EXHIBIT 10.1

Multicurrency -- Cross Border

                                    ISDA(R)
               International Swaps Dealers Association, Inc.

                               MASTER AGREEMENT
                          dated as of 19 January 2005


 NORTHERN  ROCK PLC    and       GRANITE  FINANCE  FUNDING  2  LIMITED
    ("Party  A")                              ("Party B")

have entered and/or anticipate entering into one or more transactions (each a
"Transaction") that are or will be governed by this Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other confirming
evidence (each a "Confirmation") exchanged between the parties confirming
those Transactions.

Accordingly, the parties agree as follows:--

1. Interpretation

(a) Definitions. The terms defined in Section 14 and in the Schedule will have
the meanings therein specified for the purpose of this Master Agreement.

(b) Inconsistency. In the event of any inconsistency between the provisions of
the Schedule and the other provisions of this Master Agreement, the Schedule
will prevail. In the event of any inconsistency between the provisions of any
Confirmation and this Master Agreement (including the Schedule), such
Confirmation will prevail for the purpose of the relevant Transaction.

(c) Single Agreement. All Transactions are entered into in reliance on the
fact that this Master Agreement and all Confirmations form a single agreement
between the parties (collectively referred to as this "Agreement"), and the
parties would not otherwise enter into any Transactions.

2. Obligations

(a) General Conditions.

      (i) Each party will make each payment or delivery specified in each
      Confirmation to be made by it, subject to the other provisions of this
      Agreement.

      (ii) Payments under this Agreement will be made on the due date for
      value on that date in the place of the account specified in the relevant
      Confirmation or otherwise pursuant to this Agreement, in freely
      transferable funds and in the manner customary for payments in the
      required currency. Where settlement is by delivery (that is, other than
      by payment), such delivery will be made for receipt on the due date in
      the manner customary for the relevant obligation unless otherwise
      specified in the relevant Confirmation or elsewhere in this Agreement.

      (iii) Each obligation of each party under Section 2(a)(i) is subject to
      (1) the condition precedent that no Event of Default or Potential Event
      of Default with respect to the other party has occurred and is
      continuing, (2) the condition precedent that no Early Termination Date
      in respect of the relevant Transaction has occurred or been effectively
      designated and (3) each other applicable condition precedent specified
      in this Agreement.


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(b) Change of Account. Either party may change its account for receiving a
payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a
reasonable objection to such change.

(c) Netting. If on any date amounts would otherwise be payable:--

      (i) in the same currency; and

      (ii) in respect of the same Transaction,

by each party to the other, then, on such date, each party's obligation to
make payment of any such amount will be automatically satisfied and discharged
and, if the aggregate amount that would otherwise have been payable by one
party exceeds the aggregate amount that would otherwise have been payable by
the other party, replaced by an obligation upon the party by whom the larger
aggregate amount would have been payable to pay to the other party the excess
of the larger aggregate amount over the smaller aggregate amount.

The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be
made in the Schedule or a Confirmation by specifying that subparagraph (ii)
above will not apply to the Transactions identified as being subject to the
election, together with the starting date (in which case subparagraph (ii)
above will not, or will cease to, apply to such Transactions from such date).
This election may be made separately for different groups of Transactions and
will apply separately to each pairing of Offices through which the parties
make and receive payments or deliveries.

(d)   Deduction or Withholding for Tax.

      (i) Gross-Up. All payments under this Agreement will be made without any
      deduction or withholding for or on account of any Tax unless such
      deduction or withholding is required by any applicable law, as modified
      by the practice of any relevant governmental revenue authority, then in
      effect. If a party is so required to deduct or withhold, then that party
      ("X") will:--

            (1) promptly notify the other party ("Y") of such requirement;

            (2) pay to the relevant authorities the full amount required to be
            deducted or withheld (including the full amount required to be
            deducted or withheld from any additional amount paid by X to Y
            under this Section 2(d)) promptly upon the earlier of determining
            that such deduction or withholding is required or receiving notice
            that such amount has been assessed against Y;

            (3) promptly forward to Y an official receipt (or a certified
            copy), or other documentation reasonably acceptable to Y,
            evidencing such payment to such authorities; and

            (4) if such Tax is an Indemnifiable Tax, pay to Y, in addition to
            the payment to which Y is otherwise entitled under this Agreement,
            such additional amount as is necessary to ensure that the net
            amount actually received by Y (free and clear of Indemnifiable
            Taxes, whether assessed against X or Y) will equal the full amount
            Y would have received had no such deduction or withholding been
            required. However, X will not be required to pay any additional
            amount to Y to the extent that it would not be required to be paid
            but for:--

                  (A) the failure by Y to comply with or perform any agreement
                  contained in Section 4(a)(i), 4(a)(iii) or 4(d); or

                  (B) the failure of a representation made by Y pursuant to
                  Section 3(f) to be accurate and true unless such failure
                  would not have occurred but for (I) any action taken by a
                  taxing authority, or brought in a court of competent
                  jurisdiction, on or after the date on which a Transaction is
                  entered into (regardless of whether such action is taken or
                  brought with respect to a party to this Agreement) or (II) a
                  Change in Tax Law.


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      (ii) Liability. If:--

            (1) X is required by any applicable law, as modified by the
            practice of any relevant governmental revenue authority, to make
            any deduction or withholding in respect of which X would not be
            required to pay an additional amount to Y under Section
            2(d)(i)(4);

            (2) X does not so deduct or withhold; and

            (3) a liability resulting from such Tax is assessed directly
            against X,

      then, except to the extent Y has satisfied or then satisfies the
      liability resulting from such Tax, Y will promptly pay to X the amount
      of such liability (including any related liability for interest, but
      including any related liability for penalties only if Y has failed to
      comply with or perform any agreement contained in Section 4(a)(i),
      4(a)(iii) or 4(d)).

(e) Default Interest; Other Amounts. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant
Transaction, a party that defaults in the performance of any payment
obligation will, to the extent permitted by law and subject to Section 6(c),
be required to pay interest (before as well as after judgment) on the overdue
amount to the other party on demand in the same currency as such overdue
amount, for the period from (and including) the original due date for payment
to (but excluding) the date of actual payment, at the Default Rate. Such
interest will be calculated on the basis of daily compounding and the actual
number of days elapsed. If, prior to the occurrence or effective designation
of an Early Termination Date in respect of the relevant Transaction, a party
defaults in the performance of any obligation required to be settled by
delivery, it will compensate the other party on demand if and to the extent
provided for in the relevant Confirmation or elsewhere in this Agreement.

3.    Representations

Each party represents to the other party (which representations will be deemed
to be repeated by each party on each date on which a Transaction is entered
into and, in the case of the representations in Section 3(f), at all times
until the termination of this Agreement) that:--

(a)   Basic Representations.

      (i) Status. It is duly organized and validly existing under the laws of
      the jurisdiction of its organization or incorporation and, if relevant
      under such laws, in good standing;

      (ii) Powers. It has the power to execute this Agreement and any other
      documentation relating to this Agreement to which it is a party, to
      deliver this Agreement and any other documentation relating to this
      Agreement that it is required by this Agreement to deliver and to
      perform its obligations under this Agreement and any obligations it has
      under any Credit Support Document to which it is a party and has taken
      all necessary action to authorize such execution, delivery and
      performance;

      (iii) No Violation or Conflict. Such execution, delivery and performance
      do not violate or conflict with any law applicable to it, any provision
      of its constitutional documents, any order or judgment of any court or
      other agency of government applicable to it or any of its assets or any
      contractual restriction binding on or affecting it or any of its assets;

      (iv) Consents. All governmental and other consents that are required to
      have been obtained by it with respect to this Agreement or any Credit
      Support Document to which it is a party have been obtained and are in
      full force and effect and all conditions of any such consents have been
      complied with; and

      (v) Obligations Binding. Its obligations under this Agreement and any
      Credit Support Document to which it is a party constitute its legal,
      valid and binding obligations, enforceable in accordance with their
      respective terms (subject to applicable bankruptcy, reorganization,
      insolvency, moratorium or similar laws affecting creditors' rights
      generally and subject, as to enforceability, to equitable principles of
      general application (regardless of whether enforcement is sought in a
      proceeding in equity or at law)).


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(b) Absence of Certain Events. No Event of Default or Potential Event of
Default or, to its knowledge, Termination Event with respect to it has
occurred and is continuing and no such event or circumstance would occur as a
result of its entering into or performing its obligations under this Agreement
or any Credit Support Document to which it is a party.

(c) Absence of Litigation. There is not pending or, to its knowledge,
threatened against it or any of its Affiliates any action, suit or proceeding
at law or in equity or before any court, tribunal, governmental body, agency
or official or any arbitrator that is likely to affect the legality, validity
or enforceability against it of this Agreement or any Credit Support Document
to which it is a party or its ability to perform its obligations under this
Agreement or such Credit Support Document.

(d) Accuracy of Specified Information. All applicable information that is
furnished in writing by or on behalf of it to the other party and is
identified for the purpose of this Section 3(d) in the Schedule is, as of the
date of the information, true, accurate and complete in every material
respect.

(e) Payer Tax Representation. Each representation specified in the Schedule as
being made by it for the purpose of this Section 3(e) is accurate and true.

(f) Payee Tax Representations. Each representation specified in the Schedule
as being made by it for the purpose of this Section 3(f) is accurate and true.

4. Agreements

Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party:--

(a) Furnish Specified Information. It will deliver to the other party or, in
certain cases under subparagraph (iii) below, to such government or taxing
authority as the other party reasonably directs:--

      (i) any forms, documents or certificates relating to taxation specified
      in the Schedule or any Confirmation;

      (ii) any other documents specified in the Schedule or any Confirmation;
      and

      (iii) upon reasonable demand by such other party, any form or document
      that may be required or reasonably requested in writing in order to
      allow such other party or its Credit Support Provider to make a payment
      under this Agreement or any applicable Credit Support Document without
      any deduction or withholding for or on account of any Tax or with such
      deduction or withholding at a reduced rate (so long as the completion,
      execution or submission of such form or document would not materially
      prejudice the legal or commercial position of the party in receipt of
      such demand), with any such form or document to be accurate and
      completed in a manner reasonably satisfactory to such other party and to
      be executed and to be delivered with any reasonably required
      certification,

in each case by the date  specified  in the  Schedule  or such  Confirmation
or, if none is specified, as soon as reasonably practicable.

(b) Maintain Authorizations. It will use all reasonable efforts to maintain in
full force and effect all consents of any governmental or other authority that
are required to be obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party and will use all reasonable efforts to
obtain any that may become necessary in the future.

(c) Comply with Laws. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or any Credit Support Document to which it is a party.

(d) Tax Agreement. It will give notice of any failure of a representation made
by it under Section 3(f) to be accurate and true promptly upon learning of
such failure.

(e) Payment of Stamp Tax. Subject to Section 11, it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution or performance of
this Agreement by a jurisdiction in which it is incorporated,


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organized, managed and controlled, or considered to have its seat, or in which
a branch or office through which it is acting for the purpose of this
Agreement is located ("Stamp Tax Jurisdiction") and will indemnify the other
party against any Stamp Tax levied or imposed upon the other party or in
respect of the other party's execution or performance of this Agreement by any
such Stamp Tax Jurisdiction which is not also a Stamp Tax Jurisdiction with
respect to the other party.

5. Events of Default and Termination Events

(a) Events of Default. The occurrence at any time with respect to a party or,
if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any of the following events constitutes an event of
default (an "Event of Default") with respect to such party:--

      (i) Failure to Pay or Deliver. Failure by the party to make, when due,
      any payment under this Agreement or delivery under Section 2(a)(i) or
      2(e) required to be made by it if such failure is not remedied on or
      before the third Local Business Day after notice of such failure is
      given to the party;

      (ii) Breach of Agreement. Failure by the party to comply with or perform
      any agreement or obligation (other than an obligation to make any
      payment under this Agreement or delivery under Section 2(a)(i) or 2(e)
      or to give notice of a Termination Event or any agreement or obligation
      under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied with or
      performed by the party in accordance with this Agreement if such failure
      is not remedied on or before the thirtieth day after notice of such
      failure is given to the party;

      (iii) Credit Support Default.

            (1) Failure by the party or any Credit Support Provider of such
            party to comply with or perform any agreement or obligation to be
            complied with or performed by it in accordance with any Credit
            Support Document if such failure is continuing after any
            applicable grace period has elapsed;

            (2) the expiration or termination of such Credit Support Document
            or the failing or ceasing of such Credit Support Document to be in
            full force and effect for the purpose of this Agreement (in either
            case other than in accordance with its terms) prior to the
            satisfaction of all obligations of such party under each
            Transaction to which such Credit Support Document relates without
            the written consent of the other party; or

            (3) the party or such Credit Support Provider disaffirms,
            disclaims, repudiates or rejects, in whole or in part, or
            challenges the validity of, such Credit Support Document;

      (iv) Misrepresentation. A representation (other than a representation
      under Section 3(e) or (f)) made or repeated or deemed to have been made
      or repeated by the party or any Credit Support Provider of such party in
      this Agreement or any Credit Support Document proves to have been
      incorrect or misleading in any material respect when made or repeated or
      deemed to have been made or repeated;

      (v) Default under Specified Transaction. The party, any Credit Support
      Provider of such party or any applicable Specified Entity of such party
      (1) defaults under a Specified Transaction and, after giving effect to
      any applicable notice requirement or grace period, there occurs a
      liquidation of, an acceleration of obligations under, or an early
      termination of, that Specified Transaction, (2) defaults, after giving
      effect to any applicable notice requirement or grace period, in making
      any payment or delivery due on the last payment, delivery or exchange
      date of, or any payment on early termination of, a Specified Transaction
      (or such default continues for at least three Local Business Days if
      there is no applicable notice requirement or grace period) or (3)
      disaffirms, disclaims, repudiates or rejects, in whole or in part, a
      Specified Transaction (or such action is taken by any person or entity
      appointed or empowered to operate it or act on its behalf);

      (vi) Cross Default. If "Cross Default" is specified in the Schedule as
      applying to the party, the occurrence or existence of (1) a default,
      event of default or other similar condition or event (however


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      described) in respect of such party, any Credit Support Provider of such
      party or any applicable Specified Entity of such party under one or more
      agreements or instruments relating to Specified Indebtedness of any of
      them (individually or collectively) in an aggregate amount of not less
      than the applicable Threshold Amount (as specified in the Schedule)
      which has resulted in such Specified Indebtedness becoming, or becoming
      capable at such time of being declared, due and payable under such
      agreements or instruments, before it would otherwise have been due and
      payable or (2) a default by such party, such Credit Support Provider or
      such Specified Entity (individually or collectively) in making one or
      more payments on the due date thereof in an aggregate amount of not less
      than the applicable Threshold Amount under such agreements or
      instruments (after giving effect to any applicable notice requirement or
      grace period);

      (vii) Bankruptcy. The party, any Credit Support Provider of such party
      or any applicable Specified Entity of such party:--

            (1) is dissolved (other than pursuant to a consolidation,
            amalgamation or merger); (2) becomes insolvent or is unable to pay
            its debts or fails or admits in writing its inability generally to
            pay its debts as they become due; (3) makes a general assignment,
            arrangement or composition with or for the benefit of its
            creditors; (4) institutes or has instituted against it a
            proceeding seeking a judgment of insolvency or bankruptcy or any
            other relief under any bankruptcy or insolvency law or other
            similar law affecting creditors' rights, or a petition is
            presented for its winding-up or liquidation, and, in the case of
            any such proceeding or petition instituted or presented against
            it, such proceeding or petition (A) results in a judgment of
            insolvency or bankruptcy or the entry of an order for relief or
            the making of an order for its winding-up or liquidation or (B) is
            not dismissed, discharged, stayed or restrained in each case
            within 30 days of the institution or presentation thereof; (5) has
            a resolution passed for its winding-up, official management or
            liquidation (other than pursuant to a consolidation, amalgamation
            or merger); (6) seeks or becomes subject to the appointment of an
            administrator, provisional liquidator, conservator, receiver,
            trustee, custodian or other similar official for it or for all or
            substantially all its assets; (7) has a secured party take
            possession of all or substantially all its assets or has a
            distress, execution, attachment, sequestration or other legal
            process levied, enforced or sued on or against all or
            substantially all its assets and such secured party maintains
            possession, or any such process is not dismissed, discharged,
            stayed or restrained, in each case within 30 days thereafter; (8)
            causes or is subject to any event with respect to it which, under
            the applicable laws of any jurisdiction, has an analogous effect
            to any of the events specified in clauses (1) to (7) (inclusive);
            or (9) takes any action in furtherance of, or indicating its
            consent to, approval of, or acquiescence in, any of the foregoing
            acts; or

      (viii) Merger Without Assumption. The party or any Credit Support
      Provider of such party consolidates or amalgamates with, or merges with
      or into, or transfers all or substantially all its assets to, another
      entity and, at the time of such consolidation, amalgamation, merger or
      transfer:--

            (1) the resulting, surviving or transferee entity fails to assume
            all the obligations of such party or such Credit Support Provider
            under this Agreement or any Credit Support Document to which it or
            its predecessor was a party by operation of law or pursuant to an
            agreement reasonably satisfactory to the other party to this
            Agreement; or

            (2) the benefits of any Credit Support Document fail to extend
            (without the consent of the other party) to the performance by
            such resulting, surviving or transferee entity of its obligations
            under this Agreement.

(b) Termination Events. The occurrence at any time with respect to a party or,
if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any event specified below constitutes an Illegality if
the event is specified in (i) below, a Tax Event if the event is specified in
(ii) below or a Tax Event Upon Merger if the event is specified in (iii)
below, and, if specified to be applicable, a Credit Event


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Upon Merger if the event is specified pursuant to (iv) below or an Additional
Termination Event if the event is specified pursuant to (v) below:--

      (i) Illegality. Due to the adoption of, or any change in, any applicable
      law after the date on which a Transaction is entered into, or due to the
      promulgation of, or any change in, the interpretation by any court,
      tribunal or regulatory authority with competent jurisdiction of any
      applicable law after such date, it becomes unlawful (other than as a
      result of a breach by the party of Section 4(b)) for such party (which
      will be the Affected Party):--

            (1) to perform any absolute or contingent obligation to make a
            payment or delivery or to receive a payment or delivery in respect
            of such Transaction or to comply with any other material provision
            of this Agreement relating to such Transaction; or

            (2) to perform, or for any Credit Support Provider of such party
            to perform, any contingent or other obligation which the party (or
            such Credit Support Provider) has under any Credit Support
            Document relating to such Transaction;

      (ii) Tax Event. Due to (x) any action taken by a taxing authority, or
      brought in a court of competent jurisdiction, on or after the date on
      which a Transaction is entered into (regardless of whether such action
      is taken or brought with respect to a party to this Agreement) or (y) a
      Change in Tax Law, the party (which will be the Affected Party) will, or
      there is a substantial likelihood that it will, on the next succeeding
      Scheduled Payment Date (1) be required to pay to the other party an
      additional amount in respect of an Indemnifiable Tax under Section
      2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii)
      or 6(e)) or (2) receive a payment from which an amount is required to be
      deducted or withheld for or on account of a Tax (except in respect of
      interest under Section 2(e), 6(d)(ii) or 6(e)) and no additional amount
      is required to be paid in respect of such Tax under Section 2(d)(i)(4)
      (other than by reason of Section 2(d)(i)(4)(A) or (B));

      (iii) Tax Event Upon Merger. The party (the "Burdened Party") on the
      next succeeding Scheduled Payment Date will either (1) be required to
      pay an additional amount in respect of an Indemnifiable Tax under
      Section 2(d)(i)(4) (except in respect of interest under Section 2(e),
      6(d)(ii) or 6(e)) or (2) receive a payment from which an amount has been
      deducted or withheld for or on account of any Indemnifiable Tax in
      respect of which the other party is not required to pay an additional
      amount (other than by reason of Section 2(d)(i)(4)(A) or (B)), in either
      case as a result of a party consolidating or amalgamating with, or
      merging with or into, or transferring all or substantially all its
      assets to, another entity (which will be the Affected Party) where such
      action does not constitute an event described in Section 5(a)(viii);

      (iv) Credit Event Upon Merger. If "Credit Event Upon Merger" is
      specified in the Schedule as applying to the party, such party ("X"),
      any Credit Support Provider of X or any applicable Specified Entity of X
      consolidates or amalgamates with, or merges with or into, or transfers
      all or substantially all its assets to, another entity and such action
      does not constitute an event described in Section 5(a)(viii) but the
      creditworthiness of the resulting, surviving or transferee entity is
      materially weaker than that of X, such Credit Support Provider or such
      Specified Entity, as the case may be, immediately prior to such action
      (and, in such event, X or its successor or transferee, as appropriate,
      will be the Affected Party); or

      (v) Additional Termination Event. If any "Additional Termination Event"
      is specified in the Schedule or any Confirmation as applying, the
      occurrence of such event (and, in such event, the Affected Party or
      Affected Parties shall be as specified for such Additional Termination
      Event in the Schedule or such Confirmation).

(c) Event of Default and Illegality. If an event or circumstance which would
otherwise constitute or give rise to an Event of Default also constitutes an
Illegality, it will be treated as an Illegality and will not constitute an
Event of Default.


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6. Early Termination

(a) Right to Terminate Following Event of Default. If at any time an Event of
Default with respect to a party (the "Defaulting Party") has occurred and is
then continuing, the other party (the "Non-defaulting Party") may, by not more
than 20 days notice to the Defaulting Party specifying the relevant Event of
Default, designate a day not earlier than the day such notice is effective as
an Early Termination Date in respect of all outstanding Transactions. If,
however, "Automatic Early Termination" is specified in the Schedule as
applying to a party, then an Early Termination Date in respect of all
outstanding Transactions will occur immediately upon the occurrence with
respect to such party of an Event of Default specified in Section
5(a)(vii)(1), (3), (5), (6) or, to the extent analogous thereto, (8), and as
of the time immediately preceding the institution of the relevant proceeding
or the presentation of the relevant petition upon the occurrence with respect
to such party of an Event of Default specified in Section 5(a)(vii)(4) or, to
the extent analogous thereto, (8).

(b) Right to Terminate Following Termination Event.

      (i) Notice. If a Termination Event occurs, an Affected Party will,
      promptly upon becoming aware of it, notify the other party, specifying
      the nature of that Termination Event and each Affected Transaction and
      will also give such other information about that Termination Event as
      the other party may reasonably require.

      (ii) Transfer to Avoid Termination Event. If either an Illegality under
      Section 5(b)(i)(1) or a Tax Event occurs and there is only one Affected
      Party, or if a Tax Event Upon Merger occurs and the Burdened Party is
      the Affected Party, the Affected Party will, as a condition to its right
      to designate an Early Termination Date under Section 6(b)(iv), use all
      reasonable efforts (which will not require such party to incur a loss,
      excluding immaterial, incidental expenses) to transfer within 20 days
      after it gives notice under Section 6(b)(i) all its rights and
      obligations under this Agreement in respect of the Affected Transactions
      to another of its Offices or Affiliates so that such Termination Event
      ceases to exist.

      If the Affected Party is not able to make such a transfer it will give
      notice to the other party to that effect within such 20 day period,
      whereupon the other party may effect such a transfer within 30 days
      after the notice is given under Section 6(b)(i).

      Any such transfer by a party under this Section 6(b)(ii) will be subject
      to and conditional upon the prior written consent of the other party,
      which consent will not be withheld if such other party's policies in
      effect at such time would permit it to enter into transactions with the
      transferee on the terms proposed.

      (iii) Two Affected Parties. If an Illegality under Section 5(b)(i)(1) or
      a Tax Event occurs and there are two Affected Parties, each party will
      use all reasonable efforts to reach agreement within 30 days after
      notice thereof is given under Section 6(b)(i) on action to avoid that
      Termination Event.

      (iv) Right to Terminate. If:--

            (1) a transfer under Section 6(b)(ii) or an agreement under
            Section 6(b)(iii), as the case may be, has not been effected with
            respect to all Affected Transactions within 30 days after an
            Affected Party gives notice under Section 6(b)(i); or

            (2) an Illegality under Section 5(b)(i)(2), a Credit Event Upon
            Merger or an Additional Termination Event occurs, or a Tax Event
            Upon Merger occurs and the Burdened Party is not the Affected
            Party,

      either party in the case of an Illegality, the Burdened Party in the
      case of a Tax Event Upon Merger, any Affected Party in the case of a Tax
      Event or an Additional Termination Event if there is more than one
      Affected Party, or the party which is not the Affected Party in the case
      of a Credit Event Upon Merger or an Additional Termination Event if
      there is only one Affected Party may, by not more than 20 days notice to
      the other party and provided that the relevant Termination Event is then


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      continuing, designate a day not earlier than the day such notice is
      effective as an Early Termination Date in respect of all Affected
      Transactions.

(c)   Effect of Designation.

      (i) If notice designating an Early Termination Date is given under
      Section 6(a) or (b), the Early Termination Date will occur on the date
      so designated, whether or not the relevant Event of Default or
      Termination Event is then continuing.

      (ii) Upon the occurrence or effective designation of an Early
      Termination Date, no further payments or deliveries under Section
      2(a)(i) or 2(e) in respect of the Terminated Transactions will be
      required to be made, but without prejudice to the other provisions of
      this Agreement. The amount, if any, payable in respect of an Early
      Termination Date shall be determined pursuant to Section 6(e).

(d)   Calculations.

      (i) Statement. On or as soon as reasonably practicable following the
      occurrence of an Early Termination Date, each party will make the
      calculations on its part, if any, contemplated by Section 6(e) and will
      provide to the other party a statement (1) showing, in reasonable
      detail, such calculations (including all relevant quotations and
      specifying any amount payable under Section 6(e)) and (2) giving details
      of the relevant account to which any amount payable to it is to be paid.
      In the absence of written confirmation from the source of a quotation
      obtained in determining a Market Quotation, the records of the party
      obtaining such quotation will be conclusive evidence of the existence
      and accuracy of such quotation.

      (ii) Payment Date. An amount calculated as being due in respect of any
      Early Termination Date under Section 6(e) will be payable on the day
      that notice of the amount payable is effective (in the case of an Early
      Termination Date which is designated or occurs as a result of an Event
      of Default) and on the day which is two Local Business Days after the
      day on which notice of the amount payable is effective (in the case of
      an Early Termination Date which is designated as a result of a
      Termination Event). Such amount will be paid together with (to the
      extent permitted under applicable law) interest thereon (before as well
      as after judgment) in the Termination Currency, from (and including) the
      relevant Early Termination Date to (but excluding) the date such amount
      is paid, at the Applicable Rate. Such interest will be calculated on the
      basis of daily compounding and the actual number of days elapsed.

(e) Payments on Early Termination. If an Early Termination Date occurs, the
following provisions shall apply based on the parties' election in the
Schedule of a payment measure, either "Market Quotation" or "Loss," and a
payment method, either the "First Method" or the "Second Method." If the
parties fail to designate a payment measure or payment method in the Schedule,
it will be deemed that "Market Quotation" or the "Second Method," as the case
may be, shall apply. The amount, if any, payable in respect of an Early
Termination Date and determined pursuant to this Section will be subject to
any Set-off.

      (i) Events of Default. If the Early Termination Date results from an
      Event of Default:--

            (1) First Method and Market Quotation. If the First Method and
            Market Quotation apply, the Defaulting Party will pay to the
            Non-defaulting Party the excess, if a positive number, of (A) the
            sum of the Settlement Amount (determined by the Non-defaulting
            Party) in respect of the Terminated Transactions and the
            Termination Currency Equivalent of the Unpaid Amounts owing to the
            Non-defaulting Party over (B) the Termination Currency Equivalent
            of the Unpaid Amounts owing to the Defaulting Party.

            (2) First Method and Loss. If the First Method and Loss apply, the
            Defaulting Party will pay to the Non-defaulting Party, if a
            positive number, the Non-defaulting Party's Loss in respect of
            this Agreement.

            (3) Second Method and Market Quotation. If the Second Method and
            Market Quotation apply, an amount will be payable equal to (A) the
            sum of the Settlement Amount (determined by the


                                      9
<PAGE>

            Non-defaulting Party) in respect of the Terminated Transactions
            and the Termination Currency Equivalent of the Unpaid Amounts
            owing to the Non-defaulting Party less (B) the Termination
            Currency Equivalent of the Unpaid Amounts owing to the Defaulting
            Party. If that amount is a positive number, the Defaulting Party
            will pay it to the Non-defaulting Party; if it is a negative
            number, the Non-defaulting Party will pay the absolute value of
            that amount to the Defaulting Party.

            (4) Second Method and Loss. If the Second Method and Loss apply,
            an amount will be payable equal to the Non-defaulting Party's Loss
            in respect of this Agreement. If that amount is a positive number,
            the Defaulting Party will pay it to the Non-defaulting Party; if
            it is a negative number, the Non-defaulting Party will pay the
            absolute value of that amount to the Defaulting Party.

      (ii) Termination Events. If the Early Termination Date results from a
      Termination Event:--

            (1) One Affected Party. If there is one Affected Party, the amount
            payable will be determined in accordance with Section 6(e)(i)(3),
            if Market Quotation applies, or Section 6(e)(i)(4), if Loss
            applies, except that, in either case, references to the Defaulting
            Party and to the Non-defaulting Party will be deemed to be
            references to the Affected Party and the party which is not the
            Affected Party, respectively, and, if Loss applies and fewer than
            all the Transactions are being terminated, Loss shall be
            calculated in respect of all Terminated Transactions.

            (2) Two Affected Parties. If there are two Affected Parties:--

                  (A) if Market Quotation applies, each party will determine a
                  Settlement Amount in respect of the Terminated Transactions,
                  and an amount will be payable equal to (I) the sum of (a)
                  one-half of the difference between the Settlement Amount of
                  the party with the higher Settlement Amount ("X") and the
                  Settlement Amount of the party with the lower Settlement
                  Amount ("Y") and (b) the Termination Currency Equivalent of
                  the Unpaid Amounts owing to X less (II) the Termination
                  Currency Equivalent of the Unpaid Amounts owing to Y; and

                  (B) if Loss applies, each party will determine its Loss in
                  respect of this Agreement (or, if fewer than all the
                  Transactions are being terminated, in respect of all
                  Terminated Transactions) and an amount will be payable equal
                  to one-half of the difference between the Loss of the party
                  with the higher Loss ("X") and the Loss of the party with
                  the lower Loss ("Y").

            If the amount payable is a positive number, Y will pay it to X; if
            it is a negative number, X will pay the absolute value of that
            amount to Y.

      (iii) Adjustment for Bankruptcy. In circumstances where an Early
      Termination Date occurs because "Automatic Early Termination" applies in
      respect of a party, the amount determined under this Section 6(e) will
      be subject to such adjustments as are appropriate and permitted by law
      to reflect any payments or deliveries made by one party to the other
      under this Agreement (and retained by such other party) during the
      period from the relevant Early Termination Date to the date for payment
      determined under Section 6(d)(ii).

      (iv) Pre-Estimate. The parties agree that if Market Quotation applies an
      amount recoverable under this Section 6(e) is a reasonable pre-estimate
      of loss and not a penalty. Such amount is payable for the loss of
      bargain and the loss of protection against future risks and except as
      otherwise provided in this Agreement neither party will be entitled to
      recover any additional damages as a consequence of such losses.


                                      10
<PAGE>

7.    Transfer

Subject to Section 6(b)(ii), neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred (whether by way of
security or otherwise) by either party without the prior written consent of
the other party, except that:--

(a) a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to
any other right or remedy under this Agreement); and

(b) a party may make such a transfer of all or any part of its interest in any
amount payable to it from a Defaulting Party under Section 6(e).

Any purported transfer that is not in compliance with this Section will be
void.

8. Contractual Currency

(a) Payment in the Contractual Currency. Each payment under this Agreement
will be made in the relevant currency specified in this Agreement for that
payment (the "Contractual Currency"). To the extent permitted by applicable
law, any obligation to make payments under this Agreement in the Contractual
Currency will not be discharged or satisfied by any tender in any currency
other than the Contractual Currency, except to the extent such tender results
in the actual receipt by the party to which payment is owed, acting in a
reasonable manner and in good faith in converting the currency so tendered
into the Contractual Currency, of the full amount in the Contractual Currency
of all amounts payable in respect of this Agreement. If for any reason the
amount in the Contractual Currency so received falls short of the amount in
the Contractual Currency payable in respect of this Agreement, the party
required to make the payment will, to the extent permitted by applicable law,
immediately pay such additional amount in the Contractual Currency as may be
necessary to compensate for the shortfall. If for any reason the amount in the
Contractual Currency so received exceeds the amount in the Contractual
Currency payable in respect of this Agreement, the party receiving the payment
will refund promptly the amount of such excess.

(b) Judgments. To the extent permitted by applicable law, if any judgment or
order expressed in a currency other than the Contractual Currency is rendered
(i) for the payment of any amount owing in respect of this Agreement, (ii) for
the payment of any amount relating to any early termination in respect of this
Agreement or (iii) in respect of a judgment or order of another court for the
payment of any amount described in (i) or (ii) above, the party seeking
recovery, after recovery in full of the aggregate amount to which such party
is entitled pursuant to the judgment or order, will be entitled to receive
immediately from the other party the amount of any shortfall of the
Contractual Currency received by such party as a consequence of sums paid in
such other currency and will refund promptly to the other party any excess of
the Contractual Currency received by such party as a consequence of sums paid
in such other currency if such shortfall or such excess arises or results from
any variation between the rate of exchange at which the Contractual Currency
is converted into the currency of the judgment or order for the purposes of
such judgment or order and the rate of exchange at which such party is able,
acting in a reasonable manner and in good faith in converting the currency
received into the Contractual Currency, to purchase the Contractual Currency
with the amount of the currency of the judgment or order actually received by
such party. The term "rate of exchange" includes, without limitation, any
premiums and costs of exchange payable in connection with the purchase of or
conversion into the Contractual Currency.

(c) Separate Indemnities. To the extent permitted by applicable law, these
indemnities constitute separate and independent obligations from the other
obligations in this Agreement, will be enforceable as separate and independent
causes of action, will apply notwithstanding any indulgence granted by the
party to which any payment is owed and will not be affected by judgment being
obtained or claim or proof being made for any other sums payable in respect of
this Agreement.

(d) Evidence of Loss. For the purpose of this Section 8, it will be sufficient
for a party to demonstrate that it would have suffered a loss had an actual
exchange or purchase been made.


                                      11
<PAGE>

9. Miscellaneous

(a) Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto.

(b) Amendments. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing evidenced
by a facsimile transmission) and executed by each of the parties or confirmed
by an exchange of telexes or electronic messages on an electronic messaging
system.

(c) Survival of Obligations. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive the
termination of any Transaction.

(d) Remedies Cumulative. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.

(e) Counterparts and Confirmations.

      (i) This Agreement (and each amendment, modification and waiver in
      respect of it) may be executed and delivered in counterparts (including
      by facsimile transmission), each of which will be deemed an original.

      (ii) The parties intend that they are legally bound by the terms of each
      Transaction from the moment they agree to those terms (whether orally or
      otherwise). A Confirmation shall be entered into as soon as practicable
      and may be executed and delivered in counterparts (including by
      facsimile transmission) or be created by an exchange of telexes or by an
      exchange of electronic messages on an electronic messaging system, which
      in each case will be sufficient for all purposes to evidence a binding
      supplement to this Agreement. The parties will specify therein or
      through another effective means that any such counterpart, telex or
      electronic message constitutes a Confirmation.

(f) No Waiver of Rights. A failure or delay in exercising any right, power or
privilege in respect of this Agreement will not be presumed to operate as a
waiver, and a single or partial exercise of any right, power or privilege will
not be presumed to preclude any subsequent or further exercise, of that right,
power or privilege or the exercise of any other right, power or privilege.

(g) Headings. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.

10. Offices; Multibranch Parties

(a) If Section 10(a) is specified in the Schedule as applying, each party that
enters into a Transaction through an Office other than its head or home office
represents to the other party that, notwithstanding the place of booking
office or jurisdiction of incorporation or organization of such party, the
obligations of such party are the same as if it had entered into the
Transaction through its head or home office. This representation will be
deemed to be repeated by such party on each date on which a Transaction is
entered into.

(b) Neither party may change the Office through which it makes and receives
payments or deliveries for the purpose of a Transaction without the prior
written consent of the other party.

(c) If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office through
which it makes and receives payments or deliveries with respect to a
Transaction will be specified in the relevant Confirmation.

11. Expenses

A Defaulting Party will, on demand, indemnify and hold harmless the other
party for and against all reasonable out-of-pocket expenses, including legal
fees and Stamp Tax, incurred by such other party by reason of the enforcement
and protection of its rights under this Agreement or any Credit Support
Document


                                      12
<PAGE>

to which the Defaulting Party is a party or by reason of the early
termination of any Transaction, including, but not limited to, costs of
collection.

12.   Notices

(a) Effectiveness. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:--

      (i) if in writing and delivered in person or by courier, on the date it
      is delivered;

      (ii) if sent by telex, on the date the recipient's answerback is
      received;

      (iii) if sent by facsimile transmission, on the date that transmission
      is received by a responsible employee of the recipient in legible form
      (it being agreed that the burden of proving receipt will be on the
      sender and will not be met by a transmission report generated by the
      sender's facsimile machine);

      (iv) if sent by certified or registered mail (airmail, if overseas) or
      the equivalent (return receipt requested), on the date that mail is
      delivered or its delivery is attempted; or

      (v) if sent by electronic messaging system, on the date that electronic
      message is received,

unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.

(b) Change of Addresses. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details at
which notices or other communications are to be given to it.

13. Governing Law and Jurisdiction

(a) Governing Law. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.

(b) Jurisdiction. With respect to any suit, action or proceedings relating to
this Agreement ("Proceedings"), each party irrevocably:--

      (i) submits to the jurisdiction of the English courts, if this Agreement
      is expressed to be governed by English law, or to the non-exclusive
      jurisdiction of the courts of the State of New York and the United
      States District Court located in the Borough of Manhattan in New York
      City, if this Agreement is expressed to be governed by the laws of the
      State of New York; and

      (ii) waives any objection which it may have at any time to the laying of
      venue of any Proceedings brought in any such court, waives any claim
      that such Proceedings have been brought in an inconvenient forum and
      further waives the right to object, with respect to such Proceedings,
      that such court does not have any jurisdiction over such party.

Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the
Civil Jurisdiction and Judgments Act 1982 or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.

(c) Service of Process. Each party irrevocably appoints the Process Agent (if
any) specified opposite its name in the Schedule to receive, for it and on its
behalf, service of process in any Proceedings. If for any


                                      13

<PAGE>

reason any party's Process Agent is unable to act as such, such party will
promptly notify the other party and within 30 days appoint a substitute
process agent acceptable to the other party. The parties irrevocably consent
to service of process given in the manner provided for notices in Section 12.
Nothing in this Agreement will affect the right of either party to serve
process in any other manner permitted by law.

(d) Waiver of Immunities. Each party irrevocably waives, to the fullest extent
permitted by applicable law, with respect to itself and its revenues and
assets (irrespective of their use or intended use), all immunity on the
grounds of sovereignty or other similar grounds from (i) suit, (ii)
jurisdiction of any court, (iii) relief by way of injunction, order for
specific performance or for recovery of property, (iv) attachment of its
assets (whether before or after judgment) and (v) execution or enforcement of
any judgment to which it or its revenues or assets might otherwise be entitled
in any Proceedings in the courts of any jurisdiction and irrevocably agrees,
to the extent permitted by applicable law, that it will not claim any such
immunity in any Proceedings.

14. Definitions

As used in this Agreement:--

"Additional Termination Event" has the meaning specified in Section 5(b).

"Affected Party" has the meaning specified in Section 5(b).

"Affected Transactions" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or Tax Event Upon Merger, all
Transactions affected by the occurrence of such Termination Event and (b) with
respect to any other Termination Event, all Transactions.

"Affiliate" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control"
of any entity or person means ownership of a majority of the voting power of
the entity or person.

"Applicable Rate" means:--

(a) in respect of obligations payable or deliverable (or which would have been
but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;

(b) in respect of an obligation to pay an amount under Section 6(e) of either
party from and after the date (determined in accordance with Section 6(d)(ii))
on which that amount is payable, the Default Rate;

(c) is respect of all other obligations payable or deliverable (or which would
have been but for Section 2(a)(iii)) by a Non-defaulting Party, the
Non-default Rate; and

(d) in all other cases, the Termination Rate.

"Burdened Party" has the meaning specified in Section 5(b).

"Change in Tax Law" means the enactment, promulgation, execution or
ratification of, or any change in or amendment to, any law (or in the
application or official interpretation of any law) that occurs on or after the
date on which the relevant Transaction is entered into.

"consent" includes a consent, approval, action, authorization, exemption,
notice, filing, registration or exchange control consent.

"Credit Event Upon Merger" has the meaning specified in Section 5(b).

"Credit Support Document" means any agreement or instrument that is specified
as such in this Agreement.

"Credit Support Provider" has the meaning specified in the Schedule.

"Default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.


                                      14
<PAGE>


"Defaulting Party" has the meaning specified in Section 6(a).

"Early Termination Date" means the date determined in accordance with Section
6(a) or 6(b)(iv).

"Event of Default" has the meaning specified in Section 5(a) and, if
applicable, in the Schedule.

"Illegality" has the meaning specified in Section 5(b).

"Indemnifiable Tax" means any Tax other than a Tax that would not be imposed
in respect of a payment under this Agreement but for a present or former
connection between the jurisdiction of the government or taxation authority
imposing such Tax and the recipient of such payment or a person related to
such recipient (including, without limitation, a connection arising from such
recipient or related person being or having been a citizen or resident of such
jurisdiction, or being or having been organised, present or engaged in a trade
or business in such jurisdiction, or having or having had a permanent
establishment or fixed place of business in such jurisdiction, but excluding a
connection arising solely from such recipient or related person having
executed, delivered, performed its obligations or received a payment under, or
enforced, this Agreement or a Credit Support Document).

"law" includes any treaty, law, rule or regulation (as modified, in the case
of tax matters, by the practice of any relevant governmental revenue
authority) and "lawful" and "unlawful" will be construed accordingly.

"Local Business Day" means, subject to the Schedule, a day on which commercial
banks are open for business (including dealings in foreign exchange and
foreign currency deposits) (a) in relation to any obligation under Section
2(a)(i), in the place(s) specified in the relevant Confirmation or, if not so
specified, as otherwise agreed by the parties in writing or determined
pursuant to provisions contained, or incorporated by reference, in this
Agreement, (b) in relation to any other payment, in the place where the
relevant account is located and, if different, in the principal financial
centre, if any, of the currency of such payment, (c) in relation to any notice
or other communication, including notice contemplated under Section 5(a)(i),
in the city specified in the address for notice provided by the recipient and,
in the case of a notice contemplated by Section 2(b), in the place where the
relevant new account is to be located and (d) in relation to Section
5(a)(v)(2), in the relevant locations for performance with respect to such
Specified Transaction.

"Loss" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to be
its total losses and costs (or gain, in which case expressed as a negative
number) in connection with this Agreement or that Terminated Transaction or
group of Terminated Transactions, as the case may be, including any loss of
bargain, cost of funding or, at the election of such party but without
duplication, loss or cost incurred as a result of its terminating,
liquidating, obtaining or reestablishing any hedge or related trading position
(or any gain resulting from any of them). Loss includes losses and costs (or
gains) in respect of any payment or delivery required to have been made
(assuming satisfaction of each applicable condition precedent) on or before
the relevant Early Termination Date and not made, except, so as to avoid
duplication, if Section 6(e)(i)(1) or (3) or 6(e)(ii)(2)(A) applies. Loss does
not include a party's legal fees and out-of-pocket expenses referred to under
Section 11. A party will determine its Loss as of the relevant Early
Termination Date or, if that is not reasonably practicable, as of the earliest
date thereafter as is reasonably practicable. A party may (but need not)
determine its Loss by reference to quotations of relevant rates or prices from
one or more leading dealers in the relevant markets.

"Market Quotation" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or
by such party (expressed as a positive number) in consideration of an
agreement between such party (taking into account any existing Credit Support
Document with respect to the obligations of such party) and the quoting
Reference Market-maker to enter into a transaction (the "Replacement
Transaction") that would have the effect of preserving for such party the
economic equivalent of any payment or delivery (whether the underlying
obligation was absolute or contingent and assuming the satisfaction of each
applicable condition precedent) by the parties under Section 2(a)(i) in
respect of such Terminated Transaction or group of Terminated Transactions
that would, but for the occurrence of the relevant Early Termination Date,
have


                                      15
<PAGE>


been required after that date. For this purpose, Unpaid Amounts in respect of
the Terminated Transaction or group of Terminated Transactions are to be
excluded but, without limitation, any payment or delivery that would, but for
the relevant Early Termination Date, have been required (assuming satisfaction
of each applicable condition precedent) after that Early Termination Date is
to be included. The Replacement Transaction would be subject to such
documentation as such party and the Reference Market-maker may, in good faith,
agree. The party making the determination (or its agent) will request each
Reference Market-maker to provide its quotation to the extent reasonably
practicable as of the same day and time (without regard to different time
zones) on or as soon as reasonably practicable after the relevant Early
Termination Date. The day and time as of which those quotations are to be
obtained will be selected in good faith by the party obliged to make a
determination under Section 6(e), and, if each party is so obliged, after
consultation with the other. If more than three quotations are provided, the
Market Quotation will be the arithmetic mean of the quotations, without regard
to the quotations having the highest and lowest values. If exactly three such
quotations are provided, the Market Quotation will be the quotation remaining
after disregarding the highest and lowest quotations. For this purpose, if
more than one quotation has the same highest value or lowest value, then one
of such quotations shall be disregarded. If fewer than three quotations are
provided, it will be deemed that the Market Quotation in respect of such
Terminated Transaction or group of Terminated Transactions cannot be
determined.

"Non-default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it)
if it were to fund the relevant amount.

"Non-defaulting Party" has the meaning specified in Section 6(a).

"Office" means a branch or office of a party, which may be such party's head
or home office.

"Potential Event of Default" means any event which, with the giving of notice
or the lapse of time or both, would constitute an Event of Default.

"Reference Market-makers" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria
that such party applies generally at the time in deciding whether to offer or
to make an extension of credit and (b) to the extent practicable, from among
such dealers having an office in the same city.

"Relevant Jurisdiction" means, with respect to a party, the jurisdictions (a)
in which the party is incorporated organized, managed and controlled or
considered to have its seat, (b) where an Office through which the party is
acting for purposes of this Agreement is located, (c) in which the party
executes this Agreement and (d) in relation to any payment, from or through
which such payment is made.

"Scheduled Payment Date" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.

"Set-off" means set-off, offset, combination of accounts, right of retention
or withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or
imposed on, such payer.

"Settlement Amount" means, with respect to a party and any Early Termination
Date, the sum of:--

(a) the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation is determined; and

(b) such party's Loss (whether positive or negative and without reference to
any Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation cannot be determined or would not
(in the reasonable belief of the party making the determination) produce a
commercially reasonable result.

"Specified Entity" has the meanings specified in the Schedule.


                                      16
<PAGE>


"Specified Indebtedness" means, subject to the Schedule, any obligation
(whether present or future, contingent or otherwise, as principal or surety or
otherwise) in respect of borrowed money.

"Specified Transaction" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter
entered into between one party to this Agreement (or any Credit Support
Provider of such party or any applicable Specified Entity of such party) and
the other party to this Agreement (or any Credit Support Provider of such
other party or any applicable Specified Entity of such other party) which is a
rate swap transaction, basis swap, forward rate transaction, commodity swap,
commodity option, equity or equity index swap, equity or equity index option,
bond option, interest rate option, foreign exchange transaction, cap
transaction, floor transaction, collar transaction, currency swap transaction,
cross-currency rate swap transaction, currency option or any other similar
transaction (including any option with respect to any of these transactions),
(b) any combination of these transactions and (c) any other transaction
identified as a Specified Transaction in this Agreement or the relevant
confirmation.

"Stamp Tax" means any stamp, registration, documentation or similar tax.

"Tax" means any present or future tax, levy, impost, duty, charge, assessment
or fee of any nature (including interest, penalties and additions thereto)
that is imposed by any government or other taxing authority in respect of any
payment under this Agreement other than a stamp, registration, documentation
or similar tax.

"Tax Event" has the meaning specified in Section 5(b).

"Tax Event Upon Merger" has the meaning specified in Section 5(b).

"Terminated Transactions" means with respect to any Early Termination Date (a)
if resulting from a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either case) in
effect immediately before the effectiveness of the notice designating that
Early Termination Date (or, if "Automatic Early Termination" applies,
immediately before that Early Termination Date).

"Termination Currency" has the meaning specified in the Schedule.

"Termination Currency Equivalent" means, in respect of any amount denominated
in the Termination Currency, such Termination Currency amount and, in respect
of any amount denominated in a currency other than the Termination Currency
(the "Other Currency"), the amount in the Termination Currency determined by
the party making the relevant determination as being required to purchase such
amount of such Other Currency as at the relevant Early Termination Date, or,
if the relevant Market Quotation or Loss (as the case may be), is determined
as of a later date, that later date, with the Termination Currency at the rate
equal to the spot exchange rate of the foreign exchange agent (selected as
provided below) for the purchase of such Other Currency with the Termination
Currency at or about 11:00 a.m. (in the city in which such foreign exchange
agent is located) on such date as would be customary for the determination of
such a rate for the purchase of such Other Currency for value on the relevant
Early Termination Date or that later date. The foreign exchange agent will, if
only one party is obliged to make a determination under Section 6(e), be
selected in good faith by that party and otherwise will be agreed by the
parties.

"Termination Event" means an Illegality, a Tax Event or a Tax Event Upon
Merger or, if specified to be applicable, a Credit Event Upon Merger or an
Additional Termination Event.

"Termination Rate" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as
certified by such party) if it were to fund or of funding such amounts.

"Unpaid Amounts" owing to any party means, with respect to an Early
Termination Date, the aggregate of (a) in respect of all Terminated
Transactions, the amounts that became payable (or that would have become
payable but for Section 2(a)(iii)) to such party under Section 2(a)(i) on or
prior to such Early Termination Date and which remain unpaid as at such Early
Termination Date and (b) in respect of each Terminated Transaction, for each
obligation under Section 2(a)(i) which was (or would have been but for Section
2(a)(iii)) required to be settled by delivery to such party on or prior to
such Early Termination Date and which has not been so settled as at such Early
Termination Date, an amount equal to the fair market


                                      17
<PAGE>


value of that which was (or would have been) required to be delivered as of
the originally scheduled date for delivery, in each case together with (to the
extent permitted under applicable law) interest, in the currency of such
amounts, from (and including) the date such amounts or obligations were or
would have been required to have been paid or performed to (but excluding)
such Early Termination Date, at the Applicable Rate. Such amounts of interest
will be calculated on the basis of daily compounding and the actual number of
days elapsed. The fair market value of any obligation referred to in clause
(b) above shall be reasonably determined by the party obliged to make the
determination under Section 6(e) or, if each party is so obliged, it shall be
the average of the Termination Currency Equivalents of the fair market values
reasonably determined by both parties.


<PAGE>


IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this Agreement.


NORTHERN ROCK PLC                              GRANITE FINANCE FUNDING 2 LIMITED
-----------------                              ---------------------------------
 (Name of Party)                                        (Name of Party)



By:                                            By:
    Name:                                          Name:
    Title:                                         Title:
    Date:                                          Date:



<PAGE>

                                                               Schedule #1 for
                                                                  Exhibit 10.1

                                                             Execution Version

                                                             (Basis Rate Swap)

(Multicurreney - Cross Border)

                                   SCHEDULE

                                    to the

                                   1992 ISDA

                               MASTER AGREEMENT

                          dated as of 19 January 2005

between

(1)      NORTHERN ROCK PLC ("Party A"); and

(2)      GRANITE FINANCE FUNDING 2 LIMITED ("Party B").

Part 1.  Termination Provisions.

(a)      "Specified Entity" means in relation to Party A for the purpose of:

Section 5(a)(v), none

Section 5(a)(vi), none

Section 5(a)(vii), none

Section 5(b)(iv), none

and in relation to Party B for the purpose of:

Section 5(a)(v), none

Section 5(a)(vi), none

Section 5(a)(vii), none

Section 5(b)(iv), none

(b)      "Specified Transaction" will have the meaning specified in Section
         14.

<PAGE>

(c)      The "Cross Default" provisions of Section 5(a)(vi) will apply to
         Party A and will not apply to Party B.

         "Specified Indebtedness" will have the meaning specified in Section
         14 of this Agreement, other than any obligations in respect of
         deposits received at any time in the ordinary course of Party A's
         banking business.

         "Threshold Amount" means, with respect to Party A and any guarantor
         of Party A's obligations under this Agreement, 2 per cent. of the
         shareholders' equity of Party A.

         For the purposes of the above, shareholders' equity shall be
         determined by reference to Party A's most recent consolidated balance
         sheet. Such balance sheet shall be prepared in accordance with
         accounting principles that are generally accepted in the United
         Kingdom.

(d)      The "Credit Event Upon Merger" provisions of Section 5(b)(iv) will
         apply to Party A and will not apply to Party B.

(e)      The "Automatic Early Termination" provision of Section 6(a) will not
         apply to Party A and will not apply to Party B.

(f)      Payments on Early Termination. For the purpose of Section 6(e) of
         this Agreement:

         (i)    Market Quotation will apply.

         (ii)   The Second Method will apply.

(g)      "Termination Currency" means Sterling.

(h)      Additional Termination Event will apply. The events which constitute
         Additional Termination Events are set forth in Part 5(f), Part
         5(j)(iii), Part 5(k)(iv) and Part 5(l)(v) of this Agreement.

Part 2.  Tax Representations

(a)      Payer Representations. For the purpose of Section 3(e) of this
         Agreement, Party A and Party B will each make the following
         representation:

         It is not required by any applicable law, as modified by the practice
         of any relevant governmental revenue authority, of any Relevant
         Jurisdiction to make any deduction or withholding for or on account
         of any Tax from any payment (other than interest under Section 2(e),
         6(d)(ii) or 6(e) of this Agreement) to be made by it to the other
         party under this Agreement. In making this representation, it may
         rely on (i) the accuracy of any representations made by the other
         party pursuant to Section 3(f) of this Agreement, (ii) the
         satisfaction of the agreement of the other party contained in Section
         4(a)(i) or 4(a)(iii) of this Agreement and the accuracy and
         effectiveness of any document provided by the other party pursuant to
         Section 4(a)(i) or 4(a)(iii) of this Agreement and (iii) the
         satisfaction of the agreement of the other party contained in Section
         4(d) of this



                                      2
<PAGE>

         Agreement, provided that it shall not be a breach of this
         representation where reliance is placed on clause (ii) and the other
         party does not deliver a form or document under Section 4(a)(iii) by
         reason of material prejudice to its legal or commercial position.

(b)      Payee Representations. For the purposes of Section 3(f) of the
         Agreement, the representation will not apply to Party A and will not
         apply to Party B.

Part 3.  Agreement to Deliver Documents

         For the purpose of Sections 4(a)(i) and (ii) of this Agreement, each
         party agrees to deliver the following documents, as applicable:

(a)      Tax forms, documents or certificates to be delivered are:

         Party required to          Form/Document/          Date by which
         deliver document           Certificate             to be delivered

         None                       None                    None

(b)     Other documents to be delivered are:

<TABLE>
<CAPTION>
         Party required to    Form/Document/            Date by which         Covered by
         deliver document     Certificate               to be delivered       Section 3(d)
                                                                              Representation

         <S>                  <C>                       <C>                   <C>
         Party A and          Appropriate evidence      On signing of         Yes
         Party B              of its signatory's        this Agreement
                              authority

         Party B              Certified copy of         On signing of         Yes
                              board resolution          this Agreement

         Party A              Legal opinion of          On signing of         No
                              counsel                   this Agreement

         Party B              Legal opinion of          On signing of         No
                              counsel                   this Agreement

         Party A              An executed copy of       On signing of this    Yes
                              the Credit Support        Agreement
                              Document listed in
                              Part 4(f) below
</TABLE>

Part 4.  Miscellaneous

(a)      Addresses for Notices. For the purpose of Section 12(a) of this
         Agreement:-

         Address for notices or communications to Party A:



                                      3
<PAGE>

         Address:                   Northern Rock House
                                    Gosforth
                                    Newcastle upon Tyne
                                    NE3 4PL

         Attention:                 Senior Manager, Treasury Settlement

         Facsimile No.:             +44 (0)191 2794694

         Address for notices or communications to Party B:

         Address:                   Granite Finance Funding 2 Limited
                                    Fifth Floor
                                    100 Wood Street
                                    London
                                    EC2V 7EX

         With a copy to:            Northern, Rock plc
                                    Northern Rock House
                                    Gosforth
                                    Newcastle upon Tyne
                                    NE3 4PL

         Attention:                 Andy McClean

         Facsimile No.:             +44 (0)191 279 4929

         With a copy to the Funding 2 Security Trustee:

         Address:                   The Bank of New York
                                    One Canada Square
                                    48th Floor
                                    London
                                    EI4 5AL

         Attention:                 Corporate Trust (Global Structured Finance)

         Facsimile No.:             +44 (0)20 7964 6061

(b)      Process Agent. For the purpose of Section 13(c) of this Agreement:-

         Party A appoints as its Process Agent; None.

         Party B appoints as its Process Agent: None.

(c)      Offices. The provisions of Section 10(a) will apply to this Agreement.

(d)      Multibranch Party. For the purpose of Section 10(c) of this Agreement:-



                                      4
<PAGE>

         Party A is not a Multibranch Party.

         Party B is not a Multibranch Party.

(e)      Calculation Agent. The Calculation Agent shall be as specified in each
         Confirmation.

(f)      Credit Support Document. Details of any Credit Support Document:

         In respect of Party A: the 1995 Credit Support Annex (Bilateral Form --
         Transfer) between Party A and Party B dated as of the date hereof (the
         "Credit Support Annex").

         In respect of Party B: none

(g)      Credit Support Provider.

         Credit Support Provider means, in relation to Party A, none.

         Credit Support Provider means, in relation to Party B, none.

(h)      Governing Law. This Agreement will be governed by and construed in
         accordance with English law.

(i)      Netting of Payments. Sub-paragraph (ii) of Section 2(c) of this
         Agreement will apply to Transactions entered into under this Agreement
         unless otherwise specified in a Confirmation.

(i)      "Affiliate" will have the meaning specified in Section 14 of this
         Agreement.

Part 5.  Other Provisions

(a)      Definitions and Interpretation

         Capitalized terms used in this Agreement shall, except where the
         context otherwise requires and save where otherwise defined in this
         Agreement, bear the meanings given to them in the Programme Master
         Definitions Schedule signed for the purposes of identification by
         Sidley Austin Brown and Wood and Allen and Overy LLP on or about the
         date hereof as the same may be amended, restated, varied and/or
         supplemented from time to time with the consent of the parties
         hereto.

         As used in this Agreement, the following terms shall mean:

         "Basis Rate Swap Transaction Confirmation No. 1" means the
         Confirmation so referenced between Party A and Party B dated on or
         about the date hereof;

         "Basis Rate Swap Transaction Confirmation No. 2A" means the
         Confirmation so referenced between Party A and Party B dated on or
         about the date hereof;

         "Basis Rate Swap Transaction Confirmation No. 2B" means the
         Confirmation so referenced between Party A and Party B dated on or
         about the date hereof;



                                      5
<PAGE>

         "Basis Rate Swap Transaction Confirmation No. 2C" means the
         Confirmation so referenced between Party A and Party B dated on or
         about the date hereof;

         "Basis Rate Swap Transaction No. 1" means the Transaction entered
         into between Party A and Party B dated on or about the date hereof
         and confirmed in the Basis Rate Swap Transaction Confirmation No.
         I;

         "Basis Rate Swap Transaction No. 2A" means the Transaction entered
         into between Party A and Party B dated on or about the date hereof
         and confirmed in the Basis Rate Swap Transaction Confirmation No.
         2A;

         "Basis Rate Swap Transaction No. 2B" means the Transaction entered
         into between Party A and Party B dated on or about the date hereof
         and confirmed in the Basis Rate Swap Transaction Confirmation No.
         2B;

         "Basis Rate Swap Transaction No. 2C" means the Transaction entered
         into between Party A and Party B dated on or about the date hereof
         and confirmed in the Basis Rate Swap Transaction No. 2C; and

         "Basis Rate Swap Transactions" means the Basis Rate Swap Transaction
         No. 1, the Basis Rate Swap Transaction No. 2A, the Basis Rate Swap
         Transaction No. 2B and the Basis Rate Swap Transaction Confirmation
         No. 2C, and "Basis Rate Swap Transaction" means any of them.

(b)      No Set-Off

         (i)   All payments under this Agreement shall be made without
               set-off or counterclaim, except as expressly provided for in
               Section 6. For the avoidance of doubt, Section 2(c) shall
               not be affected by this provision.

         (ii)  Section 6(e) shall be amended by the deletion of the
               following sentence: "The amount, if any, payable in respect
               of an Early Termination Date and determined pursuant to this
               Section will be subject to any Set-off."

(c)      Security Interest

         Notwithstanding Section 7, Party A hereby agrees and consents to the
         assignment by way of security by Party B of its interests under this
         Agreement (without prejudice to, and after giving effect to, any
         contractual netting provision contained in this Agreement) to the
         Funding 2 Security Trustee (or any successor thereto) pursuant to and
         in accordance with the terms and conditions of the Funding 2 Deed of
         Charge and acknowledges notice of such assignment.

(d)      Disapplication of certain Events of Default

         Section 5(a)(ii), Section 5(a)(iii), Section 5(a)(iv), Section
         5(a)(v), Section 5(a)(vi), Section 5(a)(vii)(2),(5),(6),(7) and (9)
         and Section 5(a)(viii) will not apply in respect of Party B.



                                      6
<PAGE>

         Section 5(a)(vii)(8) will not apply to Party B to the extent that it
         applies to Section 5(a)(vii)(2),(5),(6) and (7).

(e)      Disapplication of certain Termination Events

         The "Tax Event" and "Tax Event Upon Merger" provisions of Sections
         5(b)(ii) and 5(b)(iii) will not apply to Party A or to Party B.

(f)      Additional Termination Events

         (A)  Party B Additional Termination Events:

         The following shall constitute an Additional Termination Event with
         respect to Party B.

         "Funding 2 Intercompany Loan Enforcement Notice. The Note Trustee
         serves a Funding 2 Intercompany Loan Enforcement Notice on Party B in
         accordance with the terms of the Global Intercompany Loan Agreement."

         In the case of the Additional Termination Event above, Party B shall
         be the sole Affected Party.

         (B)  Party A Additional Termination Event:

         The following shall constitute an Additional Termination Event with
         respect to Party A:

         Without prejudice to any other remedies available to Party B under
         this Agreement or otherwise, it shall be an Additional Termination
         Event under this Agreement if the Additional Tax Representation in
         Part 5m(iii) proves to have been incorrect or misleading in any
         material respect with respect to one or more Transactions when made
         or repeated or deemed to have been made or repeated. The sole
         Affected Party shall be Party A.

(g)      Northern Rock plc as Party B's Agent

         Party B hereby declares that pursuant to the Cash Management
         Agreement it has appointed Northern Rock plc to act as its agent for
         the purpose, inter alia, of the operation of this Agreement and
         dealing with payments hereunder. Accordingly, unless and until
         written notice is received by Party A from the Note Trustee that such
         appointment has been terminated, Party A shall be entitled to treat
         all communications and acts relating to this Agreement received from
         or carried out by Northern Rock plc as agent for Party B under the
         Cash Management Agreement as being those of Party B and Party B
         hereby agrees to ratify and confirm the same.

(h)      Security, Enforcement and Limited Recourse

         (i)    Party A confirms to Party B that it is, or will be, by the
                date hereof, bound by the terms of the Funding 2 Deed of
                Charge and, in particular, confirms that: (i) save as
                otherwise expressly set out in the Funding 2 Deed of Charge,
                no sum shall be payable by or on behalf of Party B to it
                except in accordance with the Funding 2



                                      7
<PAGE>

                Priority of Payments as set out in the Funding 2 Deed of
                Charge (as the same may be amended, restated, supplemented
                and/or otherwise modified from time to time); and (ii) it will
                not take any steps for the winding up, dissolution or
                reorganization or for the appointment of a receiver,
                administrator, administrative receiver, trustee, liquidator,
                sequestrator or similar officer of Party B or of any or all of
                its revenues and assets nor participate in any ex parte
                proceedings nor seek to enforce any judgment against Party. B
                except as provided in the Funding 2 Deed of Charge.

         (ii)   In relation to all sums due and payable by Party B to Party A,
                Party A agrees that it shall have recourse only to sums
                available to Party B for the purpose of making payments to
                Party A in accordance with the relevant Funding 2 Priority of
                Payments and the Funding 2 Deed of Charge.

         (iii)  If, on any payment date under a Transaction, an amount is
                payable by Party B to Party A and Party B does not pay such
                amount in full on such date (after the application of Section
                2(c) to such Transaction) because of the limitation contained
                in Part 5(h(i) above, then: (A) payment by Party B of the
                shortfall (and the corresponding payment obligation of Party A
                with respect to such shortfall (being the full amount Party A
                would otherwise owe on such date less the actual amount
                payable by Party A determined in accordance with Part
                5(h)(iii)(C) below)) will not then fall due, but will instead
                be deferred until the first Payment Date (as defined in the
                Relevant Confirmation) thereafter on which sufficient funds
                are available (subject to the limitation in Part 5(h)(i)
                above), (B) failure by Party B to make the full payment under
                such Transaction (after the application of Section 2(c) to
                such Transaction) shall not constitute an Event of Default for
                the purpose of Section 5(a)(i), and (C) the obligation of
                Party A to make payment to Party B, in respect of the same
                Transaction, on such date, will be reduced so that Party A
                will be obligated to pay the Equivalent Percentage of the
                amount it would otherwise owe under that Transaction.
                "Equivalent Percentage" means the percentage obtained by
                dividing the amount paid by Party B by the amount it would
                have paid on the relevant date absent such limitation
                multiplied by one hundred.

         (iv)   if an Early Termination Date results from an Event of Default
                or Termination Event, any amount payable (the payment of which
                was deferred or not paid in the circumstances described under
                Part 5(h)(iii) above by Party A or by Party B, as the case may
                be, under this Agreement) will be deemed to be Unpaid Amounts
                owing to Party B or, as the case may be, owing to Party A on
                the Early Termination Date.

         (v)    Following the calculation thereof, and in any event no later
                than two Local Business Days prior to any relevant Payment
                Date (as defined in the relevant Confirmation), Party B agrees
                to notify Party A of the amount of any shortfall, the payment
                of which by Party B is deferred in accordance with Part
                5(h)(iii) above).



                                      8
<PAGE>

(i)      Authorized Person

         For the purposes of Section 3 of this Agreement, Party A represents
         to Party B (which representation will be deemed to be repeated by
         Party A on each date on which a Transaction is entered into and until
         all outstanding payment and delivery obligations of Party A, from
         time to time, under this Agreement have been satisfied in full) that
         it is an authorized person for the purposes of the Financial Services
         and Markets Act 2000 (or any successor to it).

(j)      Ratings Downgrade of Party A - Standard & Poor's Rating Services, a
         division of The McGraw-Hill Companies Inc. ("S&P")

         (i)    Initial S&P Note Downgrade Event

         In the event that an Initial S&P Note Downgrade Event occurs, then
         Party A shall, within 30 days of the occurrence of such Initial S&P
         Note Downgrade Event, at its own cost, either:

         (A)    provide collateral in the form of cash and/or securities or
                both in support of its obligations under this Agreement in
                accordance with the provisions of the Credit Support Annex; or

         (B)    transfer all of its rights and obligations with respect to
                this Agreement to a replacement third party whose short-term,
                unsecured and unsubordinated debt obligations are rated at
                least as high as "A-1" (or its equivalent) by S&P or such
                other rating as is commensurate with the rating assigned to
                any Notes issued by a Funding 2 Issuer by S&P from time to
                time; or

         (C)    procure another person to become co-obligor or guarantor in
                respect of the obligations of Party A under this Agreement
                whose short-term, unsecured and unsubordinated debt
                obligations are rated at least as high as "A-1" (or its
                equivalent) by S&P or such other rating as is commensurate
                with the rating assigned to any Notes issued by a Funding 2
                Issuer by S&P from time to time; or

         (D)    take such other action as Party A may agree with S&P as will
                result in the rating of any Notes issued by a Funding 2 Issuer
                then outstanding following the taking of such action being
                rated no lower than the rating of any Notes issued by a
                Funding 2 Issuer immediately prior to such downgrade.

         If any of sub-paragraphs (j)(i)(B), (j)(i)(C) or (j)(i)(D) above are
         satisfied at any time, all collateral (or the equivalent thereof, as
         appropriate) transferred by Party A pursuant to sub-paragraph
         (j)(i)(A) above will be transferred back to Party A, and Party A will
         not be required to transfer any additional collateral in respect of
         such particular Initial S&P Note Downgrade Event.



                                      9
<PAGE>

         (ii)   Subsequent S&P Note Downgrade Event

                (A)  Party A shall, within 10 days of the occurrence of a
                     Subsequent S&P Note Downgrade Event, at its own cost and
                     expense, use its best endeavors to take the action set
                     out in sub-paragraph (i)(B) above; and

                (B)  if, at the time a Subsequent S&P Note Downgrade Event
                     occurs, Party A has provided collateral in accordance
                     with the provisions of the Credit Support Annex pursuant
                     to sub-paragraph (i)(A) above following an Initial S&P
                     Note Downgrade Event, it will continue to provide
                     collateral notwithstanding the occurrence of a Subsequent
                     S&P Note Downgrade Event until such time as the action in
                     sub-paragraph (ii)(A) above has been taken.

         If the action set out in sub-paragraph (ii)(A) above is taken at any
         time, all collateral (or the equivalent thereof, as appropriate)
         transferred by Party A pursuant to sub-paragraph (j)(i)(A) above will
         be transferred back to Party A, and Party A will not be required to
         transfer any additional collateral in respect of such Subsequent S&P
         Note Downgrade Event.

         (iii)  Additional Termination Events

                If Party A does not take any of the measures described in
                sub-paragraphs (j)(i) or (j)(ii) above such failure shall not
                be or give rise to an Event of Default but shall constitute an
                Additional Termination Event with respect to Party A and shall
                be deemed to have occurred on the thirtieth day following the
                Initial S&P Note Downgrade Event or Subsequent S&P Note
                Downgrade Event, as applicable, with Party A as the sole
                Affected Party.

                However, in the event that Party B were to designate an Early
                Termination Date and there would be a payment due to Party A,
                Party B may only designate such an Early Termination Date in
                respect of an Additional Termination Event under this
                sub-paragraph (j)(iii) if Party B has found a replacement
                counterparty willing to enter into a new transaction with
                Party B on terms that reflect as closely as reasonably
                possible (as the Note Trustee, on behalf of Party B may, in
                its absolute discretion, determine) the economic, legal and
                credit terms of the Terminated Transactions with Party A.

         (iv)   S&P Definitions

                For the purposes of this Part 5(j):

                an "Initial S&P Note Downgrade Event" will occur where:

                (a)  the short-term, unsecured and unsubordinated debt
                     obligations of Party A (or its successor), or any
                     guarantor of Party A's obligations under this Agreement
                     (or its successor), cease to be rated at least as high as
                     "A-l" (or its equivalent) by S&P, and



                                      10
<PAGE>

                (b)  as a result of such cessation, the then current rating of
                     the Notes issued by a Funding 2 Issuer may, in the
                     reasonable opinion of S&P, be downgraded or placed under
                     review for possible downgrade; and

                 a "Subsequent Note Downgrade Event" will occur where:

                (a)  the long-term, unsecured and unsubordinated debt
                     obligations of Party A (or its successor), or any
                     guarantor of Party A's obligations under this Agreement
                     (or its successor), cease to be rated at least as high as
                     "BBB" (or its equivalent) by S&P, and

                (b)  as a result of such cessation, the then current rating of
                     any Notes issued by a Funding 2 Issuer may, in the
                     reasonable opinion of S&P, be downgraded or placed under
                     review for possible downgrade.

(k)      Ratings Downgrade of Party A -- Moody's Investors Service Limited
         ("Moody's")

         (i)    Initial Moody's Note Downgrade Event

                Within 30 days of a the occurrence of an Initial Moody's
                Note Downgrade Event, Party A shall, on a reasonable efforts
                basis and at its own cost, attempt to:

                (A)  transfer all of its rights and obligations with respect
                     to this Agreement to either (x) a replacement third party
                     with the Required Ratings (as defined below) domiciled in
                     the same legal jurisdiction as Party A or Party B or (y)
                     a replacement third party which, as agreed with Moody's,
                     will not adversely affect the ratings of any Notes issued
                     by a Funding 2 Issuer; or

                (B)  procure another person to become co-obligor or guarantor
                     in respect of the obligations of Party A under this
                     Agreement. Such co-obligor may be either (x) a person
                     with the Required Ratings domiciled in the same legal
                     jurisdiction as Party A or Party B, or (y) a person, who
                     as agreed with Moody's, will not adversely affect the
                     ratings of any Notes issued by a Funding 2 Issuer; or

                (C)  take such other action as Moody's shall confirm to Party
                     A will remedy an Initial Moody's Note Downgrade Event; or

                (D)  provide collateral in the form of cash or securities or
                     both, in support of its obligations under this Agreement
                     in accordance with the provisions of the Credit Support
                     Annex.

                If any of sub-paragraphs (k)(i)(A), (k)(i)(B) or (k)(i)(C)
                above are satisfied at any time, all collateral (or the
                equivalent thereof, as appropriate) transferred by Party A
                pursuant to sub-paragraph (k)(i)(D) above will be
                transferred back to Party A and Party A will not be required
                to transfer any additional collateral as a consequence of
                such particular Initial Moody's Note Downgrade Event.



                                      11
<PAGE>

         (ii)   Subsequent Moody's Note Downgrade Event

                Party A shall, within 30 days of the occurrence of a
                Subsequent Moody's Note Downgrade Event, on a best efforts
                basis and at its own cost, attempt to:

                (A)  transfer all of its rights and obligations with respect
                     to this Agreement to either (x) a replacement third party
                     with the Required Ratings domiciled in the same legal
                     jurisdiction as Party A or Party B, or (y) a replacement
                     third party which, as agreed with Moody's, will not
                     adversely affect the ratings of any Notes issued by a
                     Funding 2 Issuer; or

                (B)  procure another person to become co-obligor or guarantor
                     in respect of the obligations of Party A under this
                     Agreement. Such co-obligor may be either (x) a person
                     with the Required Ratings domiciled in the same legal
                     jurisdiction as Party A or Party B, or (y) a person, who
                     as agreed with Moody's, will not adversely affect the
                     ratings of any Notes issued by a Funding 2 Issuer; or

                (C)  take such other action as Moody's shall confirm to Party
                     A will remedy a Subsequent Moody's Note Downgrade Event.

                In the event that Party A is unable to comply with either
                sub-paragraph (ii)(A), (ii)(B) or (ii)(C) within such 30 day
                period then it will continue, on a best efforts basis, to
                comply with the same.

         (iii)  Subsequent Moody's Note Downgrade Event - Collateral
                Requirements

                Pending compliance with any of sub-paragraphs (k)(ii)(A),
                (k)(ii)(B) or (k)(ii)(C) above, Party A will at its own cost
                and within 10 days of such Subsequent Moody's Note Downgrade
                Event or 30 days of the occurrence of an Initial Moody's Note
                Downgrade Event, whichever is the earlier, provide collateral
                in the form of cash or securities or both, in support of its
                obligations under this Agreement in accordance with the
                provisions of the Credit Support Annex; provided that, if at
                the time when a Subsequent Moody's Note Downgrade Event
                occurs, Party A has provided collateral pursuant to the Credit
                Support Annex pursuant to sub-paragraph (k)(i)(D) above, it
                will continue to provide collateral notwithstanding the
                occurrence of a Subsequent Moody's Note Downgrade Event.

                If any of sub-paragraphs (k)(ii)(A), (k)(ii)(B) or (k)(ii)(C)
                above are satisfied at any time, all collateral (or the
                equivalent thereof, as appropriate) transferred by Party A
                pursuant to this sub-paragraph (k)(iii) will be transferred
                back to Party A and Party A will not be required to transfer
                any additional collateral (subject always to any collateral
                which may be required pursuant to sub-paragraph (k)(i)(D)
                above and unless a further Subsequent Mood's Note Downgrade
                Event occurs).



                                      12
<PAGE>

         (iv)   Additional Termination Events and Event of Default

                If Party A does not take the measures described in
                sub-paragraph (k)(i) above such failure shall not be or give
                rise to an Event of Default but shall constitute an Additional
                Termination Event with respect to Party A and shall be deemed
                to have occurred on the thirtieth day following an Initial
                Moody's Note Downgrade Event with Party A as the sole Affected
                Party.

                If Party A does not take the measures described in
                sub-paragraph (k)(iii) above such failure shall give rise to
                an Event of Default with respect to Party A and shall be
                deemed to have occurred on the thirtieth day following a
                Subsequent Moody's Note Downgrade Event (or, if Party A has
                put in place a collateral agreement in accordance with the
                requirements of sub-paragraph (k)(i)(A) above, such Event of
                Default shall be deemed to have occurred on the tenth day
                following such Subsequent Moody's Note Downgrade Event with
                Party A as the sole Defaulting Party. Further, it shall
                constitute an Additional Termination Event with respect to
                Party A if, even after satisfying the requirements of
                sub-paragraph (k)(iii), Party A has failed, having applied
                best efforts, to comply with any of sub-paragraphs (k)(ii)(A),
                (k)(ii)(B) or (k)(ii)(C) and such Additional Termination Event
                shall be deemed to have occurred on the thirtieth day
                following such Subsequent Moody's Note Downgrade Event with
                Party A as the sole Affected Party.

                However, in the event that Party B were to designate an Early
                Termination Date and there would be a payment due to Party A,
                Party B may only designate such an Early Termination Date in
                respect of an Additional Termination Event under this
                sub-paragraph (k)(iv) if Party B has found a replacement
                counterparty willing to enter into a new transaction with
                Party B on terms that reflect as closely as reasonably
                possible (as the Note Trustee, on behalf of Party B, may, in
                its absolute discretion, determine) the economic, legal and
                credit terms of the Terminated Transactions with Party A.

         (v)    Moody's Definitions

                For the purposes of this Part 5(k):

                an "Initial Moody's Note Downgrade Event" will occur where:

                (a)  the long-term, unsecured and unsubordinated debt
                     obligations of Party A (or its successor) and, if
                     relevant, any guarantor of Party A's obligations under
                     this Agreement (or its successor), cease to be rated at
                     least as high as "A2" (or its equivalent) by Moody's, or

                (b)  the short-term, unsecured and unsubordinated debt
                     obligations of Party A (or its successor) and, if
                     relevant, any guarantor of Party A's obligations under
                     this Agreement (or its successor), cease to be rated at
                     least as high as "Prime-l" (or its equivalent) by
                     Moody's;



                                      13
<PAGE>

                a "Subsequent Moody's Note Downgrade Event" will occur where

                (a)  the long-term, unsecured and unsubordinated debt
                     obligations of Party A (or its successor) and, if
                     relevant, any guarantor of Party A's obligations under
                     this Agreement (or its successor), cease to be rated at
                     least as high as "A3' (or its equivalent) by Moody's, or

                (b)  the short-term, unsecured and unsubordinated debt
                     obligations of Party A (or its successor) and, if
                     relevant, any guarantor of Party A's obligations under
                     this Agreement (or its successor), cease to be rated at
                     least as high as "Prime-2" (or its equivalent) by
                     Moody's; and

                "Required Ratings" means, in respect of a person, its
                short-term, unsecured and unsubordinated debt obligations
                are rated at least as high as "Prime-l" and its long-term,
                unsecured and unsubordinated debt obligations are rated at
                least as high as "Al", or such other ratings as may be
                agreed with Moody's from time to time.

(1)      Ratings Downgrade of Party A -- Fitch Ratings Ltd ("Fitch")

         (i)    Initial Fitch Note Downgrade Event

                Party A will, on a best efforts basis, within 30 days of the
                occurrence of an Initial Fitch Note Downgrade Event, at its
                own cost, either:

                (A)  provide collateral in the form of cash or securities or
                     both, in support of its obligations under this Agreement,
                     in accordance with the provisions of the Credit Support
                     Annex; or

                (B)  transfer all of its rights and obligations with respect
                     to this Agreement to a replacement third party whose
                     long-term, unsecured and unsubordinated debt ratings are
                     rated at least as high as "A" (or its equivalent) by
                     Fitch, and whose short-term, unsecured and unsubordinated
                     debt ratings are rated at least as high as "Fl" (or its
                     equivalent) by Fitch or such other rating as is
                     commensurate with the rating assigned to any Notes issued
                     by a Funding 2 Issuer by Fitch from time to time; or

                (C)  procure another person to become co-obligor or guarantor
                     in respect of the obligations of Party A under this
                     Agreement whose long-term, unsecured and unsubordinated
                     debt ratings are rated at least as high as "A" (or its
                     equivalent) by Fitch, and whose short-term, unsecured and
                     unsubordinated debt ratings are rated at least as high as
                     "Fl" (or its equivalent) by Fitch or such other rating as
                     is commensurate with the rating assigned to any Notes
                     issued by a Funding 2 Issuer by Fitch from time to time;
                     or

                (D)  take such other action as Party A may agree with Fitch as
                     will result in the rating of any Notes issued by a
                     Funding 2 Issuer then outstanding being maintained or
                     obtain confirmation from Fitch that there is no adverse



                                      14
<PAGE>

                     effect on the rating of the Issuer Notes as a result of
                     that Initial Fitch Downgrade Event so that none of the
                     courses of action outlined at (m)(i)(A), (m)(i)(B) or
                     (m)(i)(C) above need to be pursued in respect of such
                     Initial Fitch Note Downgrade Event.

                If any of sub-paragraphs (l)(i)(B), (l)(i)(C) or (1)(i)(D)
                are satisfied at any time all collateral (or the equivalent
                thereof, as appropriate) transferred by Party A pursuant to
                sub-paragraph (l)(i)(A) will be transferred back to Party A
                and Party A will not be required to transfer any additional
                collateral in consequence of the particular Initial Fitch
                Note Downgrade Event.

         (ii)   First Subsequent Fitch Note Downgrade Event

                Party A will,

                (A)  provide, at its own cost, within 30 days of the
                     occurrence of a First Subsequent Fitch Note Downgrade
                     Event provide collateral in the form of cash or
                     securities or both, in support of its obligations under
                     this Agreement in accordance with the provisions of the
                     Credit Support Annex; provided that, if at the time when
                     a First Subsequent Fitch Note Downgrade Event Party A has
                     provided collateral pursuant to the Credit Support Annex
                     pursuant to sub-paragraph (l)(i)(A) above it will
                     continue to provide collateral notwithstanding the
                     occurrence of a First Subsequent Fitch Note Downgrade
                     Event; provided further that in either case, the
                     mark-to-market calculations and the correct and timely
                     provision of collateral thereunder are verified by an
                     independent third party within five Local Business Days
                     of the date on which collateral is provided pursuant to
                     this sub-paragraph (1)(ii)(A) and thereafter, on a
                     periodic basis on every fifth Local Business Day whilst
                     collateral is being provided pursuant to this
                     sub-paragraph (1)(ii)(A) (with the costs of such
                     independent verification being borne by Party A); or

                on a best efforts basis, within 30 days of the occurrence of
                a First Subsequent Fitch Note Downgrade Event, at its own
                cost, either:

                (B)  transfer all of its rights and obligations with respect
                     to this Agreement to a replacement third party whose
                     long-term, unsecured and unsubordinated debt ratings are
                     rated at least as high as "A" (or its equivalent) by
                     Fitch, and whose short-term, unsecured and unsubordinated
                     debt ratings are rated at least as high as "Fl" (or its
                     equivalent) by Fitch or such other rating as is
                     commensurate with the rating assigned to any Notes issued
                     by a Funding 2 Issuer by Fitch from time to time; or

                (C)  procure another person to become co-obligor or guarantor
                     in respect of the obligations of Party A under this
                     Agreement whose long-term, unsecured and unsubordinated
                     debt ratings are rated at least as high as "A" (or its
                     equivalent) by Fitch, and whose short-term, unsecured and
                     unsubordinated

                                      15
<PAGE>

                     debt ratings are rated at least as high as "Fl" (or its
                     equivalent) by Fitch or such other rating as is
                     commensurate with the rating assigned to any Notes issued
                     by a Funding 2 Issuer by Fitch from time to time; or

                (D)  take such other action as Party A may agree with Fitch as
                     will result in the rating of any Notes issued by a
                     Funding 2 Issuer then outstanding being maintained, or
                     obtain confirmation from Fitch that there is no adverse
                     effect on the rating of the Issuer Notes as a result of
                     that First Subsequent Fitch Downgrade Event so that none
                     of the courses of action outlined at (1)(ii)(A),
                     (1)(ii)(B) or (1)(ii)(C) above need to be pursued in
                     respect of such First Subsequent Fitch Downgrade Event.

                If any of sub-paragraphs (1)(ii)(B), (l)(ii)(C) or
                (1)(ii)(D) above are satisfied at any time, all collateral
                (or the equivalent thereof, as appropriate) transferred by
                Party A pursuant to sub-paragraph (l)(ii)(A) above will be
                transferred back to Party A and Party A will not be required
                to transfer any additional collateral as a consequence of
                the particular First Subsequent Fitch Note Downgrade Event.

         (iii)  Second Subsequent Fitch Note Downgrade Event

                Party A will, on a best efforts basis, within 30 days of the
                occurrence of a Second Subsequent Fitch Note Downgrade
                Event, at its own cost, either:

                (A)  transfer all of its rights and obligations with respect
                     to this Agreement to a replacement third party whose
                     long-term, unsecured and unsubordinated debt ratings are
                     rated at least as high as "A" (or its equivalent) by
                     Fitch, and whose short-term, unsecured and unsubordinated
                     debt ratings are rated at least as high as "Fl" (or its
                     equivalent) by Fitch or such other rating as is
                     commensurate with the rating assigned to any Notes issued
                     by a Funding 2 Issuer by Fitch from time to time; or

                (B)  procure another person to become co-obligor or guarantor
                     in respect of the obligations of Party A under this
                     Agreement whose long-term, unsecured and unsubordinated
                     debt ratings are rated at least as high as "A" (or its
                     equivalent) by Fitch, and whose short-term, unsecured and
                     unsubordinated debt ratings are rated at least as high as
                     "F1" (or its equivalent) by Fitch or such other rating as
                     is commensurate with the rating assigned to any Notes
                     issued by a Funding 2 Issuer by Fitch from time to time;
                     or

                (C)  take such other action as Party A may agree with Fitch as
                     will result in the rating of any Notes issued by a
                     Funding 2 Issuer then outstanding being maintained or
                     obtain confirmation from Fitch that there is no adverse
                     effect on the rating of the Issuer Notes as a result of
                     that Second Subsequent Fitch Downgrade Event so that none
                     of the courses of action outlined at (1)(iii)(A) or
                     (1)(iii)(B) above need to be pursued in respect of such
                     Second Subsequent Fitch Downgrade Event.

         (iv)   Second Subsequent Fitch Note Downgrade Event - Collateral
                Requirements



                                      16
<PAGE>

                Pending compliance with any of sub-paragraphs (1)(iii)(A),
                (1)(iii)(B) or (1)(iii)(C) above, Party A will provide, at
                its own cost, within 10 days of such Second Subsequent Fitch
                Note Downgrade Event or 30 days of the occurrence of First
                Subsequent Fitch Note Downgrade Event, whichever is the
                earlier, collateral in the form of cash or securities or
                both, in support of its obligations under this Agreement. in
                accordance with the provisions of the Credit Support Annex;
                provided that, if at the time when an Initial Fitch Note
                Downgrade Event or a First Subsequent Fitch Note Downgrade
                Event, as the case may be, occurs Party A has provided
                collateral pursuant to the Credit Support Annex pursuant to
                sub-paragraphs (1)(i)(A) or (1)(ii)(A) above, it will
                continue to provide collateral notwithstanding the
                occurrence of a Second Subsequent Fitch Note Downgrade
                Event; provided further that in either case, the
                mark-to-market calculations and the correct and timely
                provision of collateral thereunder are verified by an
                independent third party (with the costs of such independent
                verification being borne by Party A).

                If any of sub-paragraphs (1)(iii)(A), (1)(iii)(B) or
                (l)(iii)(C) above are satisfied at any time, all collateral
                (or the equivalent thereof, as appropriate) transferred by
                Party A pursuant to this sub-paragraph (1)(iv) will be
                transferred back to Party A and Party A will not be required
                to transfer any additional collateral as a consequence of
                the particular Second Subsequent Fitch Note Downgrade Event.

         (v)    Additional Termination Events

                If Party A does not take any of the measures described in
                sub-paragraphs (1)(i), (1)(ii) or (1)(iii) above such
                failure shall not be or give rise to an Event of Default but
                shall constitute an Additional Termination Event with
                respect to Party A and shall be deemed to have occurred on
                the thirtieth day following such Initial Fitch Note
                Downgrade Event, First Subsequent Fitch Note Downgrade Event
                or Second Subsequent Fitch Note Downgrade Event, as the case
                may be, with Party A as the sole Affected Party.

                However, in the event that Party B were to designate an
                Early Termination Date and there would be a payment due to
                Party A, Party B may only designate such an Early
                Termination Date in respect of an Additional Termination
                Event under this sub-paragraph (l)(v) if Party B has found a
                replacement counterparty willing to enter a new transaction
                with Party B on terms that reflect as closely as reasonably
                possible (as the Note Trustee, on behalf of Party B, may, in
                its absolute discretion, determine) the economic, legal and
                credit terms of the Terminated Transactions with Party A.

         (vi)   Fitch Definitions

                For the purposes of this Part 5(1):

                an "Initial Fitch Note Downgrade Event" will occur where,
                the long-term, unsecured and unsubordinated debt obligations
                of Party A (or its successor) or, if



                                      17
<PAGE>

                relevant, any guarantor of Party A's obligations under this
                Agreement (or its successor) cease to be rated at least as
                high as "A" (or its equivalent) by Fitch, and the short-term,
                unsecured and unsubordinated debt obligations of Party A (or
                its successor) or any guarantor of Party A's obligations under
                this Agreement (or its successor), cease to be rated at least
                as high as "F1" (or its equivalent) by Fitch;

                a "First Subsequent Fitch Note Downgrade Event" will occur
                where, the long-term, unsecured and unsubordinated debt
                obligations of Party A (or its successor) or, if relevant, any
                guarantor of Party A's obligations under this Agreement (or
                its successor), cease to be rated at least as high as "BBB+"
                (or its equivalent) by Fitch, and the short-term, unsecured
                and unsubordinated debt obligations of Party A (or its
                successor) or any guarantor of Party A's obligations under
                this Agreement (or its successor), cease to be rated at least
                as high as "F2" (or its equivalent) by Fitch; and

                a "Second Subsequent Fitch Note Downgrade Event" will occur
                where, the long-term, unsecured and unsubordinated debt
                obligations of Party A (or its successor) or, if relevant, any
                guarantor of Party A's obligations under this Agreement (or
                its successor), cease to be rated at least as high as "BBB-"
                (or its equivalent) by Fitch, and the short-term, unsecured
                and unsubordinated debt obligations of Party A (or its
                successor) or any guarantor of Party A's obligations under
                this Agreement (or its successor), cease to be rated at least
                as high as "F3" (or its equivalent) by Fitch.

(m)      Additional Section 3 and Tax Deductibility Representations

         (i)    Section 3 is amended by the addition at the end thereof of
                the following additional representation:

                "(g) No Agency. It is entering into this Agreement and each
                Transaction as principal and not as agent of any person."

         (ii)   Party A represents to Party B (which representation will be
                deemed to be repeated by Party A on each date on which a
                Transaction is entered into) that its obligations under this
                Agreement rank pari passu with all of its other unsecured,
                unsubordinated obligations except those obligations
                preferred by operation of law.

         (iii)  The following representation (the "Additional Tax
                Representation") will apply to Party A and will not apply to
                Party B and will be deemed to be repeated by Party A at all
                times until the termination of this Agreement. In relation
                to each Transaction, either:

                (A)  it is resident in the United Kingdom for United Kingdom
                     tax purposes, or

                (B)   the conditions of Paragraph 31(6) or Paragraph 31(7) of
                      Schedule 26 of the Finance Act 2002 (in each case as
                      amended or re-enacted from time to time) are satisfied
                      with respect to the relevant Transaction.



                                      18
<PAGE>

(n)      Recording of Conversations

         Each party (i) consents to the recording of telephone conversations
         between the trading, marketing and other relevant personnel of the
         parties in connection with this Agreement or any potential
         Transaction, (ii) agrees to obtain any necessary consent of, and give
         any necessary notice of such recording to, its relevant personnel,
         and (iii) agrees, to the extent permitted by applicable law, that
         recordings may be submitted in evidence in any Proceedings.

(o)      Relationship between the parties

         The Agreement is amended by the insertion after Section 14 of an
         additional Section 15, reading in its entirety as follows:

         "15. Relationship between the parties

         Each party will be deemed to represent to the other party on the date
         on which it enters into a Transaction that (absent a written
         agreement between the parties that expressly imposes affirmative
         obligations to the contrary for that Transaction):

         (i)    Non Reliance. It is acting for its own account, and it has
                made its own decisions to enter into that Transaction and as
                to whether that Transaction is appropriate or proper for it
                based upon its own judgment and advice from such advisers as
                it has deemed necessary. It is not relying on any
                communication (written or oral) of the other party as
                investment advice or as a recommendation to enter into that
                Transaction; it being understood that information and
                explanations related to the terms and conditions of a
                Transaction shall not be considered investment advice or a
                recommendation to enter into that Transaction. It has not
                received from the other party any assurance or guarantee as to
                the expected results of that Transaction.

         (ii)   Assessment and Understanding. It is capable of assessing the
                merits of and understanding (on its own behalf or through
                independent professional advice), and understands and accepts,
                the terms, conditions and risks of that Transaction. It is
                also capable of assuming, and assumes, the financial and other
                risks of that Transaction.

         (iii)  Status of Parties. The other party is not acting as a
                fiduciary for or an adviser to it in respect of that
                Transaction."

(p)      Tax

         The Agreement is amended by deleting Section 2(d) in its entirety and
         replacing it with the following:

         "(d)   Deduction or Withholding for Tax

         (i)    Requirement to Withhold



                                      19
<PAGE>

                All payments under this Agreement will be made without any
                deduction or withholding for or on account of any Tax unless
                such deduction or withholding is required (including, for
                the avoidance of doubt, if such deduction or withholding is
                required in order for the payer to obtain relief from Tax)
                by any applicable law, as modified by the practice of any
                relevant governmental revenue authority, then in effect. If
                a party ("X") is so required to deduct or withhold, then
                that party (the "Deducting Party"):

                (A)  will promptly notify the other party ("Y") of such
                     requirement;

                (B)  will pay to the relevant authorities the full amount
                     required to be deducted or withheld (including the full
                     amount required to be deducted or withheld from any Gross
                     Up Amount (as defined below) paid by the Deducting Party
                     to Y under this Section 2(d)) promptly upon the earlier
                     of determining that such deduction or withholding is
                     required or receiving notice that such amount has been
                     assessed against Y;

                (C)  will promptly forward to Y an official receipt (or a
                     certified copy), or other documentation reasonably
                     acceptable to Y, evidencing such payment to such
                     authorities; and

                (D)  if X is Party A, X will promptly pay in addition to the
                     payment to which Party B is otherwise entitled under this
                     Agreement, such additional amount (the "Gross Up Amount")
                     as is necessary to ensure that the net amount actually
                     received by Party B will equal the full amount which
                     Party B would have received had no such deduction or
                     withholding been required.

         (ii)   Liability

                If:

                (A)  X is required by any applicable law, as modified by the
                     practice of any relevant governmental revenue authority,
                     to make any deduction or withholding for or on account of
                     any Tax in respect of payments under this Agreement; and

                (B)  X does not so deduct or withhold; and

                (C)  a liability resulting from such Tax is assessed directly
                     against X,

                then, except to the extent that Y has satisfied or then
                satisfies the liability resulting from such Tax, (A) where X
                is Party B, Party A will promptly pay to Party B the amount of
                such liability (the "Liability Amount") (including any related
                liability for interest and together with an amount equal to
                the Tax payable by Party B on receipt of such amount but
                including any related liability for penalties only if Party A
                has failed to comply with or perform any agreement contained
                in Section 4(a)(i), 4(a)(iii) or 4(d)) and Party B will
                promptly pay to the



                                      20
<PAGE>

                relevant government revenue authority the amount of such
                liability (including any related liability for interest and
                penalties) and (B) where X is Party A and Party A would have
                been required to pay a Gross Up Amount to Party B, Party A
                will promptly pay to the relevant government revenue authority
                the amount of such liability (including any related liability
                for interest and penalties).

         (iii)  Tax Credit etc.

                (a)  Where Party A pays an amount in accordance with Section
                     2(d)(i)(D) or 2(d)(ii)(C) above, Party B undertakes as
                     follows:

                     (1)  to the extent that Party B obtains any Tax credit,
                          allowance, set-off or repayment from the tax
                          authorities of any jurisdiction relating to any
                          deduction or withholding giving rise to such payment
                          or in the case of Section 2(d)(ii)(B) the amount to
                          be assessed ("Tax Credit"), it shall pay to Party A
                          on the next Note Payment Date (as defined in the
                          Programme Master Definitions Schedule) after receipt
                          of the same so much of the cash benefit (as
                          determined in accordance with subparagraph
                          (iii)(a)(2) below) relating thereto which it has
                          received as will leave Party B in substantially the
                          same (but in any event no worse) position as Party B
                          would have been in if no such deduction or
                          withholding had been required or the amount had not
                          been so assessed;

                     (2)  the "cash benefit" shall, in the case of credit,
                          allowance or set-off, be the additional amount of
                          Tax which would have been payable by Party B in the
                          jurisdiction referred to in sub-paragraph
                          (iii)(a)(l) above but for the obtaining by it of the
                          said Tax credit, allowance or set-off and, in the
                          ease of a repayment, shall be the amount of the
                          repayment together, in either case, with any related
                          interest or similar payment obtained by Party B; and

                     (3)  it will use all best endeavors to obtain any Tax
                          Credit as soon as is reasonably practicable provided
                          that it shall be the sole judge of the amount of any
                          such Tax Credit and of the date on which the same is
                          received and shall not be obliged to disclose to
                          Party A any information regarding its tax affairs or
                          tax computations save that Party B shall, upon
                          request by Party A, supply Party A with a reasonably
                          detailed explanation of its calculation of the
                          amount of any such Tax Credit and of the date on
                          which the same is received.

                          The definition of "Indemnifiable Tax" in Section 14
                          shall be deleted and the following shall be
                          substituted therefor:

                           "Indemnifiable Tax" means any Tax."

(q)      Change of Account



                                      21
<PAGE>

         Section 2(b) of this Agreement is hereby amended by the addition of
         the following at the end thereof:

         "; provided that such new account shall be in the same legal and tax
         jurisdiction as the original account and such new account, in the
         case of Party B, is held with a financial institution with a
         long-term unsecured and unsubordinated debt obligation rating of at
         least "Al" by Moody's and a short term unsecured, unsubordinated and
         unguaranteed debt obligation rating of at least "P-1" by Moody's and
         "A-1" by "S&P"."

(r)      Condition Precedent

         Section 2(a)(iii) shall be amended by the deletion of the words "or
         Potential Event of Default" in respect of conditions precedent to the
         obligations of Party A only.

(s)      Representations

         (i)    Section 3(a)(v) shall be amended by the addition of the
                words "(with the exception of Section 11 insofar as it
                relates to any Stamp Tax)" after the words "this Agreement".

         (ii)   Section 3(b) shall be amended by the deletion of the words
                "or Potential Event of Default" in respect of the
                representation given by Party B only.

(t)      Transfers

         (i)    Section 7 of this Agreement shall not apply to Party A, who
                shall be required to comply with, and shall be bound by, the
                following:

                Without prejudice to Section 6(b)(ii), Party A may transfer
                all its interest and obligations in and under this Agreement
                to any other entity (a "Transferee") provided that:

                (a)  it has given five Business Days prior written notice to
                     the Funding 2 Security Trustee;

                (b)  the Transferee's long-term, unsecured and unsubordinated
                     debt obligations are then rated not less than "Al" by
                     Moody's and its short-term, unsecured and unsubordinated
                     debt obligations are then rated not less than "P-1" by
                     Moody's, "A-1" by S&P and "F1" by Fitch (or its
                     equivalent by any substitute rating agency) or such
                     Transferee's obligations under this Agreement are
                     guaranteed by an entity whose long-term, unsecured and
                     unsubordinated debt obligations are then rated not less
                     than "Al" by Moody's and whose short-term, unsecured and
                     unsubordinated debt obligations are then rated not less
                     than "P-1" by Moody's, "A-I" by S&P and "F1" by Fitch (or
                     its equivalent by any substitute rating agency);



                                      22
<PAGE>

                (c)  as of the date of such transfer the Transferee will not,
                     as a result of such transfer, be required to withhold or
                     deduct on account of Tax under this Agreement;

                (d)  a Termination Event or an Event of Default does not occur
                     under this Agreement as a result of such transfer;

                (e)  no additional amount will be payable by Party B to Party
                     A or the Transferee on the next succeeding Scheduled
                     Payment Date as a result of such transfer; and

                (f)  (if the Transferee is domiciled in a different country
                     from both Party A and Party B) S&P, Moody's and Fitch
                     have provided prior written notification that the then
                     current ratings of any Notes issued by a Funding 2 Issuer
                     will not be adversely affected.

                     Following such transfer all references to Party A shall
                     be deemed to be references to the Transferee.

(u)      Scope of Agreement

         It is hereby understood. and agreed that the provisions of this
         Agreement shall only apply to the Basis Rate Swap Transactions and
         that no other Transaction may be entered into pursuant hereto except
         in accordance with Parts 5(j)(i)(A), 5(k)(i)(D), 5(k)(iii),
         5(1)(i)(A), 5(1)(ii)(A) or 5(1)(iv) or where the Rating Agencies have
         confirmed in writing that the then current ratings of any Notes
         issued by a Funding 2 Issuer would not be adversely affected by such
         other Transaction.

(v)      Contracts (Rights of Third Parties) Act 1999

         A person who is not a party to this Agreement shall have no right
         under the Contracts (Rights of Third Parties) Act 1999 to enforce any
         of its terms but this shall not affect any right or remedy of a third
         party which exists or is available apart from that Act.

(w)      Calculations if an Early Termination Date occurs as a result of an
         Event of Default or Additional Termination Event where Party A is the
         Defaulting Party or the sole Affected Party

         Subject to compliance with clause 14.3(n) of the Funding 2 Deed of
         Charge, upon the occurrence of an Event of Default or an Additional
         Termination Event where Party A is the Defaulting Party or the sole
         Affected Party, as applicable, Party B will be entitled (but not
         obliged in the event that it does not designate an Early Termination
         Date) to proceed in accordance with Section 6 of the Agreement
         subject to the following:

         (i)    For the purposes of Section 6(d)(i) of this Agreement, Party
                B's obligation with respect to the extent of information to
                be provided with its calculations is limited to information
                Party B has already received in writing and provided Party B
                is



                                      23
<PAGE>

                able to release this information without breaching the
                provisions of any law applicable to, or any contractual
                restriction binding upon, Party 13.

         (ii)   The following amendments shall be deemed to be made to the
                definitions of "Market Quotation":

                (a)  the word "firm" shall be added before the word
                     "quotations" in the second line; and

                (b)  the words "provided that the documentation relating
                     thereto is either the same as this Agreement and the
                     Confirmations with respect to the Terminated Transactions
                     (and the long-term unsecured and unsubordinated debt
                     obligations of the Reference Market-maker are rated not
                     less than "Al" by Moody's, and its short-term, unsecured
                     and unsubordinated debt obligations are rated not less
                     than "P-I" by Moody's, "A-1" by S&P and "Fl" by Fitch
                     (or, if such Reference Market-maker is not rated by a
                     Rating Agency, at such equivalent rating (by another
                     rating agency) that is acceptable to each such Rating
                     Agency) or the Rating Agencies have confirmed in writing
                     such proposed documentation will not adversely impact the
                     ratings of any Notes issued by a Funding 2 Issuer" shall
                     be added after "agree" in the sixteenth line; and

                (c)  the last sentence shall be deleted and replaced with the
                     fallowing:

                     "If, on the last date set for delivery of quotations,
                     exactly two quotations are provided, the Market Quotation
                     will be the arithmetic mean of the two quotations. If
                     only one quotation is provided on such date, Party B may,
                     in its discretion, accept such quotation as the Market
                     Quotation and if Party B does not accept such quotation
                     (or if no quotation has been provided), it will be deemed
                     that the Market Quotation in respect of the Terminated
                     Transaction cannot be determined."

         (ii)   For the purpose of the definition of "Market Quotation", and
                without limitation of the general rights of Party B under
                the Agreement:

                (A)  Party B will undertake to use its reasonable efforts to
                     obtain at least three firm quotations as soon as
                     reasonably practicable after the Early Termination Date
                     and in any event within the time period specified
                     pursuant to (iii)(C) below;

                (B)  Party A shall, for the purposes of Section 6(e), be
                     permitted to obtain quotations from Reference
                     Market-makers; and

                (C)  if no quotations have been obtained within 10 Local
                     Business Days after the occurrence of the Early
                     Termination Date or such longer period as Party B may
                     specify in writing to Party A, then it will be deemed
                     that the Market Quotation in respect of the Terminated
                     Transaction cannot be determined.



                                      24
<PAGE>

         (iv)   Party B will be deemed to have discharged its obligations
                under sub-paragraph (w)(iii)(A) above if it requests that
                Party A (such request to be in writing and made within two
                Local Business Days after the occurrence. of the Early
                Termination Date) obtains quotations from Reference
                Market-makers and Party A agrees to act in accordance with
                such request.

         (v)    Party B will not be obliged to consult with Party A as to
                the day and time of obtaining any quotations.



                                      25

<PAGE>

                                                                   Schedule #2
                                                              for Exhibit 10.1

(Bilateral Form - Transfer)(1)      (ISDA Agreements Subject to English Law)(2)


                                    ISDA(R)
             International Swaps and Derivatives Association, Inc.



                             CREDIT SUPPORT ANNEX

                            to the Schedule to the

                             ISDA Master Agreement

                          dated as of 19 January 2005

                                    between

         NORTHERN ROCK PLC        and        GRANITE FINANCE FUNDING 2 LIMITED
               ("Party A")                        ("Party B")



This Annex supplements, forms part of, and is subject to, the ISDA Master
Agreement referred to above and is part of its Schedule. For the purposes of
this Agreement, including, without limitation, Sections 1(c), 2(a), 5 and 6,
the credit support arrangements set out in this Annex constitute a Transaction
(for which this Annex constitutes the Confirmation).

Paragraph 1.  Interpretation

Capitalised terms not otherwise defined in this Annex or elsewhere in this
Agreement have the meanings specified pursuant to Paragraph 10, and all
references in this Annex to Paragraphs are to Paragraphs of this Annex. In the
event of any inconsistency between this Annex and the other provisions of this
Schedule, this Annex will prevail, and in the event of any inconsistency
between Paragraph 11 and the other provisions of this Annex, Paragraph 11 will
prevail. For the avoidance of doubt, references to "transfer" in this Annex
mean, in relation to cash, payment and, in relation to other assets, delivery.


----------------------
(1) This document is not intended to create a charge or other security
interest over the assets transferred under its terms. Persons intending to
establish a collateral arrangement based on the creation of a charge or other
security interest should consider using the ISDA Credit Support Deed (English
law) or the ISDA Credit Support Annex (New York law), as appropriate.
(2) This Credit Support Annex has been prepared for use with ISDA Master
Agreements subject to English law. Users should consult their legal advisers
as to the proper use and effect of this form and the arrangements it
contemplates. In particular. users should consult their legal advisers if they
wish to have the Credit Support Annex made subject to a governing law other
than English law or to have the Credit Support Annex subject to a different
governing law than that governing the rest of the ISDA Master Agreement (e.g.,
English law for the Credit Support Annex and New York law for the rest of the
ISDA Master Agreement).

<PAGE>

Paragraph 2.  Credit Support Obligations

(a)  Delivery Amount. Subject to Paragraphs 3 and 4, upon a demand made by the
Transferee on or promptly following a Valuation Date, if the Delivery Amount
for that Valuation Date equals or exceeds the Transferor's Minimum Transfer
Amount, then the Transferor will transfer to the Transferee Eligible Credit
Support having a Value as of the date of transfer at least equal to the
applicable Delivery Amount (rounded pursuant to Paragraph 11(b)(iii)(D)).
Unless otherwise specified in Paragraph 11(b), the "Delivery Amount"
applicable to the Transferor for any Valuation Date will equal the amount by
which:

     (i)    the Credit Support Amount

     exceeds

     (ii)   the Value as of that Valuation Date of the Transferor's Credit
     Support Balance (adjusted to include any prior Delivery Amount and to
     exclude any prior Return Amount, the transfer of which, in either case,
     has not yet been completed and for which the relevant Settlement Day
     falls on or after such Valuation Date).

(b)  Return Amount. Subject to Paragraphs 3 and 4, upon a demand made by the
Transferor on or promptly following a Valuation Date, if the Return Amount for
that Valuation Date equals or exceeds the Transferee's Minimum Transfer
Amount, then the Transferee will transfer to the Transferor Equivalent Credit
Support specified by the Transferor in that demand having a Value as of the
date of transfer as close as practicable to the applicable Return Amount
(rounded pursuant to Paragraph 1l(b)(iii)(D)) and the Credit Support Balance
will, upon such transfer, be reduced accordingly. Unless otherwise specified
in Paragraph 11(b), the "Return Amount" applicable to the Transferee for any
Valuation Date will equal the amount by which:

     (i)    the Value as of that Valuation Date of the Transferor's Credit
     Support Balance (adjusted to include any prior Delivery Amount and to
     exclude any prior Return Amount, the transfer of which, in either case,
     has not yet been completed and for which the relevant Settlement Day
     falls on or after such Valuation Date)

     exceeds

     (ii)   the Credit Support Amount.

Paragraph 3.  Transfers, Calculations and Exchanges

(a)  Transfers. All transfers under this Annex of any Eligible Credit Support,
Equivalent Credit Support, Interest Amount or Equivalent Distributions shall
be made in accordance with the instructions of the Transferee or Transferor,
as applicable, and shall be made:

     (i)    in the case of cash, by transfer into one or more bank accounts
     specified by the recipient;

     (ii)   in the case of certificated securities which cannot or which the
     parties have agreed will not be delivered by book-entry, by delivery in
     appropriate physical form to the



                                      2
<PAGE>

     recipient or its account accompanied by any duly executed instruments of
     transfer, transfer tax stamps and any other documents necessary to
     constitute a legally valid transfer of the transferring party's legal and
     beneficial title to the recipient; and

     (iii)  in the case of securities which the parties have agreed will be
     delivered by book-entry, by the giving of written instructions
     (including, for the avoidance of doubt, instructions given by telex,
     facsimile transmission or electronic messaging system) to the relevant
     depository institution or other entity specified by the recipient,
     together with a written copy of the instructions to the recipient,
     sufficient, if complied with, to result in a legally effective transfer
     of the transferring party's legal and beneficial title to the recipient.

Subject to Paragraph 4 and unless otherwise specified, if a demand for the
transfer of Eligible Credit Support or Equivalent Credit Support is received
by the Notification Time, then the relevant transfer will be made not later
than the close of business on the Settlement Day relating to the date such
demand is received; if a demand is received after the Notification Time, then
the relevant transfer will be made not later than the close of business on the
Settlement Day relating to the day after the date such demand is received.

(b)  Calculations. All calculations of Value and Exposure for purposes of
Paragraphs 2 and 4(a) will be made by the relevant Valuation Agent as of the
relevant Valuation Time. The Valuation Agent will notify each party (or the
other party, if the Valuation Agent is a party) of its calculations not later
than the Notification Time on the Local Business Day following the applicable
Valuation Date (or, in the case of Paragraph 4(a), following the date of
calculation).

(c)  Exchanges

     (i)    Unless otherwise specified in Paragraph 1I, the Transferor may on
     any Local Business Day by notice inform the Transferee that it wishes to
     transfer to the Transferee Eligible Credit Support specified in that
     notice (the "New Credit Support") in exchange for certain Eligible Credit
     Support (the "Original Credit Support") specified in that notice
     comprised in the Transferor's Credit Support Balance.

     (ii)   If the Transferee notifies the Transferor that it has consented to
     the proposed exchange, (A) the Transferor will be obliged to transfer the
     New Credit Support to the Transferee on the first Settlement Day
     following the date on which it receives notice (which may be oral
     telephonic notice) from the Transferee of its consent and (B) the
     Transferee will be obliged to transfer to the Transferor Equivalent
     Credit Support in respect of the Original Credit Support not later than
     the Settlement Day following the date on which the Transferee receives
     the New Credit Support, unless otherwise specified in Paragraph 11(d)
     (the "Exchange Date"); provided that the Transferee will only be obliged
     to transfer Equivalent Credit Support with a Value as of the date of
     transfer as close as practicable to, but in any event not more than, the
     Value of the New Credit Support as of that date.



                                      3
<PAGE>

Paragraph 4.  Dispute Resolution

(a)  Disputed Calculations or Valuations. If a party (a "Disputing Party")
reasonably disputes (I) the Valuation Agent's calculation of a Delivery Amount
or a Return Amount or (II) the Value of any transfer of Eligible Credit
Support or Equivalent Credit Support, then:

     (1)  the Disputing Party will notify the other party and the Valuation
     Agent (if the Valuation Agent is not the other party) not later than the
     close of business on the Local Business Day following, in the case of (I)
     above, the date that the demand is received under Paragraph 2 or, in the
     case of (II) above, the date of transfer;

     (2)  in the case of (I) above, the appropriate party will transfer the
     undisputed amount to the other party not later than the close of business
     on the Settlement Day following the date that the demand is received
     under Paragraph 2;

     (3)  the parties will consult with each other in an attempt to resolve the
     dispute; and

     (4)  if they fail to resolve the dispute by the Resolution Time, then:

          (i)    in the case of a dispute involving a Delivery Amount or Return
          Amount, unless otherwise specified in Paragraph 11(c), the Valuation
          Agent will recalculate the Exposure and the Value as of the
          Recalculation Date by:

                 (A)  utilising any calculations of that part of the Exposure
                 attributable to the Transactions that the parties have agreed
                 are not in dispute;

                 (B) calculating that part of the Exposure attributable to the
                 Transactions in dispute by seeking four actual quotations at
                 mid-market from Reference Market-makers for purposes of
                 calculating Market Quotation, and taking the arithmetic average
                 of those obtained; provided that if four quotations are not
                 available for a particular Transaction, then fewer than four
                 quotations may be used for that Transaction, and if no
                 quotations are available for a particular Transaction, then the
                 Valuation Agent's original calculations will be used for the
                 Transaction; and

                 (C) utilising the procedures specified in Paragraph 11(e)(ii)
                 for calculating the Value, if disputed, of the outstanding
                 Credit Support Balance;

          (ii)   in the case of a dispute involving the Value of any transfer of
          Eligible Credit Support or Equivalent Credit Support, the Valuation
          Agent will recalculate the Value as of the date of transfer pursuant
          to Paragraph 1l(e)(ii).

Following a recalculation pursuant to this Paragraph, the Valuation Agent will
notify each party (or the other party, if the Valuation Agent is a party) as
soon as possible but in any event not later than the Notification Time on the
Local Business Day following the Resolution Time. The appropriate party will,
upon demand following such notice given by the Valuation Agent or a resolution
pursuant to (3) above and subject to Paragraph 3(a), make the appropriate
transfer.



                                      4
<PAGE>

(b)  No Event of Default. The failure by a party to make a transfer of any
amount which is the subject of a dispute to which Paragraph 4(a) applies will
not constitute an Event of Default for as long as the procedures set out in
this Paragraph 4 are being carried out. For the avoidance of doubt, upon
completion of those procedures, Section 5(a)(i) of this Agreement will apply
to any failure by a party to make a transfer required under the final sentence
of Paragraph 4(a) on the relevant due date.

Paragraph 5.  Transfer of Title, No Security Interest, Distributions and
              Interest Amount

(a)  Transfer of Title. Each party agrees that all right, title and interest in
and to any Eligible Credit Support, Equivalent Credit Support, Equivalent
Distributions or Interest Amount which it transfers to the other party under
the terms of this Annex shall vest in the recipient free and clear of any
liens, claims, charges or encumbrances or any other interest of the
transferring party or of any third person (other than a lien routinely imposed
on all securities in a relevant clearance system).

(b)  No Security Interest. Nothing in this Annex is intended to create or does
create in favour of either party any mortgage, charge, lien, pledge,
encumbrance or other security interest in any cash or other property
transferred by one party to the other party under the terms of this Annex.

(c)  Distributions and Interest Amount.

     (i)    Distributions. The Transferee will transfer to the Transferor not
     later than the Settlement Day following each Distributions Date cash,
     securities or other property of the same type, nominal value, description
     and amount as the relevant Distributions ("Equivalent Distributions") to
     the extent that a Delivery Amount would not be created or increased by
     the transfer, as calculated by the Valuation Agent (and the date of
     calculation will be deemed a Valuation Date for this purpose).

     (ii)   Interest Amount. Unless otherwise specified in Paragraph 11(f)(iii),
     the Transferee will transfer to the Transferor at the times specified in
     Paragraph 11(f)(ii) the relevant Interest Amount to the extent that a
     Delivery Amount would not be created or increased by the transfer, as
     calculated by the Valuation Agent (and the date of calculation will be
     deemed a Valuation Date for this purpose).

Paragraph 6.  Default

If an Early Termination Date is designated or deemed to occur as a result of
an Event of Default in relation to a party, an amount equal to the Value of
the Credit Support Balance, determined as though the Early Termination Date
were a Valuation Date, will be deemed to be an Unpaid Amount due to the
Transferor (which may or may not be the Defaulting Party) for purposes of
Section 6(e). For the avoidance of doubt, if Market Quotation is the
applicable payment measure for purposes of Section 6(e), then the Market
Quotation determined under Section 6(e) in relation to the Transaction
constituted by this Annex will be deemed to be zero, and, if Loss is the
applicable payment measure for purposes of Section 6(e), then the Loss
determined under Section 6(e) in relation to the Transaction will be limited
to the Unpaid Amount representing the Value of the Credit Support Balance.



                                      5
<PAGE>

Paragraph 7.  Representation

Each party represents to the other party (which representation will be deemed
to be repeated as of each date on which it transfers Eligible Credit Support,
Equivalent Credit Support or Equivalent Distributions) that it is the sole
owner of or otherwise has the right to transfer all Eligible Credit Support,
Equivalent Credit Support or Equivalent Distributions it transfers to the
other party under this Annex, free and clear of any security interest, lien,
encumbrance or other restriction (other than a lien routinely imposed on all
securities in a relevant clearance system).

Paragraph 8.  Expenses

Each party will pay its own costs and expenses (including any stamp, transfer
or similar transaction tax or duty payable on any transfer it is required to
make under this Annex) in connection with performing its obligations under
this Annex, and neither party will be liable for any such costs and expenses
incurred by the other party.

Paragraph 9.  Miscellaneous

(a)  Default Interest. Other than in the case of an amount which is the subject
of a dispute under Paragraph 4(a), if a Transferee fails to make, when due,
any transfer of Equivalent Credit Support, Equivalent Distributions or the
Interest Amount, it will be obliged to pay the Transferor (to the extent
permitted under applicable law) an amount equal to interest at the Default
Rate multiplied by the Value on the relevant Valuation Date of the items of
property that were required to be transferred, from (and including) the date
that the Equivalent Credit Support, Equivalent Distributions or Interest
Amount were required to be transferred to (but excluding) the date of transfer
of the Equivalent Credit Support, Equivalent Distributions or Interest Amount.
This interest will be calculated on the basis of daily compounding and the
actual number of days elapsed.

(b)  Good Faith and Commercially Reasonable Manner. Performance of all
obligations under this Annex, including, but not limited to, all calculations,
valuations and determinations made by either party, will be made in good faith
and in a commercially reasonable manner.

(c)  Demands and Notices. All demands and notices given by a party under this
Annex will be given as specified in Section 12 of this Agreement.

(d)  Specifications of Certain Matters. Anything referred to in this Annex as
being specified in Paragraph l l also may be specified in one or more
Confirmations or other documents and this Annex will be construed accordingly.

Paragraph 10.  Definitions

As used in this Annex:

"Base Currency" means the currency specified as such in Paragraph 11(a)(i).

"Base Currency Equivalent" means, with respect to an amount on a Valuation
Date, in the case of an amount denominated in the Base Currency, such Base
Currency amount and, in the case of



                                      6
<PAGE>

an amount denominated in a currency other than the Base Currency (the "Other
Currency"), the amount of Base Currency required to purchase such amount of
the Other Currency at the spot exchange rate determined by the Valuation Agent
for value on such Valuation Date.

"Credit Support Amount" means, with respect to a Transferor on a Valuation
Date, (i) the Transferee's Exposure plus (ii) all Independent Amounts
applicable to the Transferor, if any, minus (iii) all Independent Amounts
applicable to the Transferee, if any, minus (iv) the Transferor's Threshold;
provided, however, that the Credit Support Amount will be deemed to be zero
whenever the calculation of Credit Support Amount yields a number less than
zero.

"Credit Support Balance" means, with respect to a Transferor on a Valuation
Date, the aggregate of all Eligible Credit Support that has been transferred
to or received by the Transferee under this Annex, together with any
Distributions and all proceeds of any such Eligible Credit Support or
Distributions, as reduced pursuant to Paragraph 2(b), 3(c)(ii) or 6. Any
Equivalent Distributions or Interest Amount (or portion of either) not
transferred pursuant to Paragraph 5(c)(i) or (ii) will form part of the Credit
Support Balance.

"Delivery Amount" has the meaning specified in Paragraph 2(a).

"Disputing Party" has the meaning specified in Paragraph 4.

"Distributions" means, with respect to any Eligible Credit Support comprised
in the Credit Support Balance consisting of securities, all principal,
interest and other payments and distributions of cash or other property to
which a holder of securities of the same type, nominal value, description and
amount as such Eligible Credit Support would be entitled from time to time.

"Distributions Date" means, with respect to any Eligible Credit Support
comprised in the Credit Support Balance other than cash, each date on which a
holder of such Eligible Credit Support is entitled to receive Distributions
or, if that date is not a Local Business Day, the next following Local
Business Day.

"Eligible Credit Support" means, with respect to a party, the items, if any,
specified as such for that party in Paragraph 11(b)(ii) including, in relation
to any securities, if applicable, the proceeds of any redemption in whole or
in part of such securities by the relevant issuer.

"Eligible Currency" means each currency specified as such in Paragraph
11(a)(ii), if such currency is freely available.

"Equivalent Credit Support" means, in relation to any Eligible Credit Support
comprised in the Credit Support Balance, Eligible Credit Support of the same
type, nominal value, description and amount as that Eligible Credit Support.

"Equivalent Distributions" has the meaning specified in Paragraph 5(c)(i).

"Exchange Date" has the meaning specified in Paragraph 11(d).



                                      7
<PAGE>

"Exposure" means, with respect to a party on a Valuation Date and subject to
Paragraph 4 in the case of a dispute, the amount, if any, that would be
payable to that party by the other party (expressed as a positive number) or
by that party to the other party (expressed as a negative number) pursuant to
Section 6(e)(ii)(1) of this Agreement if all Transactions (other than the
Transaction constituted by this Annex) were being terminated as of the
relevant Valuation Time, on the basis that (i) that party is not the Affected
Party and (ii) the Base Currency is the Termination Currency; provided that
Market Quotations will be determined by the Valuation Agent on behalf of that
party using its estimates at mid-market of the amounts that would be paid for
Replacement Transactions (as that term is defined in the definition of "Market
Quotation").

"Independent Amount" means, with respect to a party, the Base Currency
Equivalent of the amount specified as such for that party in Paragraph
11(b)(iii)(A); if no amount is specified, zero.

"Interest Amount" means, with respect to an Interest Period, the aggregate sum
of the Base Currency Equivalents of the amounts of interest determined for
each relevant currency and calculated for each day in that Interest Period on
the principal amount of the portion of the Credit Support Balance comprised of
cash in such currency, determined by the Valuation Agent for each such day as
follows:

     (x)    the amount of cash in such currency on that day; multiplied by

     (y)    the relevant Interest Rate in effect for that day; divided by

     (z)    360 (or, in the case of pounds sterling, 365).

"Interest Period" means the period from (and including) the last Local
Business Day on which an Interest Amount was transferred (or, if no Interest
Amount has yet been transferred, the Local Business Day on which Eligible
Credit Support or Equivalent Credit Support in the form of cash was
transferred to or received by the Transferee) to (but excluding) the Local
Business Day on which the current Interest Amount is transferred.

"Interest Rate" means, with respect to an Eligible Currency, the rate
specified in Paragraph 11(f)(i) for that currency.

"Local Business Day", unless otherwise specified in Paragraph 11(h), means:

     (i)    in relation to a transfer of cash or other property (other than
     securities) under this Annex, a day on which commercial banks are open
     for business (including dealings in foreign exchange and foreign currency
     deposits) in the place where the relevant account is located and, if
     different, in the principal financial centre, if any, of the currency of
     such payment;

     (ii)   in relation to a transfer of securities under this Annex, a day on
     which the clearance system agreed between the parties for delivery of the
     securities is open for the acceptance and execution of settlement
     instructions or, if delivery of the securities is contemplated by other
     means, a day on which commercial banks are open for business



                                      8
<PAGE>

     (including dealings in foreign exchange and foreign currency deposits) in
     the place(s) agreed between the parties for this purpose;

     (iii)  in relation to a valuation under this Annex, a day on which
     commercial banks are open for business (including dealings in foreign
     exchange and foreign currency deposits) in the place of location of the
     Valuation Agent and in the place(s) agreed between the parties for this
     purpose; and

     (iv)   in relation to any notice or other communication under this Annex, a
     day on which commercial banks are open for business (including dealings
     in foreign exchange and foreign currency deposits) in the place specified
     in the address for notice most recently provided by the recipient.

"Minimum Transfer Amount" means, with respect to a party, the amount specified
as such for that party in Paragraph 11(b)(iii)(C); if no amount is specified,
zero.

"New Credit Support" has the meaning specified in Paragraph 3(c)(i).

"Notification Time" has the meaning specified in Paragraph 11(c)(iv).

"Recalculation Date" means the Valuation Date that gives rise to the dispute
under Paragraph 4; provided, however, that if a subsequent Valuation Date
occurs under Paragraph 2 prior to the resolution of the dispute, then the
"Recalculation Date" means the most recent Valuation Date under Paragraph 2.

"Resolution Time" has the meaning specified in Paragraph 11(c)(i).

"Return Amount" has the meaning specified in Paragraph 2(b).

"Settlement Day" means, in relation to a date, (i) with respect to a transfer
of cash or other property (other than securities), the next Local Business Day
and (ii) with respect to a transfer of securities, the first Local Business
Day after such date on which settlement of a trade in the relevant securities,
if effected on such date, would have been settled in accordance with customary
practice when settling through the clearance system agreed between the parties
for delivery of such securities or, otherwise, on the market in which such
securities are principally traded (or, in either case, if there is no such
customary practice, on the first Local Business Day after such date on which
it is reasonably practicable to deliver such securities).

"Threshold" means, with respect to a party, the Base Currency Equivalent of
the amount specified as such for that party in Paragraph 11(b)(iii)(B); if no
amount is specified, zero.

"Transferee" means, in relation to each Valuation Date, the party in respect
of which Exposure is a positive number and, in relation to a Credit Support
Balance, the party which, subject to this Annex, owes such Credit Support
Balance or, as the case may be, the Value of such Credit Support Balance to
the other party.

"Transferor" means, in relation to a Transferee, the other party.



                                      9
<PAGE>

"Valuation Agent" has the meaning specified in Paragraph 11(c)(i).

"Valuation Date" means each date specified in or otherwise determined pursuant
to Paragraph 11(c)(ii).

"Valuation Percentage" means, for any item of Eligible Credit Support, the
percentage specified in Paragraph 11(b)(ii).

"Valuation Time" has the meaning specified in Paragraph 11(c)(iii).

"Value" means, for any Valuation Date or other date for which Value is
calculated, and subject to Paragraph 4 in the case of a dispute, with respect
to:

     (i)    Eligible Credit Support comprised in a Credit Support Balance that
     is:

            (A) an amount of cash, the Base Currency Equivalent of such amount
            multiplied by the applicable Valuation Percentage, if any; and

            (B) a security, the Base Currency Equivalent of the bid price
            obtained by the Valuation Agent multiplied by the applicable
            Valuation Percentage, if any; and

     (ii)   items that are comprised in a Credit Support Balance and are not
     Eligible Credit Support, zero.

Paragraph 11.  Elections and Variables

(a)  Base Currency and Eligible Currency.

     (i)    "Base Currency" means United States Dollars unless otherwise
     specified here:

            ...........................................

     (ii)   "Eligible Currency" means the Base Currency and each other currency
     specified here:

            ...........................................
            ...........................................



(b)  Credit Support Obligations.

     (i)    Delivery Amount, Return Amount and Credit Support Amount

               (A)  "Delivery Amount" has the meaning specified in Paragraph
                    2(a), unless otherwise specified here: .................



                                      10
<PAGE>

               (B) "Return Amount" has the meaning specified in Paragraph
               2(b), unless otherwise specified here: .........................

               (C) "Credit Support Amount" has the meaning specified in
               Paragraph 10, unless otherwise specified here: ................

     (ii) Eligible Credit Support. The following items will qualify as
     "Eligible Credit Support" for the party specified:

<TABLE>
<CAPTION>
                                                                                Party A          Party B          Valuation
                                                                                                                  Percentage
<S>                                                                                 <C>              <C>                 <C>
     (A)    cash in an Eligible Currency                                            [ ]              [ ]                 [ ]%

     (B)    negotiable debt obligations issued by the Government of [  ]            [ ]              [ ]                 [ ]%
            having an original maturity at issuance of not more than
            one year

     (C)    negotiable debt obligations issued by the Government of [ ]             [ ]              [ ]                 [ ]%
            having an original maturity at issuance of more than one
            year but not more than 10 years

     (D)    negotiable debt obligation issued by the Government of [ ]              [ ]              [ ]                 [ ]%
            having an original maturity at issuance of more than
            10 years

     (E)    other: ...........................................                      [ ]              [ ]                 [  ]%

     (iii)  Thresholds.

            (A)  "Independent Amount" means with respect to Party A: ..............................
                 "Independent Amount" means with respect to Party B: ..............................

            (B)  "Threshold" means with respect to Parry A: .......................................
                 "Threshold" means with respect to Party B: .......................................

            (C)  "Minimum Transfer Amount" means with respect to Party A: .........................
                 "Minimum Transfer Amount" means with respect to Party B: .........................

            (D)  Rounding. The Delivery Amount and the Return Amount will be rounded [down to the
                 nearest integral multiple of ..../up and down to the nearest integral multiple of
                 ..., respectively(3)].
</TABLE>

(c)  Valuation and Timing.


---------------
(3) Delete as applicable.



                                      11
<PAGE>

     (i)    "Valuation Agent" means, for purposes of Paragraphs 2 and 4, the
     party making the demand under Paragraph 2, and, for purposes of Paragraph
     5(c), the Transferee, as applicable, unless otherwise specified here:
     ...........................................

     (ii)   "Valuation Date "means: ...........................................

     (iii)  "Valuation Time" means:

            [  ]   the close of business in the place of location of the
                   Valuation Agent on the Valuation Date or date of calculation,
                   as applicable;

            [  ]   the close of business on the Local Business Day immediately
                   preceding the Valuation Date or date of calculation, as
                   applicable;

provided that the calculations of Value and Exposure will, as far as
practicable, be made as of approximately the same time on the same date.

     (iv)   "Notification Time" means 1:00 p.m., London time, on a Local
     Business Day, unless otherwise specified here: .........................

(d)  Exchange Date. "Exchange Date" has the meaning specified in Paragraph
     3(c)(ii), unless otherwise specified here: .............................

(e)  Dispute Resolution.

     (i)    "Resolution Time" means 1:00 p.m., London time, on the Local
     Business Day following the date on which the notice is given that gives
     rise to a dispute under Paragraph 4, unless otherwise specified here:
     .....................................................

     (ii)   Value. For the purpose of Paragraphs 4(a)(4)(i)(C) and 4(a)(4)(ii),
     the Value of the outstanding Credit Support Balance or of any transfer of
     Eligible Credit Support or Equivalent Credit Support, as the case may be,
     will be calculated as follows: ...............

     (iii)  Alternative. The provisions of Paragraph 4 will apply, unless an
     alternative dispute resolution procedure is specified here:
     ....................................................

(f)  Distributions and Interest Amount.

     (i)    Interest Rate. The "Interest Rate" in relation to each Eligible
     Currency specified below will be:

                  Eligible Currency                     Interest Rate
           ...............................        .............................
           ...............................        .............................
           ...............................        .............................

     (ii)   Transfer of Interest Amount. The transfer of the Interest Amount
     will be made on the last Local Business Day of each calendar month and on
     any Local Business Day



                                      12
<PAGE>

     that a Return Amount consisting wholly or partly of cash is transferred
     to the Transferor pursuant to Paragraph 2(b), unless otherwise specified
     here:

     (iii)  Alternative to Interest Amount. The provisions of Paragraph
     5(c)(ii) will apply, unless otherwise specified here:
     .....................................................................

(g)  Addresses for Transfers.

     Party A: ................................................................
     .........................................................................

     Party B: ................................................................
     .........................................................................

(h)  Other Provisions.



                                      13
<PAGE>

                                                             Execution Version

Paragraph 11.  Elections and Variables

(a)  Base Currency and Eligible Currency.

     (i)    "Base Currency" means GBP.

     (ii)   "Eligible Currency" means the Base Currency.

(b)  Credit Support Obligations.

     (i)    Delivery Amount, Return Amount and Credit Support Amount.

                 "Delivery Amount" has the meaning specified in Paragraph
                 2(a), except that the words, "upon a demand made by the
                 Transferee" shall be deleted.

            (A)  "Return Amount" has the meaning as specified in Paragraph 2(b).

            (B)  "Credit Support Amount" has the meaning given to such
                 term in respect of each of the Rating Agencies' criteria set
                 out in Paragraph 11(h)(v) below. In circumstances where more
                 than one of the Ratings Criteria apply to Party A, the Credit
                 Support Amount shall be calculated by reference to the
                 Ratings Criteria which would result in Party A transferring
                 the greatest amount of Eligible Credit Support. Under no
                 circumstances will Party A be required to transfer more
                 Eligible Credit Support than the greatest amount calculated
                 in accordance with the Ratings Criteria set out below.

     (ii)   Eligible Credit Support. The following items will qualify as
            "Eligible Credit Support" for Party A:

<TABLE>
<CAPTION>
                                                                    Valuation Percentage

<S>                                                                 <C>
            (A) cash in an Eligible Currency                        100 per cent.

            (B) negotiable debt obligations issued by               For the purposes of S&P and Moody's, 98.5
                the Government of the United Kingdom or the         per cent. and for the purposes of Fitch,
                United States of America (with local and            the Advanced Rate (the "Advanced Rate")
                foreign currency issuer ratings equal to or         under the heading "Notes' Rating/AAA" in
                greater than AA- by S&P, AA- by Fitch and           the table entitled "Advanced Rates (%)" in
                Aa3 by Moody's) having a remaining time to          Appendix 3 to Fitch's
                maturity of not more than one year;



                                                      14
<PAGE>

                                                                    Structured Finance Report entitled
                                                                    "Counterparty Risk in Structured Finance
                                                                    Transactions: Swap Criteria" dated 13
                                                                    September 2004 (the "Fitch Report").

            (C) negotiable debt obligations issued by               For the purposes of S&P, 92 per cent., for the
                the Government of the United Kingdom or             purposes of Moody's, 97 per cent. and for the
                the United States of America (with                  purposes of Fitch, the Advanced Rate.
                local and foreign currency issuer
                ratings equal to or greater than AA- by
                S&P, AA- by Fitch and Aa3 by Moody's)
                having a remaining time to maturity of
                more than one year but not more than 5
                years;

            (D) negotiable debt obligations issued by               For the purposes of S&P, 85.4 per cent., for the
                the Government of the United Kingdom or             purposes of Moody's, 95 per cent. and for the
                the United States of America (with                  purposes of Fitch, the Advanced Rate.
                local and foreign currency issuer
                ratings equal to or greater than AA- by
                S&P, AA- by Fitch and Aa3 by Moody's)
                having a remaining time to maturity of
                more than 5 years but not more than 10
                years;

            (E) negotiable debt obligations issued by               For the purposes of S&P, 77.5 per cent., for the
                the Government of the United Kingdom or             purposes of Moody's, 95 per cent. and for the
                the United States of America (with                  purposes of Fitch, the Advanced Rate.
                local and foreign currency issuer
                ratings equal to or greater than AA- by
                S&P, AA- by Fitch and Aa3 by Moody's)
                having a remaining time to maturity of
                more than 10 years; or

            (F) such other items as agreed between                 Such Valuation Percentage as agreed between Party
                Party A and the Rating Agencies, from              A and the Rating Agencies from time to time in
                time to time, which Party B can                    respect of such Eligible Credit Support.
                lawfully receive from, and transfer
                back to, Party A as required, that will
                qualify as Eligible Credit Support.
</TABLE>



                                                      15
<PAGE>

Where negotiable debt obligations are rated by only one of the above relevant
rating agencies, the rating applied will be based on the rating of that
agency.

Where the ratings and/or the Valuation Percentages of the relevant rating
agencies differ with respect to the same negotiable debt obligation, for the
purposes of B to E above the lower of the ratings and/or the Valuation
Percentages, as the case may be, shall apply.

     (iii)  Thresholds.

            (A)  "Independent Amount" means, for Party A and Party B, with
                 respect to each Transaction, zero.

            (B)  "Threshold" means, for Party A,

                 infinity, unless Party A, in the event of: (a) an initial S&P
                 Note Downgrade Event or a Subsequent S&P Note Downgrade Event
                 (which in each case, is continuing) has not otherwise
                 complied with Part 5(j)(i)(B), Part 5(j)(i)(C), Part
                 5(j)(i)(D) or Part 5(2)(ii)(A) of the Agreement, as the case
                 may be, and/or (b) an Initial Moody's Note Downgrade Event or
                 a Subsequent Moody's Note Downgrade Event (which in each
                 case, is continuing), has not otherwise complied with Part
                 5(k)(i)(A), Part 5(k)(i)(B), Part 5(k)(i)(C), Part
                 5(k)(ii)(A), Part 5(k)(ii)(B) or Part 5(k)(ii)(C) of the
                 Agreement, as the case may be, and/or (c) an Initial Fitch
                 Note Downgrade Event or a First Subsequent Fitch Note
                 Downgrade Event or a Second Subsequent Fitch Note Downgrade
                 Event (which in each case, is continuing) has not otherwise
                 complied with Part 5(l)(i)(B), Part 5(l)(i)(C), Part
                 5(l)(i)(D), Part 5(l)(ii)(B), Part 5(l)(ii)(C), Part
                 5(l)(ii)(D), Part 5(l)(iii)(A) or Part 5(l)(iii)(B) or Part
                 5(l)(iii)(C) of the Agreement, as the case may be, then its
                 Threshold shall be zero, and

                 "Threshold" means, for Party B: infinity

             (C) "Minimum Transfer Amount" means, with respect to Party A
                 and Party B, GBP 50,000 provided, that if, (1) an Event of
                 Default has occurred and is continuing in respect of which
                 Party A is the Defaulting Party, or (2) an Additional
                 Termination Event has occurred in respect of which Party A is
                 an Affected Party, the Minimum Transfer Amount with respect
                 to Party A shall be zero.

             (D) "Rounding". The Delivery Amount and the Return Amount
                 will be rounded up and down to the nearest integral multiple
                 of GBP 10,000 respectively, subject to the maximum Return
                 Amount being equal to the Credit Support Balance.

(c)   Valuation and Timing.

      (i)   "Valuation Agent" means, Party A in all circumstances.



                                      16
<PAGE>

     (ii)   "Valuation Date" means the first Local Business Day in each week.

     (iii)  "Valuation Time" means the close of business on the Local Business
            Day immediately preceding the Valuation Date or date of
            calculation, as applicable; provided that the calculations of Value
            and Exposure will be made as of approximately the same time on the
            same date.

     (iv)   "Notification Time" means by 2:00 p.m., London time, on a Local
            Business Day.

(d)  Exchange Date. "Exchange Date" has the meaning specified in Paragraph
     3(c)(ii).

(e)  Dispute Resolution.

     (i)   "Resolution Time" means 2:00 p.m., London time, on the Local
           Business Day following the date on which notice is given that gives
           rise to a dispute under Paragraph 4.

     (ii)  Value. For the purpose of Paragraphs 4(a)(4)(i)(C) and 4(a)(4)(ii),
           the Value of the outstanding Credit Support Balance or of any
           transfer of Eligible Credit Support or Equivalent Credit Support,
           as the case may be, on the relevant date will be calculated as
           follows:

          (A)  with respect to any Eligible Credit Support or Equivalent
               Credit Support comprising securities ("Securities") the Base
               Currency Equivalent of the sum of:

               (a)  (x) the last bid price on such date for such Securities on
                    the principal national securities exchange on which such
                    Securities are listed, multiplied by the applicable
                    Valuation Percentage; or (y) where any Securities are not
                    listed on a national securities exchange, the bid price
                    for such Securities quoted as at the close of business on
                    such date by any principal market maker (which shall not
                    be and shall be independent from the Valuation Agent) for
                    such Securities chosen by the Valuation Agent, multiplied
                    by the applicable Valuation Percentage, or (z) if no such
                    bid price is able to be obtained for such date under
                    sub-paragraphs (x) or (y) above, the last bid price listed
                    determined pursuant to sub-paragraph (x), or failing which
                    sub-paragraph (y), as of the day next preceding such date
                    on which such prices were available, multiplied by the
                    applicable Valuation Percentage; and

               (b)  the accrued interest where applicable on such Securities
                    (except to the extent that such interest shall have been
                    paid to the Transferor pursuant to Paragraph 5(c)(ii) or
                    included in the applicable price referred to in Paragraph
                    11 (e)(ii)(A)(a) above) as of such date, provided that it
                    is understood that in no circumstances shall the



                                      17
<PAGE>

                    Transferee be required to transfer a Return Amount in
                    excess of the Credit Support Balance;

               (B)  with respect to any Cash, the Base Currency Equivalent of
                    the amount thereof; and

               (C)  with respect to any Eligible Credit Support or Equivalent
                    Credit Support other than Securities and Cash, the Base
                    Currency Equivalent of the fair market value thereof on
                    such date, as determined in any reasonable manner chosen
                    by the Valuation Agent, multiplied by the applicable
                    Valuation Percentage.

     (iii)  Alternative. The provisions of Paragraph 4 will apply.

(f)  Distribution and Interest Amount.

     (i)   Interest Rate. The "Interest Rate" in relation to each Eligible
           Currency specified below will be:

           Eligible Currency        Interest Rate

           GBP                      For the relevant determination date,
                                    "SONIA", which means the reference rate
                                    equal to the overnight rate as calculated
                                    by the Wholesale Market Brokers
                                    Association which appears on Telerate Page
                                    3937 under the heading "Sterling Overnight
                                    Index" as of 9.00 a.m., London time, on
                                    the first London Banking Day following that
                                    day.

     (ii)  Transfer of Interest Amount. The transfer of the Interest Amount
           will be made on the first Local Business Day following the end of
           each calendar month, provided that: (1) Party B has earned and
           received such amount of interest, and (2) a Delivery Amount would
           not arise as a result of, or if already existing, would not be
           increased by, such transfer on such date or on any other Local
           Business Day on which Equivalent Credit Support is to be
           transferred to the Transferor pursuant to Paragraph 2(b).

     (iii) Alternative to Interest Amount. The provisions of Paragraph 5(c)(ii)
           will apply. For the purposes of calculating the Interest Amount the
           amount of interest calculated for each day of the Interest Period
           shall, with respect to any Eligible Currency, be compounded daily.

     (iv)  Interest Amount. The definition of "Interest Amount" in Paragraph
           10 shall be deleted and replaced with the following:



                                      18
<PAGE>

           "Interest Amount" means, with respect to an Interest Period and
           each portion of the Credit Support Balance comprised of cash in an
           Eligible Currency, the sum of the amounts of interest determined
           for each day in that Interest Period by the Valuation Agent as
           follows:

           (x)  the amount of such currency comprised in the Credit Support
                Balance at the close of business for general dealings in the
                relevant currency on such day (or, if such day is not a Local
                Business Day, on the immediately preceding Local Business Day);
                multiplied by

           (y)  the relevant Interest Rate; divided by

           (z)  360 (or in the case of Pounds Sterling, 365)."

(g)  Addresses for Transfers.

     Party A: To be advised.

     Party B: To be advised.

(h)  Other Provisions.

     (i)    Transfer Timing

            (A)  The final paragraph of Paragraph 3(a) shall be deleted and
                 replaced with the following:

                 "Subject to Paragraph 4, and unless otherwise specified, any
                 transfer of Eligible Credit Support or Equivalent Credit
                 Support (whether by the Transferor pursuant to Paragraph 2(a)
                 or by the Transferee pursuant to Paragraph 2(b)) shall be
                 made not later than the close of business on the Settlement
                 Day."

            (B)  The definition of Settlement Day shall be deleted and replaced
                 with the following:

                 "Settlement Day" means the next Local Business Day after the
                 Demand Date.

            (C)  For the purposes of this Paragraph 11(h)(i):

                 "Demand Date" means, with respect to a transfer by a party:

                 (i)   in the case of a transfer pursuant to Paragraph 2,
                       Paragraph 3 or Paragraph 4(a)(2), the relevant
                       Valuation Date (assuming that, in the case of any
                       transfer to be made by the Transferee, the Transferee
                       has received a demand on such date from the Transferor).
                       For the purposes of Paragraph 2 and Paragraph



                                      19
<PAGE>

                       4(a)(2), the Transferor will be deemed to receive
                       notice of the demand by the Transferee to make a
                       transfer of Eligible Credit Support; and

                 (ii)  in the case of a transfer pursuant to Paragraph
                       3(c)(ii)(A), the date on which the Transferee has
                       given its consent to the proposed exchange.

                 On each Demand Date the Transferor shall deliver to the
                 Transferee and the Note Trustee a statement showing the
                 amount of Eligible Credit Support to be delivered.

          (ii)   Early Termination

                 The heading for Paragraph 6 shall be deleted and replaced
                 with "Early Termination" and the following shall be added
                 after the word "party" in the second line of Paragraph 6, "or
                 a Termination Event where all Transactions are Affected
                 Transactions".

          (iii)  Costs of Transfer on Exchange

                 Notwithstanding Paragraph 8, the Transferor will be
                 responsible for, and will reimburse the Transferee for, all
                 costs and expenses (including any stamp, transfer or similar
                 transaction tax or duty payable on any transfer that it is
                 required to make under this Annex) in connection with
                 performing both its and the Transferee's obligations under
                 this Annex, including but not limited to those involved in
                 the transfer of Eligible Credit Support or Equivalent Credit
                 Support either from the Transferor to the Transferee or from
                 the Transferee to the Transferor hereto.

          (iv)   Single Transferor and Single Transferee

                 Party A and Party B agree that the definitions of
                 "Transferee" and "Transferor" in Paragraph 10 of this Annex
                 shall be deleted in their entirety and replaced with the
                 following in lieu thereof: "Transferor" means Party A; and
                 "Transferee" means Party B, and, for the avoidance of doubt,
                 only Party A will be required to make transfers of Delivery
                 Amounts and Eligible Credit Support hereunder.

           (v)   "Ratings Criteria" means, the criteria used by S&P (as set
                 out in S&P's Structure Finance report entitled "Global
                 Interest Rate and Currency Swaps: Calculating the Collateral
                 Required Amount" publication dated 26 February 2004 (the "S&P
                 Report")) ("S&P Criteria"), the criteria used by Moody's
                 ("Moody's Criteria") and the criteria used by Fitch (as set
                 out in the Fitch Report) ("Fitch Criteria") for the purposes
                 of determining the amount of Eligible Credit Support Party A
                 is required to transfer hereunder following a credit ratings
                 downgrade where Party A has opted to or is required to
                 transfer Eligible Credit Support in support of its
                 obligations under the Agreement pursuant to Part 5(j), Part
                 5(k) and/or Part 5(l), as the case may be, of the Schedule to
                 the



                                      20
<PAGE>

                 Agreement, in respect of each of which the definition of
                 "Credit Support Amount" is set out below.

                 Moody's Criteria

                 "Credit Support Amount" shall be calculated in accordance
                 with the meaning specified in Paragraph 10, provided however,
                 that the words "plus the Additional Collateral Amount" shall
                 be added after the words "Transferee's Exposure" in the
                 second line thereof.

                 For such purposes "Additional Collateral Amount" means with
                 respect to a Valuation Date, the sum of (a) the Transferee's
                 Exposure multiplied by "A" and (b) the product of "B"
                 multiplied by the Basis Swap Transactions No. 2 Aggregate
                 Notional Amounts, where:

                 (i)    "A" means 2 per cent. and "B" means 1.6 per cent. if
                        the long-term, unsecured and unsubordinated debt
                        obligations of Party A (or its successor) or any
                        guarantor of Party A's obligations under the Agreement
                        are downgraded below "A2" by Moody's, or the
                        short-term, unsecured and unsubordinated debt
                        obligations of Party A (or its successor) or any
                        guarantor of Party A's obligations under the Agreement
                        are downgraded below "Prime-1" by Moody's;

                 (ii)   "A" means 2 per cent. and "B" shall be equal to 3.7
                        per cent. if the long-term, unsecured and
                        unsubordinated debt obligations of Party A (or its
                        successor) or any guarantor of Party A's obligations
                        under the Agreement, are downgraded below "A3" by
                        Moody's, or the short-term, unsecured and
                        unsubordinated debt obligations of Party A (or its
                        successor) or any guarantor of Party A's obligations
                        under the Agreement, are downgraded below "Prime-2" by
                        Moody's; and

                 (iii)  "A" means 0 per cent and "B" means 0 per cent. in all
                        other cases.

                 S&P Criteria

                 "Credit Support Amount" shall mean an amount calculated in
                 accordance with the S&P criteria as set out in the S&P
                 Report; except that, references therein to "the notional
                 balance of the swap" shall be read for the purposes of
                 carrying out such calculation, as being to the Basis Rate
                 Transactions No. 2 Aggregate Notional Amount (as defined
                 herein).

                 Fitch Criteria

                 "Credit Support Amount" shall mean at any time for the
                 purposes of the Fitch Criteria with respect to a Transferor
                 on a Valuation Date the result of the following formula:

                      max [MV plus VC multiplied by 105 per cent. multiplied
                      by N;0]



                                      21
<PAGE>

                 where:

                 "max" means maximum;

                 "MV" means the Transferee's Exposure;

                 "VC" means the applicable volatility cushion at that time
                 determined by reference to the table headed "Volatility
                 Cushion (%)" appearing at the end of Appendix 2 to the Fitch
                 Criteria (and for such purpose calculating the relevant
                 Weighted Average Life assuming a zero prepayment rate and
                 zero default rate in relation to the Mortgages beneficially
                 owned by Party B); and

                 "N" means the Basis Swap Transactions No. 2 Aggregate
                 Notional Amount at that time.

          (vi)   Calculations

                 Paragraph 3(b) of this Annex shall be amended by inserting
                 the words "and shall provide each party (or the other party,
                 if the Valuation Agent is a party) with a description in
                 reasonable detail of how such calculations were made, upon
                 reasonable request" after the word "calculations" in the
                 third line thereof.

          (vii)  Demands and Notices

                 All demands, specifications and notices under this Annex
                 will be made pursuant to Section 12 of this Agreement.

          (viii) Exposure

                 For the purpose of calculating Exposure pursuant to the
                 meaning set out in Paragraph 10 of the Annex, the Valuation
                 Agent shall, unless otherwise agreed in writing by the
                 Rating Agencies, seek two quotations from Reference
                 Market-makers; provided that if two Reference Market-makers
                 are not available to provide a quotation, then fewer than
                 two Reference Market-makers may be used for such purpose,
                 and if no Reference Market-maker is available, then the
                 Valuation Agent's estimate at mid-market will be used. Where
                 more than one quotation is obtained, the quotation
                 representing the greatest amount of the Transferee's
                 Exposure shall be used by the Valuation Agent.

          (ix)   Paragraph 6

                 For the purposes of determining the Credit Support Balance
                 pursuant to Paragraph 6, the definition of Value in
                 Paragraph 10 shall be amended by deleting the words
                 "multiplied by the applicable Valuation Percentage, if any"
                 from sub-paragraphs (i)(A) and (i)(B).

          (x)    Distributions



                                      22
<PAGE>

                 "Distributions" has the meaning specified in Paragraph 10,
                 except that the words "to which a holder of securities of
                 the same type, nominal value, description and amount as such
                 Eligible Credit Support would be entitled from time to time"
                 shall be deleted and replaced by the words "received by the
                 Transferee in respect of such Eligible Credit Support".

                 "Distribution Date" has the meaning specified in Paragraph
                 10, except that the words "a holder of such Eligible Credit
                 Support is entitled to receive Distributions" shall be
                 deleted and replaced by the words "Distributions are
                 received by the Transferee".

         (xi)    Definitions

                 As used in this Annex, the following terms shall mean:

                 "Basis Swap Transactions No. 2 Aggregate Notional Amounts"
                 means in respect of a Valuation Date the aggregate Notional
                 Amounts of the Basis Rate Swap Transactions No. 2 as at such
                 Valuation Date; and, for the avoidance of doubt, such amount
                 shall not include the Notional Amount (as defined Basis Rate
                 Swap Transaction No. 1 Confirmation) of the Basis Rate Swap
                 Transaction No. 1;

                 "Basis Rate Swap Transaction Confirmation No. 1" means the
                 Confirmation so referenced between Party A and Party B dated
                 on or about the date hereof;

                 "Basis Rate Swap Transaction Confirmation No. 2A" means the
                 Confirmation so referenced between Party A and Party B dated
                 on or about the date hereof;

                 "Basis Rate Swap Transaction Confirmation No. 2B" means the
                 Confirmation so referenced between Party A and Party B dated
                 on or about the date hereof;

                 "Basis Rate Swap Transaction Confirmation No, 2C" means the
                 Confirmation so referenced between Party A and Party B dated
                 on or about the date hereof;

                 "Basis Rate Swap Transaction No. 1" means the Transaction
                 entered into between Party A and Party B dated on or about
                 the date hereof and confirmed in the Basis Rate Swap
                 Transaction Confirmation No. 1;

                 "Basis Rate Swap Transaction No. 2A" means the Transaction
                 entered into between Party A and Party B dated on or about
                 the date hereof and confirmed in the Basis Rate Swap
                 Transaction Confirmation No. 2A;

                 "Basis Rate Swap Transaction No. 2B" means the Transaction
                 entered into between Party A and Party B dated on or about
                 the date hereof and confirmed in the Basis Rate Swap
                 Transaction Confirmation No. 2B;

                 "Basis Rate Swap Transaction No. 2C" means the Transaction
                 entered into between Party A and Party B dated on or about
                 the date hereof and confirmed in the Basis Rate Swap
                 Transaction Confirmation No. 2C;



                                      23
<PAGE>

                 "Basis Rate Swap Transactions No. 2" means the Basis Rate
                 Swap Transaction No. 2A, the Basis Rate Swap Transaction No.
                 2B and the Basis Rate Swap Transaction No. 2C;

                 "Fitch" means Fitch Ratings Ltd and includes any successors
                 thereto;

                 "Moodys" means Moody's Investors Service Limited and includes
                 any successors thereto;

                 "Rating Agencies" means Moody's, S&P and Fitch; and

                 "S&P" means Standard & Poor's Rating Services, a division of
                 The McGraw-Hill Companies Inc. and includes any successors
                 thereto.

              [The rest of the page is intentionally left blank]



                                      24
<PAGE>

IN WITNESS WHEREOF the parties have executed this Annex on the respective
dates specified below with effect from the date specified on the first page of
this document.

NORTHERN ROCK PLC                        GRANITE FINANCE FUNDING 2
                                         LIMITED


_______________________________________  ____________________________________

By:                                      By:


_______________________________________  ____________________________________
   Name:                                     Name:
   Title:                                    Title:
   Date:                                     Date:

<PAGE>

                                                             Execution Version


                                                           (Basis Rate Swap 1)
From:       Northern Rock plc
            Northern Rock House
            Gosforth
            Newcastle Upon Tyne
            NE3 4PL

To:         Granite Finance Funding 2 Limited
            Fifth Floor
            100 Wood Street
            London
            EC2V 7EX

Attention:  Securitisation Team, Risk Operations

                                                               19 January 2005


Dear Sirs

Basis Rate Swap Transaction No. 1 Confirmation

The purpose of this letter is to confirm the terms and conditions of the swap
transaction entered into between us on the Trade Date specified below (the
Swap Transaction). This letter constitutes a "Confirmation" as referred to in,
and supplements, forms part of and is subject to, the ISDA Master Agreement
dated as of 19 January 2005, as amended and supplemented from time to time
(the Agreement), between us. All provisions contained in the Agreement govern
this Confirmation except as expressly modified below.

The definitions and provisions contained in the 2000 ISDA Definitions, as
published by the International Swaps and Derivatives Association, Inc. (the
Definitions), are incorporated into this Confirmation. In the event of any
inconsistency between the Definitions and this Confirmation, this Confirmation
will govern. References herein to a "Transaction" shall be deemed to be
references to a "Swap Transaction" for the purposes of the Definitions. Any
terms not otherwise defined herein or in the Definitions shall have the
meanings given to them in the Programme Master Definitions Schedule signed for
the purposes of identification by Sidley Austin Brown & Wood and Allen & Overy
LLP on 19 January 2005 (as the same may be amended, restated, varied,
supplemented and/or otherwise modified from time to time with the consent of
the parties hereto) (the Master Definitions Schedule).

Defined Terms

As used in this Agreement:

<PAGE>

Aggregate Funding 2 Amount means, in respect of a Payment Date, the sum of the
Funding 2 Amount and any Further Issue Funding 2 Amounts.

Aggregate Swap Provider Amount means, in respect of a Payment Date, the sum of
the Swap Provider Amount and any Further Issue Swap Provider Amounts.

Assignment Date has the meaning given to such term in the Master Definitions
Schedule.

Average Fixed Rate Mortgage Loan Balance means, (i) in respect of a Swap
Determination Period, an amount equal to the sum of the aggregate of the
outstanding current balances of the Fixed Rate Mortgage Loans at the start of
business on the first day of such Swap Determination Period, and (ii) in
respect of a Further Issue Determination Period, an amount equal to the sum of
the aggregate of the outstanding current balances of the Further Issue Fixed
Rate Mortgage Loans at the start of business on the first day of such Further
Issue Determination Period, in the case of both (i) and (ii) above, as
notified to the Calculation Agent by the Cash Manager in accordance with the
Cash Management Agreement.

Average Flexible Mortgage Loan Balance means, (i) in respect of a Swap
Determination Period, an amount equal to the sum of the aggregate of the
outstanding current balances of the Flexible Mortgage Loans at the start of
business on the first day of such Swap Determination Period, and (ii) in
respect of a Further Issue Determination Period, an amount equal to the sum of
the aggregate of the outstanding current balances of the Further Issue
Flexible Mortgage Loans at the start of business on the first day of such
Further Issue Determination Period, in the case of both (i) and (ii) above, as
notified to the Calculation Agent by the Cash Manager in accordance with the
provisions of the Cash Management Agreement.

Average Mortgage Loan Balance means, in respect of a Swap Determination
Period, the sum of the Average Fixed Rate Mortgage Loan Balance, the Average
Variable Rate Mortgage Loan Balance and the Average Flexible Mortgage Loan
Balance.

Average Variable Rate Mortgage Loan Balance means, (i) in respect of a Swap
Determination Period, an amount equal to the sum of the aggregate of the
outstanding current balances of the Variable Rate Mortgage Loans at the start
of business on the first day of such Swap Determination Period, and (ii) in
respect of a Further Issue Determination Period, an amount equal to the sum of
the aggregate of the outstanding current balances of the Further Issue
Variable Rate Mortgage Loans at the start of business on the first day of such
Further Issue Determination Period, in the case of both (i) and (ii) above, as
notified to the Calculation Agent by the Cash Manager in accordance with the
provisions of the Cash Management Agreement.

Blended Rate means, in respect of a Swap Determination Period, a rate of
interest equal to the sum of (i) the Weighted Average Fixed Rate for such Swap
Determination Period multiplied by the Fixed Rate Ratio for such Swap
Determination Period; (ii) the Variable Rate Swap SVR for such Swap
Determination Period multiplied by the Variable Rate Ratio for such Swap
Determination Period, and (iii) the Flexible Swap Rate for such


                                   2
<PAGE>

Swap Determination Period multiplied by the Flexible Ratio for such Swap
Determination Period.

Blended Spread means, in respect of a Swap Determination Period, a percentage
equal to the sum of (i) the Fixed Rate Spread for such Swap Determination
Period multiplied by the Fixed Rate Ratio for such Swap Determination Period;
(ii) the Variable Rate Spread for such Swap Determination Period multiplied by
the Variable Rate Ratio for such Swap Determination Period, and (iii) the
Flexible Spread for such Swap Determination Period multiplied by the Flexible
Ratio for such Swap Determination Period.

Contribution Date has the meaning given to such term in the Master Definitions
Schedule.

Fixed Rate Mortgage Loans means those Mortgage Loans within the Mortgage
Portfolio from time to time which are subject to fixed rates of interest set
by reference to a pre-determined interest rate or series of interest rates for
a fixed period or periods or are subject to a maximum rate of interest (and
charge interest at the lesser of a variable rate and such maximum rate) for a
fixed period or periods (and shall, for the avoidance of doubt, exclude
Variable Rate Mortgage Loans and Flexible Mortgage Loans save for Flexible
Mortgage Loans which are, at the relevant time, subject to such fixed rates of
interest or such maximum rates of interest arrangements and shall also exclude
any Fixed Rate Mortgage Loans which have become Re-Fixed Mortgage Loans during
the immediately preceding Swap Determination Period).

Fixed Rate Ratio means, (i) in respect of a Swap Determination Period, the
Average Fixed Rate Mortgage Loan Balance divided by the Average Mortgage Loan
Balance, and (ii) in respect of a Further Issue Determination Period, the
Further Issue Average Fixed Rate Mortgage Loan Balance divided by the Further
Issue Average Mortgage Loan Balance.

Fixed Rate Spread means 0.21 per cent. per annum or such other percentage
amount as Party A may notify to Party B and the Funding 2 Security Trustee in
writing from time to time in accordance with paragraph 4 of this Confirmation.

Flexible Mortgage Loans means those Mortgage Loans within the Mortgage
Portfolio that typically incorporate features that give the borrower options
(which may be subject to certain conditions) to, among other things, make
further drawings on the mortgage loan account, and/or to overpay or underpay
interest and principal in a given month and/or to take a payment holiday (and
shall, for the avoidance of doubt, exclude: (i) Flexible Mortgage Loans which
are, at the relevant time, subject to fixed rates of interest set by reference
to a pre-determined interest rate or series of interest rates for a fixed
period or periods are subject to a maximum rate of interest (and charge
interest at the lesser of a variable rate and such maximum rate) for a fixed
period or periods (which shall, for such fixed period, constitute Fixed
Mortgage Loans); and (ii) Variable Rate Mortgage Loans).


                                        3
<PAGE>


Flexible Ratio means, (i) in respect of a Swap Determination Period, the
Average Flexible Mortgage Loan Balance divided by the Average Mortgage Loan
Balance, and (ii) in respect of a Further Issue Determination Period, the
Further Issue Average Flexible Mortgage Loan Balance divided by the Further
Issue Average Mortgage Loan Balance.

Flexible Spread means 1.55 per cent. per annum or such other percentage amount
as Party A may notify to Party B and the Funding 2 Security Trustee in writing
from time to time in accordance with paragraph 4 of this Confirmation.

Flexible Swap Rate means, (i) in respect of a Swap Determination Period, a
rate of interest equal to the Variable Rate Swap SVR for such Swap
Determination Period minus the weighted average of the discounts charged to
borrowers of Flexible Mortgage Loans as at the start of business on the first
day of such Swap Determination Period, and (ii) in respect of a Further Issue
Determination Period, a rate of interest equal to the Variable Rate Swap SVR
for such Further Issue Determination Period minus the weighted average of the
discounts charged to borrowers of Flexible Mortgage Loans in the New Mortgage
Portfolio as at the start of business on the first day of such Further Issue
Determination Period, in the case of both (i) and (ii), the weighted average
being calculated by reference to the then outstanding current balances of such
Flexible Mortgage Loans as at that date, as determined by the Cash Manager in
accordance with the provisions of the Cash Management Agreement.

Funding 2 means Granite Finance Funding 2 Limited.

Funding 2 Amount means, in respect of a Swap Determination Period, an amount
in Sterling equal to the amount produced by applying the Blended Rate for such
Swap Determination Period to the Notional Amount, such amount to be calculated
by the Calculation Agent on the basis of the number of days in such Swap
Determination Period, divided by 360 (the number of days to be calculated on
the basis of a year of 360 days with twelve 30-day months, without regard to
the date of the first day or last day of the Swap Determination Period).

Funding 2 Programme Date means 19 January 2005.

Funding 2 Share has the meaning given to such term in the Master Definitions
Schedule.

Further Issue means an increase in the Funding 2 Share on a Further Issue
Date; the amount of such increase for a particular Further Issue Date being a
Further Issue Amount.

Further Issue Average Fixed Rate Mortgage Loan Balance means, in respect of a
Further Issue Determination Period, an amount equal to the sum of the
aggregate of the outstanding current balances of the Fixed Rate Mortgage Loans
in the New Mortgage Portfolio as at the first day of such Further Issue
Determination Period (after taking account of any transfer of a New Mortgage
Portfolio to the Mortgages Trustee on such date) as notified to the
Calculation Agent by the Cash Manager in accordance with the Cash Management
Agreement.

Further Issue Average Flexible Mortgage Loan Balance means, in respect of a
Further Issue Determination Period, an amount equal to the sum of the
aggregate of the outstanding current balances of the Flexible Mortgage Loans
in the New Mortgage Portfolio as at the first day of such Further Issue
Determination Period (after taking account of any transfer of a New Mortgage
Portfolio to the Mortgages Trustee on such date) as notified to the
Calculation Agent by the Cash Manager in accordance with the provisions of the
Cash Management Agreement.


                                        4
<PAGE>

Further Issue Average Mortgage Loan Balance means, in respect of a Further
Issue Determination Period, the sum of the Further Issue Average Fixed Rate
Mortgage Loan Balance, the Further Issue Average Variable Rate Mortgage Loan
Balance and the Further Issue Average Flexible Mortgage Loan Balance.

Further Issue Average Variable Rate Mortgage Loan Balance means, in respect of
a Further Issue Determination Period, an amount equal to the sum of the
aggregate of the outstanding current balances of the Variable Rate Mortgage
Loans in the New Mortgage Loan Portfolio as at the first day of such Further
Issue Determination Period (after taking account of any transfer of a New
Mortgage Portfolio to the Mortgages Trustee on such date) as notified to the
Calculation Agent by the Cash Manager in accordance with the provisions of the
Cash Management Agreement.

Further Issue Blended Rate means, in respect of a Further Issue Determination
Period, a rate of interest equal to the sum of (i) the Weighted Average Fixed
Rate for such Further Issue Determination Period multiplied by the Fixed Rate
Ratio for such Further Issue Determination Period; (ii) the Variable Rate Swap
SVR for such Further Issue Determination Period multiplied by the Variable
Rate Ratio for such Further Issue Determination Period, and (iii) the Flexible
Swap Rate for such Further Issue Determination Period multiplied by the
Flexible Ratio for such Further Issue Determination Period.

Further Issue Blended Spread means in respect of a Further Issue Determination
Period, a percentage equal to the sum of (i) the Fixed Rate Spread for such
Further Issue Determination Period multiplied by the Fixed Rate Ratio for such
Further Issue Determination Period; (ii) the Variable Rate Spread for such
Further Issue Determination Period multiplied by the Variable Rate Ratio for
such Further Issue Determination Period, and (iii) the Flexible Spread for
such Further Issue Determination Period multiplied by the Flexible Ratio for
such Further Issue Determination Period.

Further Issue Date means a Contribution Date or an Assignment Date, as the
case may be and, for the avoidance of doubt, does not include any Distribution
Date regardless of whether or not such date is also a Contribution Date or an
Assignment Date.

Further Issue Determination Period means a period commencing on (and
including) a Further Issue Date and ending on (but excluding) the next
occurring Swap Determination Date.


                                        5
<PAGE>

Further Issue Fixed Rate Mortgage Loans means in respect of a Further Issue,
those Fixed Rate Mortgage Loans comprised in the Further Issue Mortgage
Portfolio relating to such Further Issue.

Further Issue Flexible Mortgage Loans means in respect of a Further Issue,
those Flexible Mortgage Loans comprised in the Further Issue Mortgage
Portfolio relating to such Further Issue.

Further Issue Funding 2 Amount means, in respect of a Further Issue
Determination Period, an amount in Sterling equal to the amount produced by
applying (i) in respect of each Contribution Date which is not also an
Assignment Date, the Blended Rate for the Swap Determination Period in which
such Further Issue Determination Period falls, and (ii) in respect of each
Contribution Date which is also an Assignment Date, the Further Issue Blended
Rate for such Further Issue Determination Period, to the Further Issue
Notional Amount, such amount to be calculated by the Calculation Agent on the
basis of the number of days in such Further Issue Determination Period,
divided by 360 (the number of days to be calculated on the basis of a year of
360 days with 12 30-day months, without regard to the date of the first day or
last day of the Further Issue Determination Period). For the avoidance of
doubt, there will be a Further Issue Funding 2 Amount in respect of each
Further Issue Date that occurs during a Swap Determination Date.

Further Issue Mortgage Portfolio means in respect of a Further Issue, the New
Mortgage Portfolio (if any) that is transferred to the Mortgages Trustee on
the relevant Assignment Date.

Further Issue Notional Amount means in respect of a Further Issue, the Further
Issue Amount relating to such Further Issue.

Further Issue Swap Provider Amount means in respect of a Payment Date and a
Further Issue Determination Period which ends immediately prior to such
Payment Date, an amount in Sterling, which is equal to the amount produced by
applying, a rate equal to One Month LIBOR applicable to the Swap Determination
Period in which such Further Issue Determination Period falls, plus (i) in
respect of each Contribution Date which is not also the Assignment Date with
respect to such Contribution Date, the Blended Spread for the Swap
Determination Period in which such Further Issue Determination Period falls,
and (ii) in respect of each Contribution Date which is the Assignment Date
with respect to such Contribution Date, the Further Issue Blended Spread for
the Further Issue Determination Period, to the Further Issue Notional Amount,
such amount to be calculated by the Calculation Agent on the basis of the
actual number of days in such Swap Determination Period, divided by 365. For
the avoidance of doubt, there will be a Further Issue Swap Provider Amount in
respect of each Further Issue Date that occurs during a Swap Determination
Date.

Further Issuer Variable Rate Mortgage Loans means in respect of a Further
Issue, those Variable Rate Mortgage Loans comprised in the Further Issue
Mortgage Portfolio relating to such Further Issue.


                                        6
<PAGE>


Loan Tranche has the meaning given to such term in the Master Definitions
Schedule.

Mortgage Conditions has the meaning given to such term in the Master
Definitions Schedule.

Mortgage Portfolio has the meaning given to such term in the Master
Definitions Schedule.

Mortgages Trustee has the meaning given to such term in the Master Definitions
Schedule.

New Mortgage Portfolio has the meaning given to such term in the Master
Definitions Schedule.

Notes has the meaning given to such term in the Master Definitions Schedule.

Notional Amount means, in respect of any Swap Determination Period an amount
in Sterling equal to (a) the Funding 2 Share as determined on the first day of
such Swap Determination Period, minus (b) the aggregate outstanding principal
balance of any Fixed Rate Mortgage Loans which have become Re-Fixed Mortgage
Loans at any time from (and including) the Funding 2 Programme Date to (but
including) the first day of such Swap Determination Period. For the avoidance
of doubt such amount shall be adjusted for any increase or reduction in the
Funding 2 Share on such date (which shall mean that any Further Issue Amounts
arising during a Swap Determination Period shall be added to such amount on
the first day of the next Swap Determination Period).

One Month LIBOR means, in respect of a Swap Determination Period,
GBP-LIBOR-BBA, where the Reset Date is the first day of the relevant Swap
Determination Period and the Designated Maturity is one month; except for the
first Swap Determination Period for which Linear Interpolation is applicable
and in respect of which the Linear Interpolation shall be applied by reference
to the 2 weeks and 1 month rates.

Outstanding Principal Balance has the meaning given to such term in the Master
Definitions Schedule.

Payment Date means the twentieth day of each calendar month from, and
including 20 February 2005 to, but excluding, the Termination Date, subject to
adjustment with the Following Business Day Convention. It is understood that
payments to be made on any given Payment Date shall be those payments relating
to the Swap Determination Period, and any Further Issue Determination Period,
immediately preceding such Payment Date.

Reference Lenders means Abbey National PLC, Alliance & Leicester plc, Bradford
and Bingley plc, HBOS plc, Lloyds TSB Bank plc, National Westminster Bank Plc
and Woolwich plc (or their respective successors) and such additional or
replacement residential mortgage lenders as shall be determined by the
Calculation Agent and Reference Lender means any one of them.


                                        7
<PAGE>


Re-Fixed Mortgage Loans has the meaning given to such term in the Master
Definitions Schedule.

Swap Determination Date means the first Business Day of any calendar month
occurring during the period commencing on the Funding 2 Programme Date and
ending on the Termination Date.

Swap Determination Period means the period from (and including) the Funding 2
Programme Date to (but excluding) the first Swap Determination Date and
thereafter from (and including) a Swap Determination Date to (but excluding)
the next Swap Determination Date.

Swap Provider Amount means, in respect of a Payment Date and the Swap
Determination Period which ends immediately prior to such Payment Date, an
amount in Sterling which is equal to the amount produced by applying, a rate
equal to One Month LIBOR applicable to such Swap Determination Period plus the
Blended Spread for the Swap Determination Period, to the Notional Amount, such
amount to be calculated by the Calculation Agent on the basis of the actual
number of days in such Swap Determination Period, divided by 365.

Variable Rate Mortgage Loans means those Mortgage Loans within the Mortgage
Portfolio from time to time which are subject to a rate of interest which at
any time may be varied in accordance with the relevant Mortgage Conditions
(and shall, for the avoidance of doubt, exclude Fixed Rate Mortgage Loans and
Flexible Mortgage Loans).

Variable Rate Ratio means, in respect of a Swap Determination Period, the
Average Variable Rate Mortgage Loan Balance divided by the Average Mortgage
Loan Balance, and in respect of a Further Issue Determination Period, the
Further Issue Average Variable Rate Mortgage Loan Balance divided by the
Further Issue Average Mortgage Loan Balance.

Variable Rate Spread means 1.75 per cent. per annum or such other percentage
amount as Party A may notify to Party B and the Funding 2 Security Trustee in
writing from time to time in accordance with paragraph 4 of this Confirmation.

Variable Rate Swap SVR means, (i) in respect of a Swap Determination Period,
the rate equal to the average of the standard variable rates or their
equivalent charged to existing borrowers on residential mortgage loans as
published from time to time as at the start of business on the first day of
such Swap Determination Period, and (ii) in respect of a Further Issue
Determination Period, the rate equal to the average of the standard variable
rates or their equivalent charged to existing borrowers on residential
mortgage loans as published from time to time as at the start of business on
the first day of such Further Issue Determination Period, in the case of both
(i) and (ii) above, after excluding the highest and lowest rate, of the
Reference Lenders, as determined by the Cash Manager in good faith and
notified to the Calculation Agent from time to time in accordance with the
Cash Management Agreement.


                                        8
<PAGE>


Weighted Average Fixed Rate means, (i) in respect of a Swap Determination
Period, the rate equal to the weighted average of the fixed rates of interest
charged to borrowers of Fixed Rate Mortgage Loans as at the start of business
on the first day of such Swap Determination Period, and (ii) in respect of a
Further Issue Determination Period, the rate equal to the weighted average of
the fixed rates of interest charged to borrowers of Fixed Rate Mortgage Loans
in the New Mortgage Portfolio as at the start of business on the first day of
such Further Issue Determination Period, in the case of both (i) and (ii)
above, the weighted average being calculated by reference to the then
outstanding current balances of such Fixed Rate Mortgage Loans as at that
date, as notified by the Cash Manager to the Calculation Agent in accordance
with the provisions of the Cash Management Agreement.

1. The terms of the Transaction to which this Confirmation relates are as
follows:

      Party A:          Northern Rock plc.

      Party B:          Granite Finance Funding 2 Limited.

      Trade Date:       19 January 2005.

      Effective Date:   The Funding 2 Programme Date.

      Termination Date: One calendar  month  following the reduction in the
                        Sterling amount of the Funding 2 Share to zero.

      Business Days:    London.

      Calculation of
      Amounts:          On the Swap Determination Date immediately preceding
                        each Payment Date, the Calculation Agent shall
                        calculate the Aggregate Swap Provider Amount for such
                        Payment Date and the Aggregate Funding 2 Amount for
                        such Payment Date, and forthwith notify Party A, Party
                        B, the Cash Manager and the Issuer Cash Manager of the
                        amounts so determined and of the net amount determined
                        as set out below.

      Payments:         If in relation to any Payment Date:

                        (i)   the Aggregate Swap Provider Amount for such
                              Payment Date exceeds the Aggregate Funding 2
                              Amount for such Payment Date, Party A shall pay
                              the amount of such excess to Party B on such
                              Payment Date;

                        (ii)  the Aggregate Funding 2 Amount for such Payment
                              Date exceeds the Aggregate Swap Provider Amount
                              for such Payment Date, Party B shall pay the


                                        9

<PAGE>

                              amount of such excess to Party A on such Payment
                              Date;

                        (iii) the Aggregate Swap Provider Amount for such
                              Payment Date is equal to the Aggregate Funding 2
                              Amount for such Payment Date, no amount shall be
                              due and payable by either party hereunder in
                              relation to such Payment Date with respect to
                              the Aggregate Swap Provider Amount and the
                              Aggregate Funding 2 Amount.

      Calculation
         Agent:         Northern  Rock plc  acting in its  capacity  as
                        Administrator  pursuant  to  the  Administration
                        Agreement  or  as  Cash  Manager pursuant to the Cash
                        Management Agreement, as the case may be.

2. Account Details:

   Payments to Party A: Bank:             Northern Rock plc
                        Account Name:     Northern Rock Group
                                          Treasury
                        Sort Code:        30-00-59
                        Reference:        Granite Finance Funding 2 Limited

   Payments to Party B: Bank:             Northern Rock plc
                        Account Name:     Granite Finance Funding 2 Limited
                        Account Number:   00150857
                        Sort Code:        30-00-59
                        Reference:        Northern Rock plc

3. Notice Details:

      Party A:          Northern Rock plc

      Address:          Northern Rock House
                        Gosforth
                        Newcastle upon Tyne
                        NE3 4PL

      Facsimile Number: 0191-279-4694

      Attention:        Treasury Settlements Manager

      Party B:          Granite Finance Funding 2 Limited

      Address:          Fifth Floor
                        100 Wood Street


                                       10
<PAGE>
                        London
                        EC2V 7EX
      With a copy to:   Northern Rock plc
                        Northern Rock House
                        Gosforth
                        Newcastle upon Tyne
                        NE3 4PL

      Facsimile Number: 0191 279 4929

      Attention:        Andy McClean

      With a copy to
         the Funding 2
         Security
         Trustee:       The Bank of New York

      Address:          One Canada Square
                        48th Floor
                        London
                        E14 5AL

      Facsimile Number: 020 7964 6399

      Attention:        Global Structured Finance
                        (Corporate Trust)

4.    Miscellaneous

(a)   Notwithstanding any other provision of this Confirmation, if on any date
      Funding 2 draws down a new Loan Tranche or increases the Outstanding
      Principal Balance under an existing Loan Tranche, then to reflect
      prevailing market conditions, provided, the Rating Agencies have
      confirmed that any adjustments carried out in accordance with this
      provision will not result in a lowering, qualification or withdrawal of
      the Notes issued by any Funding 2 Issuer to lower than the rating of
      such Notes immediately prior to such adjustment, Party A may, by giving
      notice in writing to Party B and to the Funding 2 Security Trustee on
      such date, make any adjustments it deems appropriate to the Fixed Rate
      Spread, the Flexible Spread and the Variable Rate Spread (or any of
      them) for the Swap Determination Period in which such date occurs and
      for all Swap Determination Periods occurring after such date (subject
      always to any further adjustment pursuant to this paragraph 4).

(b)   If the payment of any Aggregate Swap Provider Amount is deferred in
      accordance with Part 5(h)(iii) of the Schedule to the Agreement, then
      the amount so deferred (the Swap Provider Deferred Amount) shall,
      subject to the terms of this Confirmation, be payable on the next
      Payment Date (together with interest thereon (the Swap Provider Deferred
      Interest) at the Blended Spread for the relevant Calculation Period) and
      the Swap Provider Amount due on such Payment


                                       11
<PAGE>


      Date shall be deemed to include the Swap Provider Deferred Amount and
      the Swap Provider Deferred Interest.

      If the payment of any Aggregate Funding 2 Amount is deferred in
      accordance with Part 5(h)(iii) the Agreement, then the amount so
      deferred (the Funding 2 Deferred Amount) shall, subject to the terms of
      this Confirmation, be payable on the next Payment Date (together with
      interest thereon (the Funding 2 Deferred Interest) at the Blended Rate
      for the relevant Calculation Period) and the Aggregate Funding 2 Amount
      due on such Payment Date shall be deemed to include the Funding 2
      Deferred Amount and the Funding 2 Deferred Interest.

Yours faithfully

NORTHERN ROCK PLC

By:





Name:

Title:







Confirmed as of the date first written:

GRANITE FINANCE FUNDING 2 LIMITED

By:





Name:

Title:


                                       12


<PAGE>
                                                             Execution Version

                                                          (Basis Rate Swap 2A)

From:       Northern Rock plc
            Northern Rock House
            Gosforth
            Newcastle Upon Tyne
            NE3 4PL

Attention:  Swaps Administration

To:         Granite Finance Funding 2 Limited
            Fifth Floor
            100 Wood Street
            London
            EC2V 7EX

Attention:  Securitisation Team, Risk Operations

                                                               19 January 2005


Dear Sirs

Re: Basis Rate Swap Transaction No. 2A Confirmation relating to the Relevant
Issuer Notes

The purpose of this letter is to confirm the terms and conditions of the swap
transaction entered into between us on the Trade Date specified below (the
Swap Transaction). This letter constitutes a "Confirmation" as referred to in,
and supplements, forms part of and is subject to, the ISDA Master Agreement
dated as of 19 January 2005, as amended and supplemented from time to time
(the Agreement), between us. All provisions contained in the Agreement govern
this Confirmation except as expressly modified below.

The definitions and provisions contained in the 2000 ISDA Definitions, as
published by the International Swaps and Derivatives Association, Inc. (the
Definitions), are incorporated into this Confirmation. In the event of any
inconsistency between the Definitions and this Confirmation, this Confirmation
will govern. References herein to a "Transaction" shall be deemed to be
references to a "Swap Transaction" for the purposes of the Definitions. Any
terms not otherwise defined herein or in the Definitions shall have the
meanings given to them in the Programme Master Definitions Schedule signed for
the purposes of identification by Sidley Austin Brown & Wood and Allen & Overy
LLP on 19 January 2005 (as the same may be amended, restated, varied,
supplemented and/or otherwise modified from time to time with the consent of
the parties hereto).

As used in this Confirmation:

Note Payment Date means any Note Payment Date (as defined in the Relevant
Issuer Notes) on which interest is payable under the Relevant Issuer Notes.


<PAGE>

Relevant Issuer Notes means the Notes from time to time issued by any Funding
2 Issuer on or after the date of this Confirmation with Note Payment Dates
falling in January, April, July and October; except that Relevant Issuer Notes
shall not include any Notes in respect of which the Step-Up Date has occurred
on or before the immediately preceding Note Payment Date.

1     The terms of the particular Swap Transaction to which this Confirmation
      relates are as follows:


<TABLE>
<S>                                         <C>
Party A:                                    Northern Rock plc.

Party B:                                    Granite Finance Funding 2
                                            Limited.

Trade Date:                                 19 January 2005.

Effective Date:                             19 January 2005.

Termination Date:                           The earlier of:

                                            (a) the Final Maturity Date of the last remaining Relevant Issuer
                                            Notes outstanding from time to time; and

                                            (b) the occurrence of a Pass-Through Trigger Event.

Payment Dates:                              The twentieth day of each calendar month during the Term from, and
                                            including, 20 February 2005 to, but excluding, the Termination
                                            Date, subject to adjustment with the Following Business Day
                                            Convention, and the Termination Date (each a Swap Payment Date).

Notional Amount:                            On any Swap Payment Date which is also a Note Payment Date, an
                                            amount in GBP equal to the aggregate Outstanding Principal Balance
                                            of the Loan Tranches relating to the Relevant Issuer Notes on the
                                            immediately preceding Note Payment Date; plus, the aggregate
                                            Outstanding Principal Balance of the Loan Tranches relating to the
                                            Relevant Issuer Notes made in the period from (and excluding) the
                                            immediately preceding Note Payment Date to (and excluding) such
                                            Swap Payment Date (which for the avoidance of doubt will be each
                                            Increased OPB arising during such
</TABLE>


                                        2
<PAGE>


<TABLE>
<S>                                         <C>
                                            period); less, an amount equal to "x" multiplied by the balance of
                                            the Principal Deficiency Ledger on the immediately preceding Note
                                            Payment Date where "x" is a fraction with the aggregate
                                            Outstanding Principal Balance of the Loan Tranches relating to the
                                            Relevant Issuer Notes as its numerator on such Swap Payment Date,
                                            and the aggregate Outstanding Principal Balance of all of the Loan
                                            Tranches relating to all of the Notes issued by any Funding 2
                                            Issuer on such Swap Payment Date, as its denominator. It is
                                            understood that the Notional Amount on any Note Payment Date shall
                                            be determined after any reduction of the Outstanding Principal
                                            Balance of the Loan Tranches relating to the Relevant Issuer Notes
                                            that may occur on such date.

                                            With respect to any Swap Payment Date that is not a Note Payment
                                            Date, the Notional Amount shall be the Notional Amount for the
                                            immediately preceding Note Payment Date determined in the manner
                                            described above or where there has been no Note Payment Date, the
                                            issue date of the Relevant Issuer Notes.

                                            The Notional Amount in respect of each Swap Payment Date shall be
                                            notified to the Calculation Agent by the Cash Manager pursuant to
                                            paragraph 1(a) of Schedule 2 to the Cash Management Agreement.


A. Floating Payments Floating Amounts I:

      Floating Rate Payer I:                Party A.

      Floating Rate Payer I                 GBP-LIBOR-BBA.
      Floating Rate Option:
</TABLE>


                                        3
<PAGE>

<TABLE>
<S>                                         <C>
      Floating Rate Payer I                 Three months; except in respect of the initial Calculation Period
      Designated Maturity:                  for which Linear Interpolation is applicable and in respect of
                                            which the Linear Interpolation shall be applied by reference to
                                            the one month and two month rates.

      Floating Rate Payer I Spread:         Zero per cent. per annum.

      Floating Rate Payer I                 Actual/365 (Fixed).
      Floating Rate Day Count Fraction:

      Floating Rate Payer I Reset Dates:    The first day of each Calculation Period; provided however, that
                                            in respect of every Calculation Period that does not start on a
                                            Note Payment Date, the Floating Rate in effect for such
                                            Calculation Period shall be the Floating Rate for the immediately
                                            preceding Calculation Period.

Floating Amounts II:

      Floating Rate Payer II:               Party B.

      Floating Rate Payer II                GBP-LIBOR-BBA.
      Floating Rate Option:

      Floating Rate Payer II                One month.
      Designated Maturity:

      Floating Rate Payer II                Actual/365 (Fixed).
      Floating Rate Day Count Fraction:

      Floating Rate Payer II                The first day of each Calculation Period.
      Reset Dates:

Calculation Agent:                          Party A.

B. Account Details:

Payments to Floating Rate Payer I:

Account for Payments in GBP:                Northern Rock plc Northern Rock Group Treasury
                                            30-00-59

                                            Granite Finance Funding 2
                                            Limited Basis Swap 2A
</TABLE>


                                        4
<PAGE>

Payments to Floating Rate Payer II:

Account for Payments in GBP:                Northern Rock plc
                                            Granite Finance Funding 2 Limited
                                            Account No.: 00150857
                                            Sort code : 30-00-59
                                            Northern Rock plc
C. Notice Details:

Floating Rate Payer I:                      Northern Rock plc

      Address:                              Northern Rock House
                                            Gosforth
                                            Newcastle upon Tyne
                                            NE3 4PL

      Facsimile Number:                     0191 279 4694

      Attention:                            Treasury Settlements Manager

Floating Rate Payer II:                     Granite Finance Funding 2 Limited

      Address:                              Fifth Floor
                                            100 Wood Street
                                            London
                                            EC2V 7EX

With a copy to:                             Northern Rock plc
                                            Northern Rock House
                                            Gosforth
                                            Newcastle upon Tyne
                                            NE3 4PL

      Facsimile Number:                     +44 191 279 4929

      Attention:                            Andy McClean

And with a copy to the                      The Bank of New York
Funding 2 Security Trustee:

      Address:                              One Canada Square
                                            48th Floor
                                            London
                                            E14 5AL

      Facsimile Number:                     020 7964 6399

      Attention:                            Global Structured Finance
                                            (Corporate Trust)


                                        5
<PAGE>


<TABLE>
<S>                                         <C>
D. Offices:                                 The Office of Party A for each of the Transactions evidenced by
                                            this Confirmation is London.
</TABLE>

E.    Further Issue Amounts

      If on any date during a Calculation Period (other than a Note Payment
      Date) (an Increased OPB Date), as a consequence of the issue of Relevant
      Issuer Notes during such Calculation Period, the aggregate Outstanding
      Principal Balance of the Loan Tranches relating to the Relevant Issuer
      Notes increases, (the amount of such increase being an Increased OPB), a
      further Transaction (a Further Issue Transaction) shall be deemed to have
      occurred in respect of such Increased OPB on terms identical to those set
      out above in respect of the Swap Transaction, except as modified below.

<TABLE>
<S>                                         <C>
      Notional Amount:                      The Notional Amount of a Further Issue Transaction shall be an
                                            amount equal to the relevant Increased OPB (the Further Issue
                                            Notional Amount).

      Effective Date:                       The Effective Date of a Further Issue Transaction (the Further
                                            Issue Effective Date) shall be the relevant Increased OPB Date.

      Termination Date:                     The Termination Date of a Further Issue Transaction shall be the
                                            Note Payment Date immediately following the relevant Further Issue
                                            Effective Date (the Further Issue Termination Date).

      Reset Dates:                          The Reset Dates for a Further Issue Transaction shall be:

                                            (i) in respect of Party A, the Floating Rate Payer I Reset Dates,
                                            except in respect of the first Calculation Period of the Further
                                            Issue Transaction, the Reset Date for which will be the Further
                                            Issue Effective Date and, for the avoidance of doubt, the Floating
                                            Rate I applicable to any Calculation Period following the first
                                            Calculation Period shall be the Floating Rate I for such first
                                            Period; and

                                            (ii) in respect of Party B, the Floating Rate Payer II Reset
                                            Dates, including for the avoidance of doubt the first Calculation
                                            Period of the Further Issue
</TABLE>


                                        6
<PAGE>
<TABLE>
<S>                                         <C>
                                            Transaction.


      Floating Amounts I and II:            The Designated Maturity for a Further Issue Transaction shall be:

                                            (i) in respect of Party A, the period from, and including, the
                                            further Issue Effective Date to, but excluding, the Further Issue
                                            Termination Date. Linear Interpolation shall apply; and

                                            (ii) in respect of Party B, the Floating Rate Payer II Designated
                                            Maturity.
</TABLE>

F.    Miscellaneous

      If the payment of any Floating Amount I is deferred in accordance with
      Part 5(h)(iii) of the Schedule to the Agreement, then the amount so
      deferred (the Floating Amount I Deferred Amount) shall, subject to the
      terms of this Confirmation, be payable on the next Payment Date (together
      with interest thereon (the Floating Amount I Deferred Interest) at the
      Floating Rate Payer I Floating Rate for the relevant Calculation Period)
      and the Floating Amount I due on such Payment Date shall be deemed to
      include the Floating Amount I Deferred Amount and the Floating Amount I
      Deferred Interest.

      If the payment of any Floating Amount II is deferred in accordance with
      Part 5(h)(iii) the Agreement, then the amount so deferred (the Floating
      Amount II Deferred Amount) shall, subject to the terms of this
      Confirmation, be payable on the next Payment Date (together with interest
      thereon (the Floating Amount II Deferred Interest) at the Floating Rate
      Payer II Floating Rate for the relevant Calculation Period) and the
      Floating Amount II due on such Payment Date shall be deemed to include the
      Floating Amount II Deferred Amount and the Floating Amount II Deferred
      Interest.


For the purposes of Section 2(c) of the Agreement, any amounts owing by one
party to another party under a Further Issue Transaction on a Swap Payment Date,
shall be deemed to be amounts payable by such party in respect of the Swap
Transaction on such Payment Date and shall be netted in accordance with Section
2(c).

It is understood that on each Further Issue Termination Date the calculation of
the aggregate Outstanding Principal Balance of the Loan Tranches relating to the
Relevant Issuer Notes will include any Further Issue Notional Amount in respect
of any Further Issue Transaction which terminated on such date. In addition, it
is also understood that if on any Note Payment Date the Outstanding Principal
Balance of the Loan Tranches relating to the Relevant Issuer Notes is increased
by an amount, the Notional Amount of the Swap Transaction shall increase by such
amount.

Please confirm your agreement to be bound by the terms of the foregoing by
executing a copy of this Confirmation and returning it to us by facsimile.


                                        7
<PAGE>


Yours faithfully


Northern Rock plc

By:


Name:
Title:



Confirmed as of the date first written:

Granite Finance Funding 2 Limited

By:


Name:
Title:


<PAGE>

                                                            (Basis Rate Swap 2B)

From:       Northern Rock plc
            Northern Rock House
            Gosforth
            Newcastle Upon Tyne
            NE3 4PL

Attention:  Swaps Administration

To:         Granite Finance Funding 2 Limited
            Fifth Floor
            100 Wood Street
            London
            EC2V 7EX

Attention:  Securitisation Team, Risk Operations

                                                               o December 2005


Dear Sirs

Re:   Basis  Rate Swap  Transaction  No.  2B  Confirmation  relating  to the
Relevant Issuer Notes

The purpose of this letter is to confirm the terms and conditions of the swap
transaction entered into between us on the Trade Date specified below (the
Swap Transaction). This letter constitutes a "Confirmation" as referred to in,
and supplements, forms part of and is subject to, the ISDA Master Agreement
dated as of 19 January 2005, as amended and supplemented from time to time
(the Agreement), between us. All provisions contained in the Agreement govern
this Confirmation except as expressly modified below.

This Confirmation amends and restates in its entirety a letter agreement
(Basis Rate Swap 2B) dated 19 January 2005.

The definitions and provisions contained in the 2000 ISDA Definitions, as
published by the International Swaps and Derivatives Association, Inc. (the
Definitions), are incorporated into this Confirmation. In the event of any
inconsistency between the Definitions and this Confirmation, this Confirmation
will govern. References herein to a "Transaction" shall be deemed to be
references to a "Swap Transaction" for the purposes of the Definitions. Any
terms not otherwise defined herein or in the Definitions shall have the
meanings given to them in the Programme Master Definitions Schedule signed for
the purposes of identification by Sidley Austin Brown & Wood and Allen & Overy
LLP on 19 January 2005 (as the same may be amended, restated, varied,
supplemented and/or otherwise modified from time to time with the consent of
the parties hereto).

As used in this Confirmation:


<PAGE>


Note Payment Date means any Note Payment Date (as defined in the Relevant
Issuer Notes) on which interest is payable under the Relevant Issuer Notes.

Relevant Issuer Notes means the Notes from time to time issued by any Funding
2 Issuer on or after the date of this Confirmation with Note Payment Dates
falling in February, May, August and November (including, for the avoidance of
doubt, the Notes issued by Granite Master Issuer plc on 21 September 2005 (the
"Series 2005-4 Notes") with the aforementioned Note Payment Dates); except
that Relevant Issuer Notes shall not include any Notes in respect of which the
Step-Up Date has occurred on or before the immediately preceding Note Payment
Date.

1     The terms of the particular Swap Transaction to which this Confirmation
      relates are as follows:

<TABLE>
<S>                                         <C>
Party A:                                    Northern Rock plc.

Party B:                                    Granite Finance Funding 2 Limited.

Trade Date:                                 19 January 2005.

Effective Date:                             19 January 2005.

Termination Date:                           The earlier of:

                                            (a) the Final Maturity Date of the last remaining Relevant Issuer
                                            Notes outstanding from time to time; and

                                            (b) the occurrence of a Pass-Through Trigger Event.

Payment Dates:                              The twentieth day of each calendar month during the Term from, and
                                            including, 20 February 2005 to, but excluding, the Termination
                                            Date, subject to adjustment with the Following Business Day
                                            Convention, and the Termination Date (each a Swap Payment Date).

Notional Amount:                            On any Swap Payment Date which is also a Note Payment Date, an
                                            amount in GBP equal to the aggregate Outstanding Principal Balance
                                            of the Loan Tranches relating to the Relevant Issuer Notes on the
                                            immediately preceding Note Payment Date; plus, the aggregate
                                            Outstanding Principal Balance of the Loan Tranches relating to the
                                            Relevant Issuer Notes made in the period from (and excluding) the
                                            immediately preceding Note Payment
</TABLE>


                                        2
<PAGE>

<TABLE>
<S>                                         <C>
                                            Date to (and excluding) such Swap Payment Date (which for the
                                            avoidance of doubt will be each Increased OPB and 05-04 Increased
                                            OPB arising during such period); less, an amount equal to "x"
                                            multiplied by the balance of the Principal Deficiency Ledger on
                                            the immediately preceding Note Payment Date where "x" is a
                                            fraction with the aggregate Outstanding Principal Balance of the
                                            Loan Tranches relating to the Relevant Issuer Notes as its
                                            numerator on such Swap Payment Date, and the aggregate Outstanding
                                            Principal Balance of all of the Loan Tranches relating to all of
                                            the Notes issued by any Funding 2 Issuer on such Swap Payment
                                            Date, as its denominator. It is understood that the Notional
                                            Amount on any Note Payment Date shall be determined after any
                                            reduction of the Outstanding Principal Balance of the Loan
                                            Tranches relating to the Relevant Issuer Notes that may occur on
                                            such date.

                                            With respect to any Swap Payment Date that is not a Note Payment
                                            Date, the Notional Amount shall be the Notional Amount for the
                                            immediately preceding Note Payment Date determined in the manner
                                            described above or where there has been no Note Payment Date, the
                                            issue date of the Relevant Issuer Notes.

                                            The Notional Amount in respect of each Swap Payment Date shall be
                                            notified to the Calculation Agent by the Cash Manager pursuant to
                                            paragraph 1(a) of Schedule 2 to the Cash Management Agreement.

A. Floating Payments

      Floating Amounts I:

      Floating Rate Payer I:                Party A.
</TABLE>


                                        3
<PAGE>

<TABLE>
<S>                                         <C>
      Floating Rate Payer I                 GBP-LIBOR-BBA.
      Floating Rate Option:

      Floating Rate Payer I                 Three months; except in respect of the initial Calculation Period
      Designated Maturity:                  for which Linear Interpolation is applicable and in respect of
                                            which the Linear Interpolation shall be applied by reference to
                                            the one month and two month rates.

      Floating Rate Payer I Spread:         Zero per cent. per annum.

      Floating Rate Payer I                 Actual/365 (Fixed).
      Floating Rate Day Count Fraction:

      Floating Rate Payer I                 The first day of each Calculation Period; provided however, that
      Reset Dates:                          in respect of every Calculation Period that does not start on a
                                            Note Payment Date, the Floating Rate in effect for such
                                            Calculation Period shall be the Floating Rate for the immediately
                                            preceding Calculation Period.

Floating Amounts II:
      Floating Rate Payer II:               Party B.

      Floating Rate Payer II                GBP-LIBOR-BBA.
      Floating Rate Option:

      Floating Rate Payer II                One month.
      Designated Maturity:

      Floating Rate Payer II                Actual/365 (Fixed).
      Floating Rate Day Count Fraction:

      Floating Rate Payer II                The first day of each Calculation Period.
      Reset Dates:

Calculation Agent:                          Party A.

B. Account Details:

Payments to Floating Rate Payer I:

Account for Payments in GBP:                Northern Rock plc
                                            Northern Rock Group Treasury
                                            30-00-59
</TABLE>

                                        4
<PAGE>

                                            Granite Finance Funding 2
                                            Limited Basis Swap 2B

Payments to Floating Rate Payer II:

Account for Payments in GBP:                Northern Rock plc
                                            Granite Finance Funding 2 Limited
                                            Account No.: 00150857
                                            Sort code : 30-00-59
                                            Northern Rock plc
C. Notice Details:

Floating Rate Payer I:                      Northern Rock plc

      Address:                              Northern Rock House
                                            Gosforth
                                            Newcastle upon Tyne
                                            NE3 4PL

      Facsimile Number:                     0191 279 4694

      Attention:                            Treasury Settlements Manager

Floating Rate Payer II:                     Granite Finance Funding 2 Limited

      Address:                              Fifth Floor
                                            100 Wood Street
                                            London
                                            EC2V 7EX

With a copy to:                             Northern Rock plc
                                            Northern Rock House
                                            Gosforth
                                            Newcastle upon Tyne
                                            NE3 4PL

      Facsimile Number:                     +44 191 279 4929

      Attention:                            Andy McClean

And with a copy to the                      The Bank of New York
Funding 2 Security Trustee:

      Address:                              One Canada Square
                                            48th Floor
                                            London
                                            E14 5AL

      Facsimile Number:                     020 7964 6399


                                        5
<PAGE>

<TABLE>
<S>                                         <C>
      Attention:                            Global Structured Finance (Corporate Trust)

D.    Offices:                              The Office of Party A for each of the Transactions evidenced by
                                            this Confirmation is London.
</TABLE>

E.    Further Issue Amounts

      If on any date during a Calculation Period (other than a Note Payment
      Date or the 05-04 Further Issue Effective Date) (an Increased OPB Date),
      as a consequence of the issue of Relevant Issuer Notes during such
      Calculation Period, the aggregate Outstanding Principal Balance of the
      Loan Tranches relating to the Relevant Issuer Notes increases, (the
      amount of such increase being an Increased OPB), a further Transaction
      (a Further Issue Transaction) shall be deemed to have occurred in
      respect of such Increased OPB on terms identical to those set out above
      in respect of the Swap Transaction, except as modified below.

<TABLE>
<S>                                         <C>
      Notional Amount:                      The Notional Amount of a Further Issue Transaction shall be an
                                            amount equal to the relevant Increased OPB (the Further Issue
                                            Notional Amount).

      Effective Date:                       The Effective Date of a Further Issue Transaction (the Further
                                            Issue Effective Date) shall be the relevant Increased OPB Date.

      Termination Date:                     The Termination Date of a Further Issue Transaction shall be the
                                            Note Payment Date immediately following the relevant Further Issue
                                            Effective Date (the Further Issue Termination Date).


      Reset Dates:                          The Reset Dates for a Further Issue Transaction shall be:

                                            (i) in respect of Party A, the Floating Rate Payer I Reset Dates,
                                            except in respect of the first Calculation Period of the Further
                                            Issue Transaction, the Reset Date for which will be the Further
                                            Issue Effective Date and, for the avoidance of doubt, the Floating
                                            Rate I applicable to any Calculation Period following the first
                                            Calculation Period shall be the Floating Rate I for such first
                                            Period; and

                                            (ii) in respect of Party B, the Floating
</TABLE>


                                        6
<PAGE>

<TABLE>
<S>                                         <C>
                                            Rate Payer II Reset Dates, including for the avoidance of doubt
                                            the first Calculation Period of the Further Issue Transaction.


      Floating Amounts I and II:            The Designated Maturity for a Further Issue Transaction shall be:

                                            (i) in respect of Party A, the period from, and including, the
                                            Further Issue Effective Date to, but excluding, the Further Issue
                                            Termination Date. Linear Interpolation shall apply; and

                                            (ii) in respect of Party B, the Floating Rate Payer II Designated
                                            Maturity.
</TABLE>

F.    Further Issue Amounts 05-04

      On the Issue Date of the Series 05-04 Notes (the 05-04 Increased OPB
      Date), as a consequence of the issue of Relevant Issuer Notes on such
      date, the aggregate Outstanding Principal Balance of the Loan Tranches
      relating to the Relevant Issuer Notes increase, (the amount of such
      increase being an 05-04 Increased OPB), a further Transaction (the 05-04
      Further Issue Transaction) shall be deemed to have occurred in respect
      of such Increased OPB on terms identical to those set out above in
      respect of the Swap Transaction, except as modified below.

<TABLE>
<S>                                         <C>
      Notional Amount:                      The Notional Amount of the 05-04 Further Issue Transaction shall
                                            be an amount equal to the 05-04 Increased OPB (the 05-04 Further
                                            Issue Notional Amount).

      Effective Date:                       The Effective Date of the 05-04 Further Issue Transaction (the
                                            05-04 Further Issue Effective Date) shall be the 05-04 Increased
                                            OPB Date.

      Termination Date:                     The Termination Date of the 05-04 Further Issue Transaction shall
                                            be the 05-04 Note Payment Date immediately following the 05-04
                                            Further Issue Effective Date (the 05-04 Further Issue Termination
                                            Date).

      Reset Dates:                          The Reset Dates for the 05-04 Further Issue Transaction shall be:

                                            (i) in respect of Party A, the Floating Rate Payer I Reset Dates,
                                            except in respect of the first Calculation Period
</TABLE>

                                        7
<PAGE>

<TABLE>
<S>                                         <C>
                                            of the 05-04 Further Issue Transaction, the Reset Date for which
                                            will be the 05-04 Further Issue Effective Date and, for the
                                            avoidance of doubt, the Floating Rate I applicable to any
                                            Calculation Period following the first Calculation Period shall be
                                            the Floating Rate I for such first Calculation Period; and

                                            (ii) in respect of Party B, the Floating Rate Payer II Reset
                                            Dates, including for the avoidance of doubt the first Calculation
                                            Period of the 05-04 Further Issue Transaction.

      Floating Amounts I and II:            The Designated Maturity for the 05-04 Further Issue Transaction
                                            shall be:

                                            (i) in respect of Party A, the period from, and including, the
                                            05-04 Further Issue Effective Date to, but excluding, the 05-04
                                            Further Issue Termination Date. Linear Interpolation shall apply;
                                            and

                                            (ii) in respect of Party B, the Floating Rate Payer II Designated
                                            Maturity.
</TABLE>

G.    Miscellaneous

      If the payment of any Floating Amount I is deferred in accordance with
      Part 5(h)(iii) of the Schedule to the Agreement, then the amount so
      deferred (the Floating Amount I Deferred Amount) shall, subject to the
      terms of this Confirmation, be payable on the next Payment Date
      (together with interest thereon (the Floating Amount I Deferred
      Interest) at the Floating Rate Payer I Floating Rate for the relevant
      Calculation Period) and the Floating Amount I due on such Payment Date
      shall be deemed to include the Floating Amount I Deferred Amount and the
      Floating Amount I Deferred Interest.

      If the payment of any Floating Amount II is deferred in accordance with
      Part 5(h)(iii) the Agreement, then the amount so deferred (the Floating
      Amount II Deferred Amount) shall, subject to the terms of this
      Confirmation, be payable on the next Payment Date (together with
      interest thereon (the Floating Amount II Deferred Interest) at the
      Floating Rate Payer II Floating Rate for the relevant Calculation
      Period) and the Floating Amount II due on such Payment Date shall be
      deemed to include the Floating Amount II Deferred Amount and the
      Floating Amount II Deferred Interest.

For the purposes of Section 2(c) of the Agreement, any amounts owing by one
party to another party under a Further Issue Transaction on a Swap Payment
Date, shall be deemed to


                                        8
<PAGE>

be amounts payable by such party in respect of the Swap Transaction on such
Payment Date and shall be netted in accordance with Section 2(c).

It is understood that on each Further Issue Termination Date the calculation
of the aggregate Outstanding Principal Balance of the Loan Tranches relating
to the Relevant Issuer Notes will include any Further Issue Notional Amount in
respect of any Further Issue Transaction which terminated on such date and the
05-04 Further Issue Notional Amount in respect of the 05-04 Further Issue
Transaction which terminated on such date. In addition, it is also understood
that if on any Note Payment Date the Outstanding Principal Balance of the Loan
Tranches relating to the Relevant Issuer Notes is increased by an amount, the
Notional Amount of the Swap Transaction shall increase by such amount.

Please confirm your agreement to be bound by the terms of the foregoing by
executing a copy of this Confirmation and returning it to us by facsimile.

Yours faithfully


Northern Rock plc

By:


Name:
Title:



Confirmed as of the date first written:

Granite Finance Funding 2 Limited

By:


Name:
Title:


                                        9
<PAGE>
                                                             Execution Version

                                                           (Basis Rate Swap 2C)

From:       Northern Rock plc
            Northern Rock House
            Gosforth
            Newcastle Upon Tyne
            NE3 4PL

Attention:  Swaps Administration

To:         Granite Finance Funding 2 Limited
            Fifth Floor
            100 Wood Street
            London
            EC2V 7EX

Attention:  Securitisation Team, Risk Operations

                                                               19 January 2005


Dear Sirs

Re:   Basis  Rate Swap  Transaction  No.  2C  Confirmation  relating  to the
Relevant Issuer Notes

The purpose of this letter is to confirm the terms and conditions of the swap
transaction entered into between us on the Trade Date specified below (the
Swap Transaction). This letter constitutes a "Confirmation" as referred to in,
and supplements, forms part of and is subject to, the ISDA Master Agreement
dated as of 19 January 2005, as amended and supplemented from time to time
(the Agreement), between us. All provisions contained in the Agreement govern
this Confirmation except as expressly modified below.

The definitions and provisions contained in the 2000 ISDA Definitions, as
published by the International Swaps and Derivatives Association, Inc. (the
Definitions), are incorporated into this Confirmation. In the event of any
inconsistency between the Definitions and this Confirmation, this Confirmation
will govern. References herein to a "Transaction" shall be deemed to be
references to a "Swap Transaction" for the purposes of the Definitions. Any
terms not otherwise defined herein or in the Definitions shall have the
meanings given to them in the Programme Master Definitions Schedule signed for
the purposes of identification by Sidley Austin Brown & Wood and Allen & Overy
LLP on 19 January 2005 (as the same may be amended, restated, varied,
supplemented and/or otherwise modified from time to time with the consent of
the parties hereto).

As used in this Confirmation:

Note Payment Date means any Note Payment Date (as defined in the Relevant
Issuer Notes) on which interest is payable under the Relevant Issuer Notes.


                                        2
<PAGE>


Relevant Issuer Notes means the Notes from time to time issued by any Funding
2 Issuer on or after the date of this Confirmation with Note Payment Dates
falling in March, June, September and December; except that Relevant Issuer
Notes shall not include any Notes in respect of which the Step-Up Date has
occurred on or before the immediately preceding Note Payment Date.

1     The terms of the particular Swap Transaction to which this Confirmation
      relates are as follows:

<TABLE>
<S>                                         <C>
Party A:                                    Northern Rock plc.

Party B:                                    Granite Finance Funding 2 Limited.

Trade Date:                                 19 January 2005.

Effective Date:                             19 January 2005.

Termination Date:                           The earlier of:

                                            (a) the Final Maturity Date of the last remaining Relevant Issuer
                                            Notes outstanding from time to time; and

                                            (b) the occurrence of a Pass-Through Trigger Event.

Payment Dates:                              The twentieth day of each calendar month during the Term from, and
                                            including, 20 February 2005 to, but excluding, the Termination
                                            Date, subject to adjustment with the Following Business Day
                                            Convention, and the Termination Date (each a Swap Payment Date).

Notional Amount:                            On any Swap Payment Date which is also a Note Payment Date, an
                                            amount in GBP equal to the aggregate Outstanding Principal Balance
                                            of the Loan Tranches relating to the Relevant Issuer Notes on the
                                            immediately preceding Note Payment Date; plus, the aggregate
                                            Outstanding Principal Balance of the Loan Tranches relating to the
                                            Relevant Issuer Notes made in the period from (and excluding) the
                                            immediately preceding Note Payment Date to (and excluding) such
                                            Swap Payment Date (which for the avoidance of doubt will be each
                                            Increased OPB arising during such
</TABLE>


                                        2
<PAGE>

<TABLE>
<S>                                         <C>
                                            period); less, an amount equal to "x" multiplied by the balance of
                                            the Principal Deficiency Ledger on the immediately preceding Note
                                            Payment Date where "x" is a fraction with the aggregate
                                            Outstanding Principal Balance of the Loan Tranches relating to the
                                            Relevant Issuer Notes as its numerator on such Swap Payment Date,
                                            and the aggregate Outstanding Principal Balance of all of the Loan
                                            Tranches relating to all of the Notes issued by any Funding 2
                                            Issuer on such Swap Payment Date, as its denominator. It is
                                            understood that the Notional Amount on any Note Payment Date shall
                                            be determined after any reduction of the Outstanding Principal
                                            Balance of the Loan Tranches relating to the Relevant Issuer Notes
                                            that may occur on such date.

                                            With respect to any Swap Payment Date that is not a Note Payment
                                            Date, the Notional Amount shall be the Notional Amount for the
                                            immediately preceding Note Payment Date determined in the manner
                                            described above or where there has been no Note Payment Date, the
                                            issue date of the Relevant Issuer Notes.

                                            The Notional Amount in respect of each Swap Payment Date shall be
                                            notified to the Calculation Agent by the Cash Manager pursuant to
                                            paragraph 1(a) of Schedule 2 to the Cash Management Agreement.


A. Floating Payments

Floating Amounts I:

      Floating Rate Payer I:                Party A.

      Floating Rate Payer I                 GBP-LIBOR-BBA.
      Floating Rate Option:

</TABLE>


                                        3
<PAGE>


<TABLE>
<S>                                         <C>
      Floating Rate Payer I                 Three months; except in respect of the initial Calculation Period
      Designated Maturity:                  for which Linear Interpolation is applicable and in respect of
                                            which the Linear Interpolation shall be applied by reference to
                                            the one month and two month rates.

      Floating Rate Payer I Spread:         Zero per cent. per annum.

      Floating Rate Payer I                 Actual/365 (Fixed).
      Floating Rate Day Count Fraction:

      Floating Rate Payer I                 The first day of each Calculation Period; provided however, that
      Reset Dates:                          in respect of every Calculation Period that does not start on a
                                            Note Payment Date, the Floating Rate in effect for such
                                            Calculation Period shall be the Floating Rate for the immediately
                                            preceding Calculation Period.

Floating Amounts II:
      Floating Rate Payer II:               Party B.

      Floating Rate Payer II                GBP-LIBOR-BBA.
      Floating Rate Option:

      Floating Rate Payer II                One month.
      Designated Maturity:

      Floating Rate Payer II                Actual/365 (Fixed).
      Floating Rate Day Count Fraction:

      Floating Rate Payer II                The first day of each Calculation Period.
      Reset Dates:

Calculation Agent:                          Party A.

B. Account Details:
Payments to Floating Rate Payer I:

Account for Payments in GBP:                Northern Rock plc
                                            Northern Rock Group Treasury
                                            30-00-59

                                            Granite Finance Funding 2
                                            Limited Basis Swap 2C
</TABLE>


                                        4
<PAGE>


<TABLE>
<S>                                         <C>
Payments to Floating Rate Payer II:

Account for Payments in GBP:                Northern Rock plc
                                            Granite Finance Funding 2
                                            Limited
                                            Account No.: 00150857
                                            Sort code : 30-00-59
                                            Northern Rock plc
C. Notice Details:

Floating Rate Payer I:                      Northern Rock plc

      Address:                              Northern Rock House
                                            Gosforth
                                            Newcastle upon Tyne
                                            NE3 4PL

      Facsimile Number:                     0191 279 4694

      Attention:                            Treasury Settlements Manager

Floating Rate Payer II:                     Granite Finance Funding 2 Limited

      Address:                              Fifth Floor
                                            100 Wood Street
                                            London
                                            EC2V 7EX

With a copy to:                             Northern Rock plc
                                            Northern Rock House
                                            Gosforth
                                            Newcastle upon Tyne
                                            NE3 4PL

      Facsimile Number:                     +44 191 279 4929

      Attention:                            Andy McClean

And with a copy to the                      The Bank of New York
Funding 2 Security Trustee:

      Address:                              One Canada Square
                                            48th Floor
                                            London
                                            E14 5AL

      Facsimile Number:                     020 7964 6399

      Attention:                            Global Structured Finance (Corporate Trust)
</TABLE>


                                        5
<PAGE>

<TABLE>
<S>                                         <C>
D. Offices:                                 The Office of Party A for each of the Transactions evidenced by
                                            this Confirmation is London. E. Further Issue Amounts
</TABLE>

      If on any date during a Calculation Period (other than a Note Payment
      Date) (an Increased OPB Date), as a consequence of the issue of Relevant
      Issuer Notes during such Calculation Period, the aggregate Outstanding
      Principal Balance of the Loan Tranches relating to the Relevant Issuer
      Notes increases, (the amount of such increase being an Increased OPB), a
      further Transaction (a Further Issue Transaction) shall be deemed to
      have occurred in respect of such Increased OPB on terms identical to
      those set out above in respect of the Swap Transaction, except as
      modified below.

<TABLE>
<S>                                         <C>
      Notional Amount:                      The Notional Amount of a Further Issue Transaction shall be an
                                            amount equal to the relevant Increased OPB (the Further Issue
                                            Notional Amount).


      Effective Date:                       The Effective Date of a Further Issue Transaction (the Further
                                            Issue Effective Date) shall be the relevant Increased OPB Date.


      Termination Date:                     The Termination Date of a Further Issue Transaction shall be the
                                            Note Payment Date immediately following the relevant Further Issue
                                            Effective Date (the Further Issue Termination Date). Reset Dates:
                                            The Reset Dates for a Further Issue Transaction shall be:

                                            (i) in respect of Party A, the Floating Rate Payer I Reset Dates,
                                            except in respect of the first Calculation Period of the Further
                                            Issue Transaction, the Reset Date for which will be the Further
                                            Issue Effective Date and, for the avoidance of doubt, the Floating
                                            Rate I applicable to any Calculation Period following the first
                                            Calculation Period shall be the Floating Rate I for such first
                                            Period; and

                                            (ii) in respect of Party B, the Floating Rate Payer II Reset
                                            Dates, including for the avoidance of doubt the first Calculation
                                            Period of the Further Issue
</TABLE>


                                        6
<PAGE>


<TABLE>
<S>                                         <C>
                                            Transaction.

      Floating Amounts I and II:            The Designated Maturity for a Further Issue Transaction shall be:

                                            (i) in respect of Party A, the period from, and including, the
                                            further Issue Effective Date to, but excluding, the Further Issue
                                            Termination Date. Linear Interpolation shall apply; and

                                            (ii) in respect of Party B, the Floating Rate Payer II Designated
                                            Maturity.
</TABLE>

F.    Miscellaneous

      If the payment of any Floating Amount I is deferred in accordance with
      Part 5(h)(iii) of the Schedule to the Agreement, then the amount so
      deferred (the Floating Amount I Deferred Amount) shall, subject to the
      terms of this Confirmation, be payable on the next Payment Date
      (together with interest thereon (the Floating Amount I Deferred
      Interest) at the Floating Rate Payer I Floating Rate for the relevant
      Calculation Period) and the Floating Amount I due on such Payment Date
      shall be deemed to include the Floating Amount I Deferred Amount and the
      Floating Amount I Deferred Interest.

      If the payment of any Floating Amount II is deferred in accordance with
      Part 5(h)(iii) the Agreement, then the amount so deferred (the Floating
      Amount II Deferred Amount) shall, subject to the terms of this
      Confirmation, be payable on the next Payment Date (together with
      interest thereon (the Floating Amount II Deferred Interest) at the
      Floating Rate Payer II Floating Rate for the relevant Calculation
      Period) and the Floating Amount II due on such Payment Date shall be
      deemed to include the Floating Amount II Deferred Amount and the
      Floating Amount II Deferred Interest.

For the purposes of Section 2(c) of the Agreement, any amounts owing by one
party to another party under a Further Issue Transaction on a Swap Payment
Date, shall be deemed to be amounts payable by such party in respect of the
Swap Transaction on such Payment Date and shall be netted in accordance with
Section 2(c).

It is understood that on each Further Issue Termination Date the calculation
of the aggregate Outstanding Principal Balance of the Loan Tranches relating
to the Relevant Issuer Notes will include any Further Issue Notional Amount in
respect of any Further Issue Transaction which terminated on such date. In
addition, it is also understood that if on any Note Payment Date the
Outstanding Principal Balance of the Loan Tranches relating to the Relevant
Issuer Notes is increased by an amount, the Notional Amount of the Swap
Transaction shall increase by such amount.

Please confirm your agreement to be bound by the terms of the foregoing by
executing a copy of this Confirmation and returning it to us by facsimile.

                                        7

Yours faithfully


Northern Rock plc

By:


Name:
Title:



Confirmed as of the date first written:

Granite Finance Funding 2 Limited

By:


Name:
Title:

                                        8
<PAGE>
                                                            Execution Version

                                                        (Basis Rate Swap 2D)

From:       Northern Rock plc
            Northern Rock House
            Gosforth
            Newcastle Upon Tyne
            NE3 4PL

Attention:  Swaps Administration

To:         Granite Finance Funding 2 Limited
            Fifth Floor
            100 Wood Street
            London
            EC2V 7EX

Attention:  Securitisation Team, Risk Operations

                                                               26 January 2005


Dear Sirs

Re:   Basis Rate Swap Transaction No. 2D Confirmation relating to the
Relevant Issuer Notes

The purpose of this letter is to confirm the terms and conditions of the swap
transaction entered into between us on the Trade Date specified below (the
Swap Transaction). This letter constitutes a "Confirmation" as referred to in,
and supplements, forms part of and is subject to, the ISDA Master Agreement
dated as of 19 January 2005, as amended and supplemented from time to time
(the Agreement), between us. All provisions contained in the Agreement govern
this Confirmation except as expressly modified below.

The definitions and provisions contained in the 2000 ISDA Definitions, as
published by the International Swaps and Derivatives Association, Inc. (the
Definitions), are incorporated into this Confirmation. In the event of any
inconsistency between the Definitions and this Confirmation, this Confirmation
will govern. References herein to a "Transaction" shall be deemed to be
references to a "Swap Transaction" for the purposes of the Definitions. Any
terms not otherwise defined herein or in the Definitions shall have the
meanings given to them in the Programme Master Definitions Schedule signed for
the purposes of identification by Sidley Austin Brown & Wood and Allen & Overy
LLP on 19 January 2005 (as the same may be amended, restated, varied,
supplemented and/or otherwise modified from time to time with the consent of
the parties hereto).

As used in this Confirmation:

Note Payment Date means any Note Payment Date (as defined in the Relevant
Issuer Notes) on which interest is payable under the Relevant Issuer Notes.


<PAGE>

Relevant Issuer Notes means the Notes from time to time issued by any Funding
2 Issuer on or after the date of this Confirmation with monthly Note Payment
Dates; except that Relevant Issuer Notes shall not include any Notes in
respect of which the Step-Up Date has occurred on or before the immediately
preceding Note Payment Date.

1     The terms of the particular Swap Transaction to which this Confirmation
      relates are as follows:

<TABLE>
<S>                                         <C>
Party A:                                    Northern Rock plc.

Party B:                                    Granite Finance Funding 2 Limited.


Trade Date:                                 26 January 2005.

Effective Date:                             26 January 2005.

Termination Date:                           The earlier of:

                                            (a) the Final Maturity Date of the last remaining Relevant Issuer
                                            Notes outstanding from time to time; and

                                            (b) the occurrence of a Pass-Through Trigger Event.

Payment Dates:                              The twentieth day of each calendar month during the Term from, and
                                            including, 20 February 2005 to, but excluding, the Termination
                                            Date, subject to adjustment with the Following Business Day
                                            Convention, and the Termination Date (each a Swap Payment Date).


Notional Amount:                            On any Swap Payment Date which is also a Note Payment Date, an
                                            amount in GBP equal to the aggregate Outstanding Principal Balance
                                            of the Loan Tranches relating to the Relevant Issuer Notes on the
                                            immediately preceding Note Payment Date; plus, the aggregate
                                            Outstanding Principal Balance of the Loan Tranches relating to the
                                            Relevant Issuer Notes made in the period from (and excluding) the
                                            immediately preceding Note Payment Date to (and excluding) such
                                            Swap Payment Date (which for the avoidance of doubt will be each
                                            Increased OPB arising during such period); less, an amount equal
                                            to "x"
</TABLE>


                                        2
<PAGE>


<TABLE>
<S>                                        <C>
                                            multiplied by the balance of the Principal Deficiency Ledger on
                                            the immediately preceding Note Payment Date where "x" is a
                                            fraction with the aggregate Outstanding Principal Balance of the
                                            Loan Tranches relating to the Relevant Issuer Notes as its
                                            numerator on such Swap Payment Date, and the aggregate Outstanding
                                            Principal Balance of all of the Loan Tranches relating to all of
                                            the Notes issued by any Funding 2 Issuer on such Swap Payment
                                            Date, as its denominator. It is understood that the Notional
                                            Amount on any Note Payment Date shall be determined after any
                                            reduction of the Outstanding Principal Balance of the Loan
                                            Tranches relating to the Relevant Issuer Notes that may occur on
                                            such date.

                                            With respect to any Swap Payment Date that is not a Note Payment
                                            Date, the Notional Amount shall be the Notional Amount for the
                                            immediately preceding Note Payment Date determined in the manner
                                            described above or where there has been no Note Payment Date, the
                                            issue date of the Relevant Issuer Notes.

                                            The Notional Amount in respect of each Swap Payment Date shall be
                                            notified to the Calculation Agent by the Cash Manager pursuant to
                                            paragraph 1(a) of Schedule 2 to the Cash Management Agreement.


A. Floating Payments Floating Amounts I:

      Floating Rate Payer I:                Party A.

      Floating Rate Payer I                 GBP-LIBOR-BBA.
      Floating Rate Option:
</TABLE>

                                        3
<PAGE>


<TABLE>
<S>                                         <C>
      Floating Rate Payer I                 Three months; except in respect of the initial Calculation Period
      Designated Maturity:                  for which Linear Interpolation is applicable and in respect of
                                            which the Linear Interpolation shall be applied by reference to
                                            the one month and two month rates.

      Floating Rate Payer I Spread:         Zero per cent. per annum.

      Floating Rate Payer I                 Actual/365 (Fixed).
      Floating Rate Day Count Fraction:

      Floating Rate Payer I                 The first day of each Calculation Period; provided however, that
      Reset Dates:                          in respect of every Calculation Period that does not start on a
                                            Note Payment Date, the Floating Rate in effect for such
                                            Calculation Period shall be the Floating Rate for the immediately
                                            preceding Calculation Period.

Floating Amounts II:
      Floating Rate Payer II:               Party B.

      Floating Rate Payer II                GBP-LIBOR-BBA.
      Floating Rate Option:

      Floating Rate Payer II                One month.
      Designated Maturity:

      Floating Rate Payer II                Actual/365 (Fixed).
      Floating Rate Day Count Fraction:

      Floating Rate Payer II                The first day of  each Calculation Period.
      Reset Dates:

Calculation Agent:                          Party A.

B. Account Details:

Payments to Floating Rate Payer I:

Account for Payments in GBP:                Northern Rock plc
                                            Northern Rock Group Treasury
                                            30-00-59

                                            Granite Finance Funding 2 Limited Basis Swap 2D
</TABLE>


                                        4
<PAGE>


Payments to Floating Rate Payer II:

Account for Payments in GBP:                Northern Rock plc
                                            Granite Finance Funding 2
                                            Limited
                                            Account No.: 00150857
                                            Sort code : 30-00-59
                                            Northern Rock plc

C. Notice Details:

Floating Rate Payer I:                      Northern Rock plc

      Address:                              Northern Rock House
                                            Gosforth
                                            Newcastle upon Tyne
                                            NE3 4PL

      Facsimile Number:                     0191 279 4694

      Attention:                            Treasury Settlements Manager

Floating Rate Payer II:                     Granite Finance Funding 2 Limited

      Address:                              Fifth Floor
                                            100 Wood Street
                                            London
                                            EC2V 7EX

With a copy to:                             Northern Rock plc
                                            Northern Rock House
                                            Gosforth
                                            Newcastle upon Tyne
                                            NE3 4PL

      Facsimile Number:                     +44 191 279 4929

      Attention:                            Andy McClean

And with a copy to the                      The Bank of New York
Funding 2 Security Trustee:
      Address:                              One Canada Square
                                            48th Floor
                                            London
                                            E14 5AL

      Facsimile Number:                     020 7964 6399

      Attention:                            Global Structured Finance
                                             (Corporate Trust)


                                        5
<PAGE>


<TABLE>
<S>                                         <C>
D. Offices:                                 The Office of Party A for each of the Transactions evidenced by
                                            this Confirmation is London.
</TABLE>

E.    Further Issue Amounts

      If on any date during a Calculation Period (other than a Note Payment
      Date) (an Increased OPB Date), as a consequence of the issue of Relevant
      Issuer Notes during such Calculation Period, the aggregate Outstanding
      Principal Balance of the Loan Tranches relating to the Relevant Issuer
      Notes increases, (the amount of such increase being an Increased OPB), a
      further Transaction (a Further Issue Transaction) shall be deemed to
      have occurred in respect of such Increased OPB on terms identical to
      those set out above in respect of the Swap Transaction, except as
      modified below.

<TABLE>
<S>                                         <C>
      Notional Amount:                      The Notional Amount of a Further Issue Transaction shall be an
                                            amount equal to the relevant Increased OPB (the Further Issue
                                            Notional Amount).

      Effective Date:                       The Effective  Date of a Further
                                            Issue Transaction (the Further
                                            Issue Effective Date) shall be the
                                            relevant Increased OPB Date.

      Termination Date:                     The Termination Date of a Further Issue Transaction shall be the
                                            Note Payment Date immediately following the relevant Further Issue
                                            Effective Date (the Further Issue Termination Date).

      Reset Dates:                          The  Reset  Dates  for a Further
                                            Issue Transaction shall be:

                                            (i) in respect of Party A, the Floating Rate Payer I Reset Dates,
                                            except in respect of the first Calculation Period of the Further
                                            Issue Transaction, the Reset Date for which will be the Further
                                            Issue Effective Date and, for the avoidance of doubt, the Floating
                                            Rate I applicable to any Calculation Period following the first
                                            Calculation Period shall be the Floating Rate I for such first
                                            Period; and

                                            (ii) in respect of Party B, the Floating Rate Payer II Reset
                                            Dates, including for the avoidance of doubt the first Calculation
                                            Period of the Further Issue
</TABLE>


                                        6
<PAGE>

<TABLE>
<S>                                         <C>
                                            Transaction.


      Floating Amounts I and II:            The Designated Maturity for a Further Issue Transaction shall be:

                                            (i) in respect of Party A, the period from, and including, the
                                            further Issue Effective Date to, but excluding, the Further Issue
                                            Termination Date. Linear Interpolation shall apply; and

                                            (ii) in respect of Party B, the Floating Rate Payer II Designated
                                            Maturity.
</TABLE>

F.    Miscellaneous
      If the payment of any Floating Amount I is deferred in accordance with
      Part 5(h)(iii) of the Schedule to the Agreement, then the amount so
      deferred (the Floating Amount I Deferred Amount) shall, subject to the
      terms of this Confirmation, be payable on the next Payment Date
      (together with interest thereon (the Floating Amount I Deferred
      Interest) at the Floating Rate Payer I Floating Rate for the relevant
      Calculation Period) and the Floating Amount I due on such Payment Date
      shall be deemed to include the Floating Amount I Deferred Amount and the
      Floating Amount I Deferred Interest.

      If the payment of any Floating Amount II is deferred in accordance with
      Part 5(h)(iii) the Agreement, then the amount so deferred (the Floating
      Amount II Deferred Amount) shall, subject to the terms of this
      Confirmation, be payable on the next Payment Date (together with
      interest thereon (the Floating Amount II Deferred Interest) at the
      Floating Rate Payer II Floating Rate for the relevant Calculation
      Period) and the Floating Amount II due on such Payment Date shall be
      deemed to include the Floating Amount II Deferred Amount and the
      Floating Amount II Deferred Interest.

For the purposes of Section 2(c) of the Agreement, any amounts owing by one
party to another party under a Further Issue Transaction on a Swap Payment
Date, shall be deemed to be amounts payable by such party in respect of the
Swap Transaction on such Payment Date and shall be netted in accordance with
Section 2(c).

It is understood that on each Further Issue Termination Date the calculation
of the aggregate Outstanding Principal Balance of the Loan Tranches relating
to the Relevant Issuer Notes will include any Further Issue Notional Amount in
respect of any Further Issue Transaction which terminated on such date. In
addition, it is also understood that if on any Note Payment Date the
Outstanding Principal Balance of the Loan Tranches relating to the Relevant
Issuer Notes is increased by an amount, the Notional Amount of the Swap
Transaction shall increase by such amount.

Please confirm your agreement to be bound by the terms of the foregoing by
executing a copy of this Confirmation and returning it to us by facsimile.

                                        7

<PAGE>

Yours faithfully


Northern Rock plc

By:


Name:
Title:



Confirmed as of the date first written:

Granite Finance Funding 2 Limited

By:


Name:
Title:

                                        8