for fees and expenses of counsel as contemplated

by the second and third sentences of this paragraph, the indemnifying party

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 party of the aforesaid request and (ii)

such indemnifying party shall not have reimbursed the indemnified party in

accordance with such request prior to the date of such settlement. No

indemnifying party shall, without the prior written consent of the indemnified

party, effect any settlement of any pending or threatened proceeding in respect

of which any indemnified party is or could have been a party and indemnity could

have been sought hereunder by such indemnified party, unless such settlement

includes an unconditional release of such indemnified party from all liability

on claims that are the subject matter of such proceeding.

(d) To the extent the indemnification provided for in paragraph (a) or (b)

of this Section 6 is unavailable to an indemnified party or insufficient in

respect of any losses, claims, damages or liabilities referred to therein in

connection with any offering of Program Securities, then each indemnifying party

under such paragraph, in lieu of indemnifying such indemnified party thereunder,

shall contribute to the amount paid or payable by such indemnified party 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 you on the other hand from the offering of such Program Securities

or (ii) if the allocation provided by clause (i) 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 you on the other hand 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 you on the other

hand in connection with the offering of such Program Securities shall be deemed

to be in the same respective proportions as the total net proceeds from the

offering of such Program Securities (before deducting expenses) received by the

Company bear to the total discounts and commissions received by you in respect

thereof. The relative fault of the Company on the one hand and of you on the

other hand 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 you and the parties' relative intent, knowledge, access to information and

opportunity to correct or prevent such statement or omission.

(e) The Company and you agree that it would not be just or equitable if

contribution pursuant to this Section 6 were determined by pro rata allocation

or by any other method of allocation that does not take account of the equitable

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considerations referred to in paragraph (d) above. The amount paid or payable by

an indemnified party as a result of the losses, claims, damages and liabilities

referred to in paragraph (d) above shall be deemed to include, subject to the

limitations set forth above, any legal or other expenses reasonably incurred by

such indemnified party in connection with investigating or defending any such

action or claim. Notwithstanding the provisions of this Section 6, you shall not

be required to contribute any amount in excess of the amount by which the total

price at which the Program Securities referred to in paragraph (d) above that

were offered and sold to the public through you exceeds the amount of any

damages that you have 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 fraudulent misrepresentation. The remedies provided for in this

Section 6 are not exclusive and shall not limit any rights or remedies which may

otherwise be available to any indemnified party at law or in equity.

(f) The indemnity and contribution provisions contained in this Section 6

and the representations, warranties and other statements of the Company, its

officers and you set forth in or made pursuant to this Agreement or any Notes

Terms Agreement or Units Terms Agreement will remain operative and in full force

and effect regardless of (i) any termination of this Agreement or any such Notes

Terms Agreement or Units Terms Agreement, (ii) any investigation made by or on

behalf of you or any person controlling you or by or on behalf of the Company,

its officers or directors or any person controlling the Company and (iii)

acceptance of and payment for any of the Program Securities.

7. Offering Restrictions. You hereby represent to the Company and agree

with respect to the Program Securities that:

(a) you have not (A) offered or sold and will not offer or sell during

the Restricted Period (as defined below) Bearer Notes (whether offered

alone or as part of a Unit) (including any Note that is exchangeable for

Bearer Notes) directly or indirectly in the United States (as defined

below) or to or for the account of any United States person (as defined

below), other than to a Qualifying Foreign Branch (as defined below) or to

certain other persons as provided under United States Treasury Regulations

Section 1.163-5(c)(2)(i)(D)(1)(iii)(B) and (C); and (B) delivered and will

not deliver within the United States definitive Bearer Notes that are sold

during the Restricted Period;

(ii) you have, and throughout the Restricted Period will have, in

effect procedures reasonably designed to ensure that your employees or

agents who are directly engaged in selling Bearer Notes (whether

offered alone or as part of a Unit) are

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aware that such Bearer Notes may not be offered or sold during the

Restricted Period to a person who is within the United States or to a

United States person, except as permitted by Section 7(a)(i)(A) above;

(iii) if you are a United States person, you are acquiring the

Bearer Notes (whether offered alone or as part of a Unit) for purposes

of resale in connection with their original issuance and if you retain

Bearer Notes for your own account, you will only do so in accordance

with the requirements of United States Treasury Regulations Section

1.163-5(c)(2)(i)(D)(6);

(iv) if you transfer to any affiliate Bearer Notes (whether

offered alone or as part of a Unit) for the purpose of offering or

selling such Bearer Notes during the Restricted Period, you will

either (A) obtain from such affiliate for the benefit of the Company

the representations and agreements contained in clauses , (ii) and

(iii) above or (B) repeat and confirm the representations and

agreements contained in clauses (i), (ii) and (iii) above on such

affiliate's behalf and obtain from such affiliate the authority to so

obligate it; and

(v) you will obtain for the benefit of the Company the

representations and agreements contained in clauses (i), (ii), (iii)

and (iv) above from any person other than your affiliate with whom you

enter into a written contract, within the meaning of United States