Exhibit 2.5

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CONFORMED COPY

Dated 23 July 2004

ROYAL & SUN ALLIANCE
      INSURANCE GROUP PLC 
  ROYAL & SUN ALLIANCE INSURANCE PLCandClTlCORP
TRUSTEE COMPANY LIMITED

TRUST DEED

constituting 
  £450,000,000 
8.5 per cent. Cumulative Step-up Perpetual Subordinated Notes      
guaranteed
on a subordinated basis by ROYAL & SUN ALLIANCE INSURANCE PLC

Linklaters

Ref: KJT/DONR/RAJJ

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TABLE OF CONTENTS



|Contents                                            |  |                                                                              |  | Page
|--------------------------------------------------- |  | ---------------------------------------------------------------------------- |  | ----
|                                                    |  |                                                                              |  |     
|1                                                   |  | Interpretation                                                               |  | 1   
|                                                    |  |                                                                              |  |     
|2                                                   |  | Amount and Status of the Notes and Covenant
    to Pay                       |  | 4   
|                                                    |  |                                                                              |  |     
|3                                                   |  | Form of the Notes                                                            |  | 6   
|                                                    |  |                                                                              |  |     
|4                                                   |  | Stamp Duties and Taxes                                                       |  | 6   
|                                                    |  |                                                                              |  |     
|5                                                   |  | Guarantee and Indemnity                                                      |  | 7   
|                                                    |  |                                                                              |  |     
|6                                                   |  | Application of Moneys Received by the
    Trustee                            |  | 9   
|                                                    |  |                                                                              |  |     
|7                                                   |  | Covenants                                                                    |  | 10  
|                                                    |  |                                                                              |  |     
|8                                                   |  | Remuneration and Indemnification of
    the Trustee                          |  | 12  
|                                                    |  |                                                                              |  |     
|9                                                   |  | Provisions Supplemental to the Trustee
    Act 1925 and the Trustee Act 2000 |  | 13  
|                                                    |  |                                                                              |  |     
|10                                                  |  | Trustee Liable for Negligence                                                |  | 15  
|                                                    |  |                                                                              |  |     
|11                                                  |  | Waiver and Proof of Default                                                  |  | 15  
|                                                    |  |                                                                              |  |     
|12                                                  |  | Trustee not Precluded from Entering
    into Contracts                       |  | 15  
|                                                    |  |                                                                              |  |     
|13                                                  |  | Modification                                                                 |  | 16  
|                                                    |  |                                                                              |  |     
|14                                                  |  | Appointment, Retirement and Removal
    of the Trustee                       |  | 17  
|                                                    |  |                                                                              |  |     
|15                                                  |  | Couponholders                                                                |  | 18  
|                                                    |  |                                                                              |  |     
|16                                                  |  | Currency Indemnity                                                           |  | 18  
|                                                    |  |                                                                              |  |     
|17                                                  |  | Communications                                                               |  | 19  
|                                                    |  |                                                                              |  |     
|18                                                  |  | Further Issues                                                               |  | 19  
|                                                    |  |                                                                              |  |     
|19                                                  |  | Governing Law                                                                |  | 20  
|                                                    |  |                                                                              |  |     
|Schedule 1 Part 1 Form of Definitive
    Note       |  | 21                                                                          
|                                                    |  |                                                                              |  |     
|Schedule 2 Part 1 Form of Temporary
    Global Note |  | 41                                                                          
|                                                    |  |                                                                              |  |     
|Schedule 2 Part 2 Form of permanent
    Global Note |  | 46                                                                          
|                                                    |  |                                                                              |  |     
|                                                    |  |                                                                              |  |     
|                                                    |  |                                                                              |  |     



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|                                                                |  |    |  | 
|--------------------------------------------------------------- |  | -- |  | 
|                                                                |  |    |  | 
|Schedule A Principal Amount of this
    Global Note             |  | 49
|                                                                |  |   
|Schedule B Interest Payments
    in respect of this Global Note |  | 50
|                                                                |  |   
|Schedule 3 Provisions for
    Meetings of Noteholders           |  | 51



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This Trust Deedis made on 23 July 2004 between:

|(1) | ROYAL & SUN ALLIANCE INSURANCE GROUP
PLC(the"lssuer")and                                                                                                                                                                                                                                                                                              
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                       
|(2) | ROYAL & SUN
    ALLIANCE INSURANCE PLC(the "Guarantor") and                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                       
|(3) | ClTlCORP TRUSTEE COMPANY LIMITED (the "Trustee",which
      expression, where the context so admits, includes any other trustee for
    the time being of this Trust Deed).                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                       
|(A) | The Issuer, incorporated in England
      and Wales, has authorised the issue of £450,000,000 8.5 per cent.
      Cumulative Step-up Perpetual Subordinated Notes to be constituted by this
      Trust Deed and the Guarantor, incorporated in England and Wales, has authorised
    the giving of a subordinated guarantee in respect of such Notes.
|    |                                                                                                                                                                                                                                                                                                                                                       
|(B) | The Trustee has agreed to act as
    trustee of this Trust Deed on the following terms and conditions.                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                       

This Deed witnesses and it is declaredas follows:

|1 | Interpretation
|- | --------------

|    |                                                                   
|--- | ------------------------------------------------------------------
|1.1 | Definitions:The following expressions have the following meanings:

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | "Agency Agreement" means
    the agreement referred to as such in the Conditions, as altered from time
    to time, and includes any other agreements approved in writing by the Trustee
    appointing Successor Paying Agents or altering any such agreements "Authorised
    Signatory" means any person who (i) is a Director or the Secretary of the lssuer or the Guarantor (as the case may be) or (ii) has been notified by the lssuer or the Guarantor (as the case may be) in writing to the Trustee as being duly authorised to sign documents and to do other acts and things on behalf of the lssuer or the Guarantor (as the case may be) for the purposes of this Trust Deed and the Notes

| |                                                                         
| | ------------------------------------------------------------------------
| | "Clearstream, Luxembourg" means
    Clearstream Banking, société anonyme

| |                                                                                                                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | "Conditions" means the terms and conditions set out in Schedule 1 as from time to time modified in accordance with this Trust Deed and, with respect to any Notes represented by a Global Note, as modified by the provisions of such Global Note. Any reference to a particularly numbered Condition shall be construed accordingly

| |                                            
| | -------------------------------------------
| | "Couponholder" means the bearer of a Coupon

| |                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | "Coupon" means the bearer coupons relating to the Notes or, as the context may require, a specific number of them and includes any replacement Coupons issued pursuant to the Conditions

| |                                                                  
| | -----------------------------------------------------------------
| | "Deferred Interest" has the meaning given to it in Condition 4(c)

| |                                                                                
| | -------------------------------------------------------------------------------
| | "Euroclear" means Euroclear Bank S.A./N.V., as operator of the Euroclear System

| |                                                                                       
| | --------------------------------------------------------------------------------------
| | "Event of Default" means a Note Default and/or any default as described in Condition 8

| |                                                                 
| | ----------------------------------------------------------------
| | "Extraordinary Resolution" has the meaning set out in Schedule 3

| |                                                                               
| | ------------------------------------------------------------------------------
| | "FSMA" means the Financial Services and Markets Act 2000 of the United Kingdom

| |                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | "Further Notes" means
    any Notes of the lssuer constituted by a deed supplemental to this Trust
    Deed pursuant to Clause 18 and for the time being outstanding or, as the
    contract may require, a specific number thereof and includes any replacements
    for further Notes issued pursuant to Condition 13



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| | 
| | 

| | "Global Note" means the permanent global note which will represent the Notes, or some of them, after exchange of each Temporary Global Note, or a portion of it, substantially in the form set out in Part 2 of Schedule 2
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                                                                                     
| | ----------------------------------------------------------------------------------------------------
| | "Guarantee" means the guarantee (on a subordinated basis) and indemnity of the Guarantor in Clause 5

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | "Notes" means bearer notes substantially in the form set out in Part 1 of Schedule 1 comprising the £450,000,000 8.5 per cent. Cumulative Step-up Perpetual Subordinated Notes constituted by this Trust Deed and for the time being outstanding or, as the context may require, a specific number of them and includes any replacement Notes issued pursuant to the Conditions and (except for the purposes of Clause 3.1) the Temporary Global Note and the Global Note

| |                                        
| | ---------------------------------------
| | "Noteholder" means the bearer of a Note

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | "outstanding" means, in relation to the Notes, all the relevant Notes issued except (a) those which have been redeemed in accordance with the Conditions, (b) those in respect of which the date for redemption has occurred and the redemption moneys (including all interest accrued on such Notes to the date for such redemption and any interest payable under the Conditions after such date) have been duly paid to the Trustee or to the Principal Paying Agent as provided in Clause 2 and remain available for payment against presentation and surrender of Notes and/or Coupons, as the case may be, (c) those which have become void, (d) those which have been purchased and cancelled as provided in the Conditions, (e) those mutilated or defaced
Notes which have been surrendered in exchange for replacement Notes, (f) (for the purpose only of determining how many Notes are outstanding and without prejudice to their status for any other purpose) those Notes alleged to have been lost, stolen or destroyed and in respect of which replacement Notes have been issued, and (g) the Temporary Global Note to the extent that it shall have been exchanged for the Global Note pursuant to its provisions and the Global Note to the extent that it shall have been exchanged for definitive Notes pursuant to its provisions; provided that for the purposes of (1) ascertaining the right to attend and vote at any meeting of the Noteholders, (2) the determination of how many Notes are outstanding for the purposes of Conditions 8, 11 and 13 and Schedule 3 and
(3) the exercise of any discretion, power or authority which the Trustee is required, expressly or impliedly, to exercise in or by reference to the interests of the Noteholders, those Notes which are beneficially held by or on behalf of the Issuer, the Guarantor or any of their Subsidiaries and not cancelled shall (unless no longer so held) be deemed not to remain outstanding

| |                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | "Paying Agents" means the financial institutions (including the Principal Paying Agent) referred to as such in the Conditions or any Successor Paying Agents in each case at their respective specified offices

| |                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | "Potential Event of
    Default" means an event or circumstance which could with the giving of notice, lapse of time and/or issue of a certificate become an Event of Default

| |                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------
| | "Principal Paying Agent" means the financial institution named as such in the Conditions or any Successor Principal Paying Agent

| |                                                               
| | --------------------------------------------------------------
| | "Senior Creditors" has the meaning given to it in Condition 20

| |                                                                   
| | ------------------------------------------------------------------
| | "Solvency Condition" has the meaning given to it in Condition 2(c)



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| |                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | "specified office" means, in relation to a Paying Agent, the office identified with its name at the end of the Conditions or any other office approved by the Trustee and notified to Noteholders pursuant to Clause 7.10

| |                                                                                                        
| | -------------------------------------------------------------------------------------------------------
| | "Subsidiary" means a subsidiary undertaking within the meaning of Section 258 of the Companies Act 1985

| |                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | "Successor" means, in relation to the Paying Agents, such other or further person as may from time to time be appointed by the lssuer and the Guarantor as a Paying Agent with the written approval of, and on terms approved in writing by, the Trustee (each such approval not to be unreasonably withheld or delayed) and notice of whose appointment is given to Noteholders pursuant to Clause 7.10

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | "successor in
      business" means (a) an entity which acquires all or substantially
      all of the undertaking and/or assets of the lssuer or, as the case may
      be, the Guarantor or of a successor in business of the lssuer or, as the
      case may be, the Guarantor or (b) an entity into which the lssuer or, as
      the case may be, the Guarantor or a successor in business of the lssuer
      or, as the case may be, the Guarantor is amalgamated, merged or reconstructed
      in circumstances where the lssuer or, as the case may be, the Guarantor
      or such successor in business is itself not the continuing company

| |                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | "Talons" means the Talons relating to the Notes and exchangeable for further Coupons relating to the Notes and includes any replacement Talons issued pursuant to the Conditions

| |                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| | "Temporary Global Note" means the temporary global note which will represent the Notes on issue substantially in the form set out in Part 1 of Schedule 2

| |                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | "this Trust Deed" means this Trust Deed (as from time to time altered in accordance with this Trust Deed) and any other document executed in accordance with this Trust Deed (as from time to time so altered) and expressed to be supplemental to this Trust Deed

| |                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | "trust corporation" means
    a trust corporation (as defined in the Law of Property Act 1925) or a corporation
    entitled to act as a trustee pursuant to applicable foreign legislation relating
    to trustees

| | 
| | 

|1.2 | Construction of Certain References:References to:
|--- | -------------------------------------------------

| |       |                                                                                                                     
| | ----- | --------------------------------------------------------------------------------------------------------------------
| | 1.2.1 | costs, charges, remuneration or expenses include any value added, turnover or similar tax charged in respect thereof

| |       |                                                                                                                       
| | ----- | ----------------------------------------------------------------------------------------------------------------------
| | 1.2.2 | "£", "pounds","sterling","pence","penny",and "p" mean
the lawful currency for the time being of the United Kingdom and

| |       |                                                                                                                                                                                                                                                      
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1.2.3 | an action, remedy or method of judicial proceedings for the enforcement of creditors' rights include references to the action, remedy or method of judicial proceedings in jurisdictions other than England as shall most nearly approximate thereto.

|    |                                                                  
|--- | -----------------------------------------------------------------
|1.3 | Headings:Headings shall be ignored in construing this Trust Deed.

|    |                                                                                 
|--- | --------------------------------------------------------------------------------
|1.4 | Schedules:The Schedules are part of this Trust Deed and have effect accordingly.

|    |                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------
|1.5 | Definitions in the Conditions:Terms defined in the Conditions have the same meanings when used herein unless otherwise defined herein.



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|    |       |                                                                                             
|--- | ----- | --------------------------------------------------------------------------------------------
|1.6 |       |                                                                                             
|    | 1.6.1 | Words denoting the singular number only shall include the plural number also and vice versa.

| |       |                                                               
| | ----- | --------------------------------------------------------------
| | 1.6.2 | Words denoting one gender only shall include
the other gender.

| |       |                                                                                 
| | ----- | --------------------------------------------------------------------------------
| | 1.6.3 | Words denoting persons only shall include firms and corporations and vice versa.

| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1.6.4 | All references in this Trust Deed to principal, and/or interest in respect of the Notes or to any moneys payable by the lssuer and/or the Guarantor under this Trust Deed or under the Notes shall be deemed to include a reference to any additional amounts which may be payable under Condition 9 and references in the Trust Deed to interest in respect of the Notes shall, where the context requires, include Deferred Interest.

| |       |                                                                                                                                                                                                                                                                                             
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1.6.5 | All references in this Trust Deed to any provision of any statute shall (unless otherwise stated) be deemed also to refer to any statutory modification or re-enactment thereof or any statutory instrument, order or regulation made thereunder or under such modification or re-enactment.

| |       |                                                                                                                                                                                                   
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1.6.6 | Unless otherwise expressly stated or the context otherwise requires, words or expressions contained in this Trust Deed shall bear the same meanings as in the Companies Act 1985 of Great Britain.

|    |                                                                                                                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.7 | Contracts (Rights of Third Parties) Act 1999:A person who is not a party to this Trust Deed has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Trust Deed except and to the extent (if any) that this Trust Deed expressly provides for such Act to apply to any of its terms.

|    |                                                                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.8 | Clearing Systems:Any reference herein to Euroclear and/or Clearstream, Luxembourg shall, wherever the context so permits, be deemed to include a reference to any additional or alternate clearing system approved by the Trustee.

|  |                                                   
|- | --------------------------------------------------
|2 | Amount and Status of the Notes and Covenant to Pay

|    |                                                                                            
|--- | -------------------------------------------------------------------------------------------
|2.1 | Amount of the Notes:The aggregate principal
amount of the Notes is limited to £450,000,000.

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|2.2 | Covenant to pay:The lssuer will (subject
  to the Conditions and Clause 2.3) on any date when any Notes become due to
  be redeemed unconditionally pay to or to the order of the Trustee in sterling
  in London in same day funds the principal amount of the Notes becoming due
  for redemption on that date and will (subject to the Conditions and Clause
  2.3) until such payment (both before and after judgment) unconditionally so
  pay to or to the order of the Trustee interest on the principal amount of the
  Notes outstanding as set out in the Conditions (subject to Clause 2.6) provided
  that (1) payment of any sum due in respect of the Notes made to the Principal
  Paying Agent as provided in the Agency Agreement shall, to that extent, satisfy
  such obligation except to the extent that there is failure in its subsequent
  payment to the relevant Noteholders or Couponholders under the Conditions and
  (2) a payment made after the due date or following an Event of Default will
  be deemed to have been made when the full amount due has been received by the
  Principal Paying Agent or the Trustee and notice to that effect has been given
  to the Noteholders (if required under Clause
7.8),except to the extent that there is failure in its subsequent payment to the relevant Noteholders or Couponholders under the Conditions. The Trustee will hold the benefit of this covenant on trust for the Noteholders and Couponholders.



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|    |                                                                              
|--- | -----------------------------------------------------------------------------
|2.3 | Subordination:Notwithstanding the covenant of the lssuer given in Clause 2.2:

| |       |                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2.3.1 | in the event of the winding-up of the lssuer the claims of the Trustee (save as hereinafter provided), the Noteholders and the Couponholders will rank subordinate to the claims of the Senior Creditors of the lssuer and no payment shall be made in respect thereof under this Trust Deed, the Notes and/or the Coupons unless the claims of the Senior Creditors have been satisfied in full prior to such payment and

| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2.3.2 | except in a winding-up of the Issuer, or if the FSA has indicated that it has no objection to such payment, all payments by the lssuer in respect of the claims of the Trustee (save as herein provided), the Noteholders and the Couponholders under this Trust Deed, the Notes and/or the Coupons are conditional upon the lssuer satisfying the Solvency Condition both at the time of and immediately after any such payment and, accordingly, the lssuer will not make any payment in respect thereof under this Trust Deed, the Notes and/or the Coupons and any such payment shall not be so payable if the Solvency Condition is not satisfied.

| |                                                                                                                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | This subordination of the claims of the Trustee, the Noteholders and the Couponholders shall not affect any liability of the lssuer to the Trustee in its personal capacity (in relation to sums due to it or claimed by it under Clause 8) and in such capacity the Trustee shall rank as a Senior Creditor of the Issuer.

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.4 | Payments upon winding-up of Issuer:On the winding up in England and Wales of the lssuer (except, in any such case, a solvent winding-up solely for the purpose of a reconstruction or amalgamation or substitution in place of the lssuer of a successor in business of the Issuer, the terms of which reconstruction, amalgamation or substitution have previously been approved in writing by the Trustee or by an Extraordinary Resolution), there shall be payable by the lssuer in respect of each of the Notes (in lieu of any other payment by the Issuer) the Winding-up Amount. The Winding-up Amount shall be an amount equal to the principal amount of such Note together with Deferred Interest if any, and any accrued interest (other than Deferred Interest), except to
the extent that the Issuer's Assets are less than its Liabilities to Senior Creditors, in respect of the Notes and in respect of Parity Securities. To the extent that the Issuer's Assets are less than such liabilities, the Winding-up Amount shall be reduced accordingly pro ratawith the amounts payable in respect of any Parity Securities.

|    |                                                                                                                                                                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.5 | Discharge:Subject to Clause 2.6, any payment to be made in respect of the Notes or the Coupons (including Deferred Interest) by the Issuer, the Guarantor or the Trustee may be made as provided in the Conditions and any payment so made will (subject to Clause 2.6) to that extent be a good discharge to the Issuer, the Guarantor or the Trustee, as the case may be.

|    |                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------
|2.6 | Payment after a Default:At any time after an Event of Default or a Potential Event of Default has occurred the Trustee may:

| |       |                                                                                                                                                                                          
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2.6.1 | by notice in writing to the Issuer, the Guarantor and the Paying Agents, require the Paying Agents, until notified by the Trustee to the contrary, so far as permitted by applicable law:

| |  |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | (i) | to act as Paying Agents of the Trustee under
this Trust Deed and the Notes on the terms of the Agency Agreement (with consequential
amendments as necessary and except that the Trustee's liability for the indemnification,
remuneration and expenses of the Paying Agents will be limited to the amounts
for the time being held by the Trustee in respect of the Notes on the terms of
this Trust Deed) and thereafter to hold all Notes and Coupons and all moneys,
documents and records held by them in respect of Notes and Coupons to the order
of the
Trustee or



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| |  |  | 
| |  |  | 

| |  | (ii) | to deliver all Notes, Coupons and Talons and all moneys, documents and records held by them in respect of the Notes, Coupons and Talons to the Trustee or as the Trustee directs in such notice and
| |  | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |       |                                                                                                                                                                                                               
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2.6.2 | by notice in writing to the lssuer and the Guarantor require them to make all subsequent payments in respect of the Notes and Coupons to or to the order of the Trustee and not to the Principal Paying Agent.

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.7 | Rate of Interest after a Default:If the Notes become immediately due and payable under the Conditions after the Reset Date, the Reset Coupon Rate payable in respect of them will continue to be calculated by the Principal Paying Agent in accordance with the Conditions (with consequential amendments as necessary) except that the Reset Coupon Rate need not be published unless the Trustee otherwise requires. The first Coupon Calculation Period in respect of which the Reset Coupon Rate shall be so calculable will commence on the expiry of the Coupon Calculation Period during which the Notes become so repayable.

|  |                  
|- | -----------------
|3 | Form of the Notes

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1 | The Global Note:The Notes will initially be represented by a Temporary Global Note in the principal amount of £450,000,000. The Temporary Global Note will be delivered to and registered in the name of a common depositary for Euroclear and Clearstream, Luxembourg or its nominee. Interests in the Temporary Global Note will be exchangeable for interests in the Global Note as set out in the Temporary Global Note. The Global Note will be exchangeable for definitive Notes as set out in the Global Note.

|    |                                                                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.2 | The Definitive Notes:The definitive Notes, the Coupons and the Talons will be security printed in accordance with applicable legal and stock exchange requirements substantially in the forms set out in Schedule 1. The Notes will be endorsed with the Conditions.

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.3 | Signature:The Notes and the Coupons will be signed manually or in facsimile by an Authorised Signatory of the lssuer and the Notes will be authenticated by or on behalf of the Principal Paying Agent. The lssuer may use the facsimile signature of a person who at the date of this Trust Deed is such an Authorised Signatory even if at the time of issue of any Notes or Coupons he may have ceased for any reason to be an Authorised Signatory. Notes and Coupons so executed and, in the case of the Notes, authenticated will be binding and valid obligations of the Issuer.

|  |                       
|- | ----------------------
|4 | Stamp Duties and Taxes

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.1 | Stamp Duties:The lssuer (failing whom, the Guarantor) will pay any stamp, issue, documentary or other taxes and duties, including interest and penalties, payable in Belgium, Luxembourg or the United Kingdom in respect of the creation, issue and offering of the Notes and the Coupons and the execution or delivery of this Trust Deed. The lssuer (failing whom, the Guarantor) will also indemnify the Trustee, the Noteholders and the Couponholders from and against all stamp, issue, documentary or other taxes paid by any of them in any jurisdiction in connection with any action taken by or on behalf of the Trustee or, as the case may be, the Noteholders or the Couponholders to enforce the issuer's or the Guarantor's obligations under this Trust Deed, the Notes
or the Coupons.



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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.2 | Change of Taxing Jurisdiction:If the lssuer or the Guarantor becomes subject generally to the taxing jurisdiction of a territory or a taxing authority of or in that territory with power to tax other than or in addition to the United Kingdom or any such authority of or in such territory then the lssuer or, as the case may be, the Guarantor will (unless the Trustee otherwise agrees) give the Trustee an undertaking satisfactory to the Trustee in terms corresponding to the terms of Condition 9 with the substitution for, or (as the case may require) the addition to, the references in that Condition to the United Kingdom of references to that other or additional territory or authority to whose taxing jurisdiction the lssuer or the Guarantor has become so
subject. In such event this Trust Deed, the Notes and the Coupons will be read accordingly.

|  |                        
|- | -----------------------
|5 | Guarantee and Indemnity

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|5.1 | Guarantee:Subject to the provisions
of Condition 2(b) and Clause 5.2 hereof, the Guarantor irrevocably guarantees
that if the lssuer does not pay any sum payable by it under this Trust Deed,
the Notes or the Coupons by the time and on the date specified herein or in the
Conditions for such payment (whether on the normal due date, on a Resumption
Date or otherwise), the Guarantor will pay that sum to or to the order of the
Trustee, in the manner provided in Clause 2.2 (or if in respect of sums due under
Clause 8, in London in pounds sterling in immediately available funds) before
close of business on that date in the city to which payment is so to be made
pursuant to Clause 2.2. Clause 2.2.(1) and 2.2.(2)will apply (with consequential amendments
as necessary) to such payments other than those in respect of sums due under Clause 8. All payments under the Guarantee by the Guarantor will be made subject to Condition 9 of the Notes and Clause 4.2.

|    |                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------
|5.2 | Subordination:Notwithstanding the guarantee of the Guarantor given in Clause 5.1 and its indemnity given in Clause 5.9:

| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5.2.1 | in the event of the winding-up of the Guarantor the claims of the Trustee (save as hereinafter provided), the Noteholders and the Couponholders will rank subordinate to the claims of the Senior Creditors of the Guarantor and no payment in respect thereof shall be made under this Trust Deed, the Notes and/or the Coupons unless the claims of the Senior Creditors of the Guarantor have been satisfied in full prior to such payment and

| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5.2.2 | except in a winding-up of the Guarantor, or
if the FSA has indicated that it has no objection to such payment, all payments
by the Guarantor in accordance with Clause 5.1 (save as herein provided) are
conditional upon the Guarantor satisfying the Solvency Condition both at the
time of and immediately after any such payment and, accordingly, the Guarantor
will not make any payment in respect thereof under this Trust Deed, the Notes
and/or the Coupons and any such payment shall not be so payable if the Solvency
Condition is not satisfied.

| |  | 
| |  | 

| | This subordination of the claims of the Trustee, the Noteholders and the Couponholders shall not affect any liability of the Guarantor to the Trustee in its personal capacity (in relation to sums due to it or claimed by it under Clause 8) and in such capacity the Trustee shall rank as a Senior Creditor of the Guarantor.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|5.3 | Payments upon winding up of the Guarantor:On
the winding up in England and Wales of the Guarantor (except, in any such case,
a solvent winding-up solely for the purpose of a reconstruction or amalgamation
or substitution in place of the Guarantor of a successor in business of the Guarantor,
the terms of which reconstruction, amalgamation or substitution have previously
been approved in writing by the Trustee or by an Extraordinary Resolution), there
shall be payable by the Guarantor in respect of each of the Notes (in lieu of
any other payment by the Guarantor) the Winding-up Amount. The Winding-up Amount
shall be an amount equal to the principal amount of such Note together with Deferred
Interest if any, and any accrued interest (other than Deferred Interest), except
to the extent that the Guarantor's Assets are less than its Liabilities to Senior
Creditors, under the Guarantee and in respect of Parity Securities. To the extent
that the Guarantor's Assets are less than such liabilities, the Winding-up Amount
shall be reduced accordingly pro ratawith the amounts payable in respect
of any Parity Securities.



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| | 
| | 

|5.4 | Guarantor as Principal Debtor:As between
the Guarantor and the Trustee, the Noteholders and the Couponholders but without
affecting the Issuer's obligations, subject to the provisions of Condition 2(b)the Guarantor will be liable under this Clause as if it were the sole principal debtor and not merely a surety. Accordingly, it will not be discharged, nor will its liability be affected, by anything which would not discharge it or affect its liability if it were the sole principal debtor (including (1) any time, indulgence, waiver or consent at any time given to the lssuer or any other person, (2) any amendment to any other provisions of this Trust Deed or to the Conditions or to any security or other guarantee or indemnity, (3) the making or
absence of any demand on the lssuer or any other person for payment, (4) the enforcement or absence of enforcement of this Trust Deed, the Notes or the Coupons or of any security or other guarantee or indemnity, (5) the taking, existence or release of any security, guarantee or indemnity, (6) the dissolution, amalgamation, reconstruction or reorganisation of the lssuer or any other person or (7) the illegality, invalidity or unenforceability of or any defect in any provision of this Trust Deed, the Notes or the Coupons or any of the Issuer's obligations under any of them).
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|5.5 | Guarantor's Obligations Continuing:The Guarantor's obligations under this Trust Deed are and will remain in full force and effect by way of continuing security until no sum remains payable under this Trust Deed, the Notes or the Coupons. Furthermore, those obligations of the Guarantor are additional to, and not instead of, any security or other guarantee or indemnity at any time existing in favour of any person, whether from the Guarantor or otherwise and may be enforced without first having recourse to the Issuer, any other person, any security or any other guarantee or indemnity. The Guarantor irrevocably waives all notices and demands of any kind.

|    |                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------
|5.6 | Exercise of Guarantor's Rights:So long as any sum remains payable under this Trust Deed, the Notes or the Coupons:

| |       |                                                                                                                                                                                                                                                                                                                                                           
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5.6.1 | any right of the Guarantor, by reason of the performance of any of its obligations under this Clause, to be indemnified by the lssuer or to take the benefit of or to enforce any security or other guarantee or indemnity will be exercised and enforced by the Guarantor only in such manner and on such terms as the Trustee may require or approve and

| |       |                                                                                                                                                                                                                                                                                                                                        
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5.6.2 | any amount received or recovered by the Guarantor (a) as a result of any exercise of any such right or (b) in the dissolution, amalgamation, reconstruction or reorganisation of the lssuer will be held in trust for the Trustee and immediately paid to the Trustee and the Trustee will hold it on the trusts set out in Clause 6.1.

|    |                                                                                                                                                                                                                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|5.7 | Suspense Accounts:Any amount received
or recovered by the Trustee (otherwise than as a result of a payment by the lssuer
to the Trustee in accordance with Clause 2) in respect of any sum payable by
the lssuer under this Trust Deed, the Notes or the Coupons may beplaced ina
suspense account and kept there for so long as the Trustee thinks fit.



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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|5.8 | Avoidance of Payments:Subject to Clause 5.2, the Guarantor shall on demand indemnify the Trustee, each Noteholder and each Couponholder against any cost, loss, expense or liability sustained or incurred by it as a result of it being required for any reason (including any bankruptcy, insolvency, winding-up, dissolution, or similar law of any jurisdiction) to refund all or part of any amount received or recovered by it in respect of any sum payable by the lssuer under this Trust Deed, any Note or the Coupons relating to that Note and shall in any event pay to it on demand the amount as refunded by it.

|    |                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|5.9 | Debts of Issuer:If any moneys become payable by the Guarantor under this Guarantee, the lssuer will not (except in the event of the liquidation of the Issuer) so long as any such moneys remain unpaid, pay any moneys for the time being due from the lssuer to the Guarantor.

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|5.10 | Indemnity:As separate, independent and alternative stipulations, the Guarantor unconditionally and irrevocably agrees (1) that any sum which, although expressed to be payable by the lssuer under this Trust Deed, the Notes or the Coupons, is for any reason (whether or not now existing and whether or not now known or becoming known to the Issuer, the Guarantor, the Trustee or any Noteholder or Couponholder) not recoverable from the Guarantor on the basis of a guarantee will nevertheless be recoverable from it as if it were the sole principal debtor and, subject to Clause 5.2, will be paid by it to the Trustee on demand and (2), subject to Clause 5.2, as a primary obligation to indemnify the Trustee, each Noteholder and each
Couponholder against any loss (which, for the avoidance of doubt, does not include any consequential loss) suffered by it as a result of any sum expressed to be payable by the lssuer under this Trust Deed, the Notes or the Coupons not being paid on the date and otherwise in the manner specified in this Trust Deed or in the Conditions or any payment obligation of the lssuer under this Trust Deed, the Notes or the Coupons being or becoming void, voidable or unenforceable for any reason (whether or not now existing and whether or not now known or becoming known to the Trustee, any Noteholder or any Couponholder), the amount of that loss being the amount expressed to be payable by the lssuer in respect of the relevant sum.

|  |                                              
|- | ---------------------------------------------
|6 | Application of Moneys Received by the Trustee

|    |                                                                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|6.1 | Declaration of Trust:All moneys received by the Trustee in respect of the Notes or amounts payable under this Trust Deed will, despite any appropriation of all or part of them by the lssuer or the Guarantor, be held by the Trustee on trust to apply them (subject to Clause 5.6 and Clause 6.2):

| |       |                                                                                                                                                                                              
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6.1.1 | first, in payment of all costs, charges, expenses and liabilities properly incurred by the Trustee (including remuneration payable to it) in carrying out its functions under this Trust Deed

| |       |                                                                                                        
| | ----- | -------------------------------------------------------------------------------------------------------
| | 6.1.2 | secondly, in payment of any amounts owing in respect of the Notes or Coupons pari
passuand rateably and

| |       |                                                                                                                                                                
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6.1.3 | thirdly, in payment of any balance to the lssuer for itself or, if any moneys were received from the Guarantor and to the extent of such moneys, the Guarantor.

| |                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------
| | If the Trustee holds any moneys in respect of Notes or Coupons which have become void, the Trustee will hold them on these trusts.

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|6.2 | Accumulation:If the amount of the moneys
at any time available for payment in respect of the Notes under Clause 6.1 is
less than 10 per cent. of the principal amount of the Notes then outstanding,
the Trustee may, at its discretion, invest such moneys. The Trustee may retain
such investments and accumulate the resulting income until the investments and
the accumulations, together with any other funds for the time being under its
control and available for such payment, amount to at least 10 per cent. of the
principal amount of the Notes then outstanding and then such investments, accumulations
and funds (after deduction of, or provision for, any applicable taxes) will be
applied as specified in Clause 6.1.



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- 9 -


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| | 
| | 

|6.3 | Investment:Moneys held by the Trustee may be invested in its name or under its control in any investments or other assets anywhere whether or not they produce income or deposited in its name or under its control at such bank or other financial institution in such currency as the Trustee may, in its absolute discretion, think fit. If that bank or institution is the Trustee or a subsidiary, holding or associated company of the Trustee, it need only account for an amount of interest equal to the largest amount of interest payable by it on such a deposit to an independent customer. The Trustee may at any time vary or transpose any such investments or assets or convert any moneys so deposited into any other currency, and will not be responsible for any
resulting loss, whether by depreciation in value, change in exchange rates or otherwise.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|  |          
|- | ---------
|7 | Covenants

| |                                                                            
| | ---------------------------------------------------------------------------
| | So long as any Note is outstanding, the lssuer and the Guarantor will each:

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|7.1 | Books of Account:keep, and procure that each of their respective Subsidiaries keeps, proper books of account and, at any time after an Event of Default or Potential Event of Default has occurred or if the Trustee reasonably believes that such an event has occurred, so far as permitted by applicable law, allow, and procure that each such Subsidiary will allow, the Trustee and anyone appointed by it to whom the Issuer, the Guarantor and/or the relevant Subsidiary has no reasonable objection, access to its books of account at all reasonable times during normal business hours

|    |                                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------
|7.2 | Notice of Events of Default:notify the Trustee in writing promptly on becoming aware of the occurrence of any Event of Default or Potential Event of Default

|    |                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|7.3 | Information:so far as permitted by applicable law, give the Trustee such information as it reasonably requires to perform its functions under this Trust Deed

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|7.4 | Financial Statements etc.:send to the Trustee as soon as practicable following their issue and in the case of annual financial statements in any event within 180 days of the end of each financial year three copies in English of every balance sheet, profit and loss account, report or other notice, statement or circular issued, or which legally or contractually should be issued, to the members or creditors (or any class of them) of the lssuer or the Guarantor generally in their capacity as such

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|7.5 | Certificate of Authorised Signatories:send
to the Trustee, within 14 days of each anniversary of this Trust Deed, and also
within 14 days of any request by the Trustee a certificate of the lssuer or,
as the case may be, the Guarantor signed by any two of its Authorised Signatories
that, having made all reasonable enquiries, to the best of the knowledge, information
and belief of the lssuer or, as the case may be, the Guarantor as at a date (the "Certification
Date")not more than five days before the date of the certificate no Event of Default or Potential Event of Default or other breach of this Trust Deed had occurred since the Certification Date of the last such certificate or (if none) the date of this Trust Deed or, if such an
event had occurred, giving details of it



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|7.6  | Notices to Noteholders:send
        to the Trustee at least 48 hours prior to publication the form of each
        notice to be given to Noteholders and, once given, two copies of each
        such notice, such notice to be in a form approved by the Trustee (such
        approval not to be unreasonably withheld or delayed and, unless so expressed,
        not to constitute approval for the purposes of Section 21 of the FSMA
    of any such notice which is an investment advertisement (as defined therein))                                                                                                                                            
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|7.7  | Further Acts:so far as permitted
        by applicable law, do such further things as may be necessary in the
    opinion of the Trustee to give effect to this Trust Deed                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|7.8  | Notice of late payment:promptly
        upon request by the Trustee give notice to the Noteholders of any unconditional
        payment to the Principal Paying Agent or the Trustee of any sum due in
    respect of the Notes or Coupons made after the due date for such payment                                                                                                                                                                                                                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|7.9  | Listing:use all reasonable endeavours
        to obtain and maintain the listing of the Notes on the official list
        of the Financial Services Authority ("FSA")in
        its capacity as competent authority under the FSA and the trading of
        the Notes on
        the London Stock Exchange's market for listed securities but, if it is
        unable to do so, having used such endeavours, or if the maintenance of
        such listing is agreed by the Trustee to be unduly onerous, instead use
        all reasonable endeavours to obtain and maintain a listing of the Notes
    on another stock exchange approved in writing by the Trustee
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|7.10 | Change in Agents:give at least
        14 days' prior notice to the Noteholders of any future appointment, resignation
        or removal of a Paying Agent or of any change by a Paying Agent of its
        specified office and not make any such appointment or removal without
        the Trustee's written approval (such approval not to be unreasonably
    withheld or delayed)                                                                                                                                                                                                                                                                                
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|7.11 | Notes held by Issuer:Send to
        the Trustee as soon as practicable after being so requested by the Trustee
        a certificate of the lssuer or, as the case may be, the Guarantor signed
    by any two of its Authorised Signatories stating the number of Notes:                                                                                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

| | 7.11.1 | purchased up to and including the date of such certificate by or on behalf of the lssuer or, as the case may be, the Guarantor and cancelled and                                  
| | ------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |        |                                                                                                                                                                                   
| | 7.11.2 | held at the date of such certificate by any person (including but not limited to the lssuer or the Guarantor) for the benefit of the lssuer or, as the case may be, the Guarantor.

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|7.12 | FSA confirmation:where confirmation
        from the FSA that it has no objection to the making of any payment or
        the taking of any other action under this Trust Deed is required to be
        obtained before such payment is made or such other action is taken, use
        all reasonable endeavours to obtain such confirmation promptly before
        making such payment or taking such action and to the extent the FSA furnish
        such confirmation in writing, promptly provide a copy to the Trustee
    upon it being provided to the Issuer.                                                                                                                                                                                                                                  
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|7.13 | Certificate as to obligation to pay
          Deferred lnterest under Condition 3(b):If, whilst any Deferred
          lnterest is outstanding under the Notes, the lssuer or the Guarantor
          effects any redemption, purchase or other acquisition of Public Market
          Junior Securities or Public Market Parity Securities, send to the Trustee,
          within 5 days of making such redemption, purchase or acquisition, a
          certificate signed by two Authorised Signatories of the lssuer or the
          Guarantor (as the case may be) as to whether such redemption, purchase
          or other acquisition falls within the exception set out in Condition
          3(b), and therefore, as to whether the obligation to pay Deferred lnterest
    has arisen or not.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|7.14 | Notice of Resumption Date under Condition
          3(b):The lssuer shall send to the Trustee within 10 days following the occurrence of a Resumption Date pursuant to Condition 3(b) notice that
          such a Resumption Date has occurred and shall at the same time ensure
    that the Noteholders are notified in accordance with Condition 14.                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

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| | 
| | 

|7.15 | Notice of failure to satisfy the Solvency Condition:The lssuer or the Guarantor, as the case may be, shall send to the Trustee within 10 days following the failure of the lssuer or the Guarantor, as the case may be, to make payments under the Notes or the Guarantee a report in the terms set out in Condition 2(c) as to the lssuer or the Guarantor, as the case may be, having failed to satisfy the Solvency Condition.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|  |                                                
|- | -----------------------------------------------
|8 | Remuneration and Indemnification of the Trustee

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|8.1 | Normal Remuneration:So long as any Note is outstanding the lssuer (failing whom, the Guarantor) will pay the Trustee as remuneration for its services as Trustee such sum on such dates in each case as they may from time to time agree. Such remuneration will accrue from day to day from the date of this Trust Deed. However, if any payment to a Noteholder or Couponholder of moneys due in respect of any Note or Coupon is improperly withheld or refused, such remuneration will again accrue as from the date of such withholding or refusal until payment to such Noteholder or Couponholder is duly made.

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|8.2 | Extra Remuneration:If an Event of Default or Potential Event of Default shall have occurred or if the Trustee finds it expedient or necessary or is requested by the lssuer or the Guarantor to undertake duties which they both agree to be of an exceptional nature or otherwise outside the scope of the Trustee's normal duties under this Trust Deed, the lssuer (failing whom the Guarantor) will pay such additional remuneration as they may agree or, failing agreement as to any of the matters in this sub-clause (or as to such sums referred to in Clause 8.1), as determined by an investment bank (acting as an expert) selected by the Trustee and approved by the lssuer or, failing such approval, nominated by the President for the time being of The Law Society of
England and Wales. The expenses involved in such nomination and such investment bank's fee will be borne by the Issuer. The determination of such investment bank will be conclusive and binding on the Issuer, the Guarantor, the Trustee, the Noteholders and the Couponholders.

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|8.3 | Expenses:The Issuer, failing whom the Guarantor will also on demand by the Trustee pay or discharge all costs, charges, liabilities and expenses properly incurred by the Trustee in the preparation and execution of this Trust Deed and the performance of its functions under this Trust Deed including, but not limited to, legal and travelling expenses and any stamp, documentary or other taxes or duties paid by the Trustee in connection with any legal proceedings reasonably brought or contemplated by the Trustee against the lssuer or the Guarantor to enforce any provision of this Trust Deed, the Notes or the Coupons. Such costs, charges, liabilities and expenses will:

| |       |                                                                                                                                                                                                                                                           
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 8.3.1 | in the case of payments made by the Trustee before such demand carry interest from the date of the demand at the rate of 2 per cent. per annum over the base rate of National Westminster Bank PLC on the date on which the Trustee made such payments and

| |       |                                                                                                                                                                                                                                                                      
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 8.3.2 | in other cases carry interest at such rate from the 30th day after the date of the demand or (where the demand specifies that payment is to be made on an earlier date) from such earlier date (not being earlier than the eighth day after the date of such demand).

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|8.4 | The Issuer, failing whom, the Guarantor will
on demand by the Trustee indemnify it in respect of Amounts or Claims paid or
incurred by it in acting as trustee under this Trust Deed (including (1) any
Agent/Delegate Liabilities and (2) in respect of disputing or defending any Amounts
or Claims made against the Trustee or any Agent/Delegate Liabilities). The Issuer,
failing whom, the Guarantor will on demand by such agent or delegate indemnify
it against such Agent/Delegate Liabilities. "Amounts or Claims" are
losses, liabilities, costs, claims, actions, demands or expenses and "Agent/Delegate
Liabilities" are Amounts or Claims which the Trustee is or would be
obliged to pay or reimburse to any of its agents or delegates appointed pursuant
to this
Trust Deed. The Contracts (Rights of Third Parties) Act 1999 applies to this
sub-clause 8.4.



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| | 
| | 

|8.5 | Continuing Effect:Clauses
    8.3and 8.4 will continue in full force and effect as regards the Trustee notwithstanding the discharge of the Trust Deed and even if it no longer is Trustee.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|    |                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------
|8.6 | Subordination:Payments under this Clause 8 are not subordinated to any other obligations of the lssuer or the Guarantor.

|  |                                                                         
|- | ------------------------------------------------------------------------
|9 | Provisions Supplemental to the Trustee Act 1925 and the Trustee Act 2000

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|9.1 | Advice:The Trustee may act on the opinion or advice of, or information obtained from, any expert and will not be responsible to anyone for any loss occasioned by so acting. Any such opinion, advice or information may be sent or obtained by letter, telex or fax and the Trustee will not be liable to anyone for acting in good faith on any opinion, advice or information purporting to be conveyed by such means even if it contains some error or is not authentic.

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|9.2 | Trustee to Assume Performance:The Trustee need not notify anyone of the execution of this Trust Deed or do anything to find out if an Event of Default or Potential Event of Default has occurred. Until it has actual knowledge or express notice to the contrary, the Trustee may assume that no such event has occurred and that the lssuer and the Guarantor are performing all their obligations under this Trust Deed, the Notes and the Coupons.

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|9.3 | Resolutions of Noteholders:The Trustee will not be responsible for having acted in good faith on a resolution purporting to have been passed at a meeting of Noteholders in respect of which minutes have been made and signed even if it is later found that there was a defect in the constitution of the meeting or the passing of the resolution or that the resolution was not valid or binding on the Noteholders or Couponholders.

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|9.4 | Certificate signed by Authorised Signatories:If the Trustee, in the exercise of its functions, requires to be satisfied or to have information as to any fact or the expediency of any act, it may call for and accept as sufficient evidence of that fact or the expediency of that act a certificate of the Issuer, or, as the case may be, the Guarantor signed by any two Authorised Signatories of the lssuer or the Guarantor as to that fact or to the effect that, in their opinion, that act is expedient and the Trustee need not call for further evidence and will not be responsible for any loss occasioned by acting on such a certificate.

|    |                                                                                                                                                                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|9.5 | Deposit of Documents:The Trustee may deposit this Trust Deed and any other documents with any bank or entity whose business includes the safe custody of documents or with any lawyer or firm of lawyers believed by it to be of good repute and may pay all sums due in respect thereof.

|    |                                                                                                                                                                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|9.6 | Discretion:Save as expressly provided otherwise in this Trust Deed the Trustee will have absolute and uncontrolled discretion as to the exercise of its functions and will not be responsible for any loss, liability, cost, claim, action, demand, expense or inconvenience which may result from their exercise or non-exercise.



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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|9.7 | Agents:Whenever it considers it expedient in the interests of the Noteholders, the Trustee may, in the conduct of its trust business, instead of acting personally, employ and pay an agent selected by it, whether or not a lawyer or other professional person, to transact or conduct, or concur in transacting or conducting, any business and to do or concur in doing all acts required to be done by the Trustee (including the receipt and payment of money).

|    |                                                                                                                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|9.8 | Delegation:Whenever
    it considers it expedient in the interests of the Noteholders, the Trustee
    may delegate to any person on any terms (including power to sub-delegate)
    all or any of its functions.

|    |                                                                                                                                           
|--- | ------------------------------------------------------------------------------------------------------------------------------------------
|9.9 | Nominees:In relation to any asset held by it under this Trust Deed, the Trustee may appoint any person to act as its nominee on any terms.

|     |                                                                                                                                                                                                                                                                  
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|9.10 | Forged Notes:The Trustee will not be liable to the lssuer or the Guarantor or any Noteholder or Couponholder by reason of having accepted as valid or not having rejected any Note or Coupon purporting to be such and later found to be forged or not authentic.

|     |                                                                                                                                                                                                                                                                                           
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|9.11 | Confidentiality:Unless ordered to do so by a court of competent jurisdiction the Trustee shall not be required to disclose to any Noteholder or Couponholder any confidential financial price sensitive or other information made available to the Trustee by the lssuer or the Guarantor.

|     |                                                                                                                                                                                                                                                                                                                                                                                                                         
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|9.12 | Determinations Conclusive:As between itself and the Noteholders and Couponholders the Trustee may determine all questions and doubts arising in relation to any of the provisions of this Trust Deed. Such determinations, whether made upon such a question actually raised or implied in the acts or proceedings of the Trustee, will be conclusive and shall bind the Trustee, the Noteholders and the Couponholders.

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|9.13 | Currency Conversion:Where it is necessary or desirable to convert any sum from one currency to another, it will (unless otherwise provided hereby or required by law) be converted at such rate or rates, in accordance with such method and as at such date as may reasonably be specified by the Trustee after consultation with the lssuer or the Guarantor as relevant but having regard to current rates of exchange, if available. Any rate, method and date so specified will be binding on the Issuer, the Guarantor, the Noteholders and the Couponholders.

|     |                                                                                                                                                                                                                                              
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|9.14 | Payment for and Delivery of Notes:The Trustee will not be responsible for the receipt or application by the lssuer of the proceeds of the issue of the Notes, any exchange of Notes or the delivery of Notes to the persons entitled to them.

|     |                                                                                                                                                                                                                                                                                      
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|9.15 | Notes held by the lssuer etc.:In the absence of knowledge or express notice to the contrary, the Trustee may assume without enquiry (other than requesting a certificate under Clause 7.11) that no Notes are for the time being held by or on behalf of the lssuer or the Guarantor.

|     |                                                                                                                                                                                                                                                                                                                                                                                                               
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|9.16 | Enforcement:The Trustee
    shall not be bound to take any action to enforce the terms of the Notes or
    the provisions of this Trust Deed until (a) directed to do so by an Extraordinary
    Resolution of Noteholders or so requested in writing by Noteholders holding
    at least one-quarter in principal amount of Notes outstanding and (b) it
    shall have been indemnified to its satisfaction.

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|9.17 | Consent of Trustee:Any consent or approval given by the Trustee for the purposes of the Trust Deed may be given on such terms and subject to such conditions (if any) as the Trustee thinks fit.                                                                                                                                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|9.18 | Responsibility for agents
        etc.:If the Trustee exercises reasonable care in selecting any custodian,
        agent, delegate or nominee appointed under this claim (an "Appointee"), it
        will not have any obligation to supervise the Appointee or be responsible
    for any loss, liability, cost, claim action, demand or expense incurred by
        reason of the Appointee's misconduct or default or the misconduct or
    default of any substitute appointed by the Appointee.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       



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| | 
| | 

|9.19 | Indemnity:Nothing contained in this Trust Deed shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties hereunder or the exercise of any rights, powers, authority or discretion hereunder if it has grounds for believing the repayment of the funds or adequate indemnity against, or security for, such risk or liability is not reasonably assured to it.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|     |                                                                                                                                                                                                                                                                                                                                                            
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|9.20 | Events of Default: The
    Trustee may determine whether or not an Event of Default or Potential Event
    of Default is in its opinion capable of remedy and/or materially prejudicial
    to the interests of Noteholders. Any such determination will be conclusive
    and binding on the Issuer, the Guarantor, the Noteholders and the Couponholders.

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                 
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|9.21 | Material Prejudice:If the Trustee is obliged to consider whether, in its opinion, an event, matter or breach of the Trust Deed is materially prejudicial to the interests of the Noteholders, the Trustee is not obliged to take any action to consider the issue of material prejudice unless and until it is indemnified, and if it so requires, secured (whether by way of advance payment or otherwise) to its satisfaction.

|   |                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10 | Trustee Liable for Negligence                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Section 1 of the Trustee
      Act 2000 shall not apply to any function of the Trustee, provided that
      if the Trustee fails to show the degree of care and diligence required
      of it as trustee, nothing in this Trust Deed shall relieve or indemnify
      it from or against any liability which would otherwise attach to it in
    respect of any negligence, or wilful default, of which it may be guilty.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                           

|11   | Waiver and Proof of Default                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|11.1 | Waiver:The Trustee
      may, without the consent of the Noteholders or Couponholders and without
      prejudice to its rights in respect of any subsequent breach, from time
      to time and at any time, if in its opinion the interests of the Noteholders
      will not be materially prejudiced thereby, on such terms as seem expedient
      to it, waive or authorise any breach or proposed breach by the Issuer or
      the Guarantor of this Trust Deed or the Conditions or determine that an
      Event of Default or Potential Event of Default will not be treated as such
      provided that the Trustee will not do so in contravention of an express
      direction given by an Extraordinary Resolution or a request made pursuant
      to Condition 8. No such direction or request will affect a previous waiver,
      authorisation or determination. Any such waiver, authorisation or determination
      will be binding on the Noteholders and the Couponholders and, if the Trustee
    so requires, will be notified to the Noteholders as soon as practicable.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|11.2 | Proof of Default:Proof
      that the Issuer or the Guarantor has failed to pay a sum due to the holder
      of any one Note or Coupon will (unless the contrary be proved) be sufficient
      evidence that it has made the same default as regards all other Notes or
    Coupons which are then payable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|12   | Trustee not Precluded
    from Entering into Contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     | The Trustee and any other
      person, whether or not acting for itself, may acquire, hold or dispose
      of any Note, Coupon or other security (or any interest therein) of the
      Issuer, the Guarantor or any other person, may enter into or be interested
      in any contract or transaction with any such person and may act on, or
    as depositary or agent for, any committee or body of holders of any securities
      of any such person in each case with the same rights as it would have had
      if the Trustee were not acting as Trustee and need not account for any
    profit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        



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|   |                              
|-- | -----------------------------
|13 | Modification and Substitution

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|13.1 | Modification: The Trustee may agree without the consent of the Noteholders or Couponholders to any modification to this Trust Deed of a formal, minor or technical nature or to correct a manifest error or to comply with the mandatory provisions of the law of the jurisdiction in which the lssuer is incorporated. The Trustee may also so agree to any modification to this Trust Deed which is in its opinion not materially prejudicial to the interests of the Noteholders, but such power does not extend to any such modification as is mentioned in the proviso to paragraph 2 of Schedule 3.

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|13.2 | Substitution: Subject to having received
consent from the FSA, or the period of six months following the giving of prior
written notice to the FSA having expired without any objection having been received
from the FSA, the Trustee may, without the consent of the Noteholders or Couponholders,
agree with the lssuer and the Guarantor to the substitution (a) in place of the
lssuer (or of the previous substitute under this Clause) as the principal debtor
under this Trust Deed of either (i) the Guarantor or (ii) any other subsidiary
(as defined in Section 736 of the Companies Act 1985) of the lssuer or (b) in
place of the Guarantor (or of the previous substitute under this Clause) as guarantor
under this Trust Deed of either (i) a Successor in Business to the Guarantor
or (ii) a subsidiary (as defined in Section 736 of the Companies Act 1985) of
the Guarantor acceptable to the Trustee (any such substituted company being hereinafter
called the "Substituted Obligor") in each case provided that:

| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i)  | a deed is executed or undertaking given by the Substituted Obligor to the Trustee, in form and manner satisfactory to the Trustee, agreeing to be bound by this Trust Deed, the Notes, the Coupons and the Talons (with consequential amendments as the Trustee may deem appropriate) as if the Substituted Obligor had been named in this Trust Deed, the Notes, the Coupons and the Talons as the principal debtor in place of the lssuer or as the guarantor in place of the Guarantor as the case may be                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (ii) | if
      the Substituted Obligor is subject generally to the taxing jurisdiction
      of a territory or any authority of or in that territory with power to tax
      (the "Substituted Territory") other than the territory
      to the taxing jurisdiction of which (or to any such authority of or in
      which)
      the lssuer is subject generally (the "Issuer's Territory")
      or to which the Guarantor is subject generally (the "Guarantor's
      Territory"),
      the Substituted Obligor will (unless the Trustee otherwise agrees) give
      to the Trustee an undertaking satisfactory to the Trustee in terms corresponding
      to Condition 8 with the substitution for the references in that Condition
      to the Issuer's Territory or the Guarantor's Territory as the case may
      be of references to the Substituted Territory whereupon the Trust Deed,
    the Notes, the Coupons and the Talons will be read accordingly

| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (iii) | if any two Authorised Signatories of the Substituted Obligor certify that it will be solvent immediately after such substitution, the Trustee need not have regard to the Substituted Obligor's financial condition, profits or prospects or compare them with those of the lssuer or the Guarantor                                                                                                                                                                          
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (iv)  | the
      Issuer, the Guarantor and the Substituted Obligor comply with such other
    requirements as the Trustee may direct in the interests of the Noteholders                                                                                                                                                                                                                                                                                                            
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (v)   | (unless
      the Issuer's successor in business is the Substituted Obligor as the principal
      debtor under this Trust Deed, the Notes, the Coupons
    and the Talons) the obligations of the Substituted Obligor as the principal
      debtor under this Trust Deed, the Notes, the Coupons and the Talons are
      guaranteed by the Guarantor in the same terms (with consequential amendments
    as necessary) as the Guarantee to the Trustee's satisfaction and

|
|

|
|



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- 16 -


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| |  | 
| |  | 

| | (vi) | the Trustee shall be satisfied that the interests of the Noteholders will not be materially prejudiced by any substitution proposed pursuant to this Clause and, in satisfying itself whether Noteholders have been so prejudiced, shall take into account the effect, if any, such substitution might have on any rating assigned to the Notes.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|13.3 | Release of Substituted lssuer or Substituted Guarantor:An agreement by the Trustee pursuant to Clause 13.2 will, if so expressed, release the lssuer or the Guarantor (or a previous substitute of either of them) from any or all of its obligations under this Trust Deed, the Notes, the Coupons and the Talons. Notice of the substitution will be given to the Noteholders within 14 days of the execution of such documents and compliance with such requirements.

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|13.4 | Completion of Substitution:On completion of the formalities set out in Clause 13.2, the Substituted Obligor will be deemed to be named in this Trust Deed, the Notes, the Coupons and the Talons as the principal debtor in place of the lssuer (or of any previous substitute) or as the guarantor in place of the Guarantor (or of any previous substitute) as the case may be and this Trust Deed, the Notes, the Coupons and the Talons will be deemed to be amended as necessary to give effect to the substitution.

|   |                                                       
|-- | ------------------------------------------------------
|14 | Appointment, Retirement
    and Removal of the Trustee

|     |                                                                                                                                                                                                                                                                                                                                                                
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|14.1 | Appointment:The lssuer has the power of appointing new Trustees but no-one may be so appointed unless previously approved by an Extraordinary Resolution. A trust corporation will at all times be a Trustee and may be the sole Trustee. Any appointment of a new Trustee will be notified by the lssuer to the Noteholders as soon as reasonably practicable.

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|14.2 | Retirement and Removal:Any Trustee
may retire at any time on giving at least three months' written notice to the
lssuer and the Guarantor without giving any reason or being responsible for any
costs occasioned by such retirement and the Noteholders may by Extraordinary
Resolution remove any Trustee provided that the retirement or removal of a sole
trust corporation will not be effective until a trust corporation is appointed
as successor Trustee. If a sole trust corporation gives notice of retirement
or an Extraordinary Resolution is passed for its removal, it will use all reasonable
endeavours to procure that another trust corporation be appointed as Trustee.

|     |                                                                                                                                                                                                      
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|14.3 | Co-Trustees:The Trustee may, despite Clause 14.1, by written notice to the lssuer and the Guarantor appoint anyone to act as a separate Trustee or as an additional Trustee jointly with the Trustee:

| |        |                                                                                                            
| | ------ | -----------------------------------------------------------------------------------------------------------
| | 14.3.1 | if the Trustee considers the appointment to be in the interests of the Noteholders and/or the Couponholders

| |        |                                                                                                                                
| | ------ | -------------------------------------------------------------------------------------------------------------------------------
| | 14.3.2 | to conform with a legal requirement, restriction or condition in a jurisdiction in which a particular act is to be performed or

| |        |                                                                                                       
| | ------ | ------------------------------------------------------------------------------------------------------
| | 14.3.3 | to obtain a judgment or to enforce a judgment or any provision of this Trust Deed in any jurisdiction.



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Subject to the provisions of this Trust Deed the Trustee may confer on any person so appointed such functions as it thinks fit. The Trustee may by written notice to the Issuer, the Guarantor and that person remove that person. At the Trustee's request, the lssuer and the Guarantor will forthwith do all things as may be required to perfect such appointment or removal and each of them irrevocably appoints the Trustee as its attorney in its name and on its behalf to do so.

|     |                                                                                                                                                                                                       
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|14.4 | Competence of a Majority of Trustees:If there are more than two Trustees the majority of them will be competent to perform the Trustee's functions provided the majority includes a trust corporation.

|   |              
|-- | -------------
|15 | Couponholders

| |                                                                                                                                                                                                                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | No notices need be given to Couponholders. They will be deemed to have notice of the contents of any notice given to Noteholders. Even if it has express notice to the contrary, in exercising any of its functions by reference to the interests of the Noteholders, the Trustee will assume that the holder of each Note is the holder of all Coupons and Talons relating to it.

|   |                   
|-- | ------------------
|16 | Currency Indemnity

|     |                                                                                                                                                                                                                                                                     
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|16.1 | Currency of Account and Payment:Sterling
    (the "Contractual Currency") is the sole currency of account and payment for all sums payable by the lssuer or the Guarantor under or in connection with this Trust Deed, the Notes and the Coupons, including damages.

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|16.2 | Extent of discharge:An amount received or recovered in a currency other than the Contractual Currency (whether as a result of, or of the enforcement of, a judgment or order of a court of any jurisdiction, in the winding-up or dissolution of the lssuer or the Guarantor or otherwise), by the Trustee or any Noteholder or Couponholder in respect of any sum expressed to be due to it from the lssuer or Guarantor will only discharge the lssuer and Guarantor to the extent of the Contractual Currency amount which the recipient is able to purchase with the amount so received or recovered in that other currency on the date of that receipt or recovery (or, if it is not practicable to make that purchase on that date, on the first date on which it is
practicable to do so).

|     |                                                                                                                                                                                                                                                                                                                                                                
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|16.3 | Indemnity:If that Contractual Currency amount is less than the Contractual Currency amount expressed to be due to the recipient under this Trust Deed, the Notes or the Coupons, the lssuer will indemnify it against any loss sustained by it as a result. In any event, the lssuer will indemnify the recipient against the cost of making any such purchase.

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|16.4 | lndemnity separate:The indemnities in this Clause 16 and in Clause 8.4 constitute separate and independent obligations from the other obligations in this Trust Deed, will give rise to a separate and independent cause of action, will apply irrespective of any indulgence granted by the Trustee and/or any Noteholder or Couponholder and will continue in full force and effect despite any judgment, order, claim or proof for a liquidated amount in respect of any sum due under this Trust Deed, the Notes and/or the Coupons or any other judgment or order.



---

- 18 -


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|   |               
|-- | --------------
|17 | Communications

| |                                             
| | --------------------------------------------
| | Any communication shall be by letter or fax:

| |                                     
| | ------------------------------------
| | in the case of the Issuer, to it at:

| |                                                                                
| | -------------------------------------------------------------------------------
| | Royal & Sun Alliance lnsurance Group plc
  30 Berkeley Square 
  London W1X 5HA

| |                                                                                     
| | ------------------------------------------------------------------------------------
| | Fax no. 020 7569 6639 
  Attention Group Treasurer 
  (with a copy to the Guarantor)

| |                                        
| | ---------------------------------------
| | in the case of the Guarantor, to it at:

| |                                                                                                      
| | -----------------------------------------------------------------------------------------------------
| | Royal & Sun Alliance lnsurance plc 
  St Mark's Court 
  Chart Way 
  Horsham 
  West Sussex RH11 1XL

| |                                                   
| | --------------------------------------------------
| | Fax no. 020 7569 6639 
  Attention Group Treasurer

| |                                          
| | -----------------------------------------
| | and in the case of the Trustee, to it at:

| |                                                                                                      
| | -----------------------------------------------------------------------------------------------------
| | Citicorp Trustee Company Limited 
  Citigroup Centre 
  Canada Square
  Canary Wharf
  London E14 5LB

| |                                                         
| | --------------------------------------------------------
| | Fax no. 020 7500 5857/5877 
  Attention Agency and Trust

| |                                                                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Communications will take effect, in the case of delivery, when delivered or, in the case of telex or fax, when despatched. Communications not by letter shall be confirmed by letter but failure to send or receive that letter shall not invalidate the original communication.

|   |               
|-- | --------------
|18 | Further Issues

|     |                                                                                                                                                                                                                                                                                                                                                                                                                     
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|18.1 | Further Notes:The lssuer shall be at liberty from time to time (but subject always to the terms and conditions of this Trust Deed and the Notes) without the consent of the Noteholders to create and issue further notes ranking pari passu in all respects (or in all respects save for the first payment of interest thereon) and so that the same shall be consolidated and form a single series with the Notes.

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|18.2 | Supplemental Trust Deed:Any such further
notes be constituted by a deed supplemental to this Trust Deed. In any such case
the lssuer shall, prior to the issue of any further notes to be so constituted
(being "Further Notes"), execute and deliver to the Trustee
a deed supplemental to this Trust Deed (if applicable, duly stamped or denoted)
containing a covenant by the lssuer in the form mutatis mutandis of sub-clause
2.2 of this Trust Deed in relation to the principal, premium, if any, and interest
in respect of such Further Notes and such other provisions (whether or not corresponding
to any of the provisions contained in these presents) as the Trustee shall require.

|     |                                                                                                                                                                                   
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|18.3 | Endorsement of Trust Deed:A memorandum of every such supplemental deed shall be endorsed by the Trustee on this Trust Deed and by the lssuer on the duplicates of this Trust Deed.



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- 19 -


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|   |                                                                                   
|-- | ----------------------------------------------------------------------------------
|19 | Governing Law                                                                     
|   |                                                                                   
|   | This Trust Deed shall be governed by and construed in accordance with English law.



---

- 20 -


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Schedule 1 
    Part 1 
    Form of Definitive Note


|On the front:           |  |              |  |        |  |            
|----------------------- |  | ------------ |  | ------ |  | -----------
|                        |  |              |  |        |  |            
|Denomination            |  | lSlN         |  | Series |  | Certif. No.
|                        |  |              |  |        |  |            
|£1,000/£10,000/£100,000 |  | XS0197028714 |  |        |  |            
|                        |  |              |  |        |  |            

ROYAL & SUN ALLIANCE
      INSURANCE GROUP PLC 
  (Incorporated with limited liability in England and
      Wales) 
  £450,000,000 
  8.5 per cent. Cumulative Step-up Perpetual Subordinated
      Notes 
  guaranteed on a subordinated basis by 
  ROYAL & SUN ALLIANCE INSURANCE
PLC 
(Incorporated with limited liability in England and Wales)

This Note forms part of a series
    designated as specified in the title (the "Notes")of
    Royal & Sun
Alliance Insurance Group plc (the "lssuer")constituted
by the Trust Deed referred to on the reverse hereof. The Notes are subject to,
and have the benefit of, that Trust Deed and the terms and conditions (the "Conditions") set
out on the reverse hereof.

This is to certify that the bearer of this Note is entitled on such date as the principal sum mentioned below may become repayable in accordance with the Conditions, to the principal sum of:

£[1,000/10,000/100,000]([1,000/10,000/100,000]pounds)

together with interest on such principal sum from 23 July 2004 at the rates and on the dates determined in accordance with the Conditions and such other amounts as may be payable under the Conditions, all subject to and in accordance with the Conditions and the provisions of the Trust Deed.

This Note shall not be valid or become obligatory for any purpose until authenticated by or on behalf of the Principal Paying Agent.

In witness whereof the Issuer has caused this Note to be signed in facsimile on its behalf.

Dated 23 July 2004

ROYAL& SUN ALLIANCE INSURANCE GROUP PLC

By:

Director



---

- 21 -


---



This Note is authenticated by or on behalf of the Principal Paying Agent. 
By:

Authorised Signatory

ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.



---

- 22 -


---



On the back:

TERMS AND CONDITIONS OF THE NOTES

|The following terms and
      conditions, subject to alteration (and except for the paragraphs in italics),
      are the terms and conditions of the Notes (the "Terms and Conditions")
      which will be endorsed on each Note in definitive form if issued:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The £450,000,000
    per cent. Cumulative Step-up Perpetual Subordinated Notes (the "Notes")
    are constituted by the Trust Deed. The issue of the Notes was authorised
    pursuant to a resolution of the Board of Directors of the Issuer passed on
    25 March 2004 and a resolution of a committee of the Board of Directors of
    the Issuer passed on 20 July 2004 and the giving of the Guarantee was authorised
    pursuant to a resolution of the Board of Directors of the Guarantor passed
    on 20 July 2004. The statements in these Terms and Conditions include summaries
    of, and are subject to, the detailed provisions of the Trust Deed. Copies
    of the Trust Deed and the Agency Agreement are available for inspection during
    normal business hours by the Holders and the Couponholders at the registered
    office of the Trustee, being at the date hereof Citicorp Centre, Canada Square,
    Canary Wharf, London E14 5LB, and at the specified office of each of the
    Paying Agents. The Holders and the Couponholders are entitled to the benefit
    of,
    are bound by, and are deemed to have notice of, all the provisions of the
    Trust Deed and the Agency Agreement applicable to them.

|1 | Form, Denomination and Title
|- | ----------------------------

|    |                      
|--- | ---------------------
|(a) | Form and Denomination

| |                                                                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Notes are serially numbered and in bearer form in denominations of £1,000, £10,000 and £100,000 each with Coupons and one Talon attached on issue. Notes of one denomination may not be exchanged for Notes of another denomination.

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | Title                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | Title to the Notes, Coupons and Talons will pass by delivery. The bearer of any Notes or Coupons will (except as otherwise required by law or as ordered by a court of competent jurisdiction) be treated as its absolute owner for all purposes (whether or not it is overdue and regardless of any notice of ownership, trust or any interest in it or its theft or loss or anything written on it) and no person will be liable for so treating the Holder.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|2   | Status, Subordination
        and
Guarantee                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(a) | Status and Subordination
    of the Notes                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                               

| | (i) | Status
| | --- | ------

|    |                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | --------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                               | The Notes constitute unsecured,
    subordinated obligations of the Issuer and rankpari passuwithout
    any preference among themselves.                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | (ii)                                          | Subordination                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                               | The rights and claims of
      the Holders and Couponholders against the Issuer under the Notes in respect
      of the principal amounts due and payable on redemption and any Deferred
      Interest and Coupon Payments are subject to Condition 2(c) and subordinated
    on a winding-up of the Issuer to the rights and claims of its Senior Creditors.                                                                                                                                                                                                      
|    |                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(b) | Status
    and Subordination of the Guarantee
|    |                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | (i)                                           | Status                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                               | The Guarantor has (subject
      as provided in this Condition 2(b)) in the Trust Deed irrevocably guaranteed
      the due and punctual payment of all principal, Coupon Payments, Deferred
      Interest and other sums from time to time payable by the Issuer in respect
      of the Notes and the Coupons and all other monies payable by the Issuer
      under or pursuant to the Trust Deed. The obligations of the Guarantor under
      such guarantee (the "Guarantee") constitute direct, unsecured
    and subordinated obligations of the Guarantor.
|    |                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | (ii)                                          | Obligations of the
    Guarantor                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                               | For the purpose of determining
      whether any principal or Coupon Payment, Deferred Interest or any other
      sum is, from time to time, due and payable by the Issuer for the purposes
    of the obligations of the Guarantor under the Guarantee:                                                                                                                                                                                                                                                                                                           
|    |                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     



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| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       | (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | payments of principal and/or Coupon Payments
and/or Deferred Interest and/or other sums from time to time payable by the Issuer
in respect of the Notes shall be deemed to be due and payable on the relevant
Coupon Payment Date or Redemption Date or other due date for payment pursuant
to these Conditions (as the case may be) by the Issuer notwithstanding that Condition
3(a) shall apply or that Condition 3(c) shall apply in respect of the Issuer,
provided that, in the event that any Holder exercises any rights conferred upon
it by the Guarantee in respect of any such amounts and has received payment in
full and final satisfaction of such amounts, then this shall be treated as satisfying
such Holder's right to payment of such amounts under the terms of the Notes;
and                                                                                                                                                                                                                                                                                                                                                                                      
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |       | (2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | where
      an order is made, or an effective resolution is passed, for the winding-up
      of' the Issuer, in the circumstances set out in Condition 7(e), the Guarantor
      shall be obliged under the Guarantee to meet the payment obligations of
      the Issuer that would otherwise have arisen under the Notes and shall have
      the benefit of all the provisions applicable to the Issuer in the Notes
      (including, without limitation, the Issuer's ability to redeem the Notes
      in the circumstances set out in Condition 5), and, accordingly, all references
      to the Issuer shall be construed as references to the Guarantor, provided
      that in such circumstances, no amounts shall be payable under the Guarantee
      prior to the time at which such amounts would have fallen due under the
    Notes in the absence of the winding-up of the Issuer under Condition 7(e).                                                                                                                                                                                                                                                                 
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (iii) | Deferral of payments
        under the Guarantee                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |       | Notwithstanding any other provision of
      the Notes or the Trust Deed, the Guarantor shall have the option to defer
      its obligation to make payments under the Guarantee to Holders in respect
    of:                                                                                                                                                                                                                                                                                                                                                                                                    
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |       | (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Deferred
      Interest, other than any Deferred Interest due and payable on a Resumption
    Date;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |       | (2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | any
      Coupon Payment Date, provided that (A) (x) a Regulatory Event relating
      to the Guarantor has occurred prior to the date the Coupon Amounts fell,
      or could otherwise have fallen, due and is continuing on such date or is
      reasonably likely to occur as a result of the Guarantor making the payment
      on such date; and (y) no interest payments have been made on and no redemption
      or purchase or acquisition has been made of any Parity Securities or Junior
      Securities of the Issuer or the Guarantor and no dividend or distribution
      has been made on any class of share capital of the Issuer in each case
      since the date of the commencement of such Regulatory Event; or (B) no
      interest payments have been made on and no redemption or purchase or acquisition
      has been made of any Parity Securities or Junior Securities of the Issuer
      or the Guarantor in the financial year in which the Coupon Amounts fell
      due and no dividend or distribution has been declared or paid on any class
      of share capital of the Issuer since the most recent annual general meeting
    of the Issuer;
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |       | (3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | any
      amounts due and payable by the Issuer on redemption of the Notes in accordance
    with Condition 5 (other than any Deferred Interest); or                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |       | (4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | any
      other amounts due and payable pursuant to the Notes (such amounts referred
      to in (1) to (4) above which the Guarantor shall be entitled to defer collectively
    being "Relevant Amounts").                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |       | Subject to the provisions
      herein, the Guarantor may elect to defer the payment of such Relevant Amounts
      for such
      period of time as the Guarantor shall determine, provided that the obligation
      to make payment of such Relevant Amounts shall remain outstanding until
      such time as they are paid in full by the Issuer and/or the Guarantor and
      such Relevant Amounts shall, for the avoidance of doubt, be payable by
    the Guarantor in a winding-up of the Guarantor as provided in Condition 7(f).                                                                     
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |       | Any payment which for the time being is
      not made by virtue of this Condition 2(b)(iii) shall not constitute a default
      for any purpose (including, but without limitation, Condition 7) on the
    part of the Guarantor.                                                                                                                                                                                                                                                                                                                                                                              
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |       | For the avoidance of doubt,
    all amounts payable by the Issuer in respect of (i) Deferred Interest, (ii)
      any Coupon Payments, (iii) any amounts due and payable pursuant to the
    redemption of the Notes in accordance with Condition 5or (iv) any
    other amount due and payable pursuant to the Notes shall remain due and payable
    by the Issuer subject to Condition 2(b)(ii)(1) and to the extent provided
    for by these Conditions and no provision of the Trust Deed or these Conditions
    relating to the Guarantee shall be deemed to relieve the Issuer of any such
    liability.

|
|



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| |  | 
| |  | 

| | (iv) | Subordination
| | ---- | -------------

| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      | The rights and claims of the Holders and the Couponholders against the Guarantor under the Guarantee are subject to Condition 2(c) and subordinated on a winding-up of the Guarantor to the rights and claims of its Senior Creditors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (v)  | Limited Recourse                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |      | The liability of the Guarantor
      under the Guarantee will not exceed the extent of the Guarantor's assets
    available to make payment in respect thereof.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (vi) | Winding-up Claims of
    the Guarantor                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |      | Without prejudice to Deferred
      Interest becoming due following a Resumption Date where payments are being
      made under the Guarantee as described in 2(b)(ii)(2) above, amounts payable
      under the Guarantee in respect of which the Solvency Condition referred
      to in Condition 2(c) is not satisfied on the date upon which the same would
      otherwise be due and payable ("Winding-up Claims of the Guarantor")
      will be payable by the Guarantor in a winding-up of the Guarantor as provided
    in Condition 7(f). A Winding-up Claim of the Guarantor shall not bear interest.                                                                                                                                                                                                                                               
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |      | As a consequence of the subordination
      conditions, the Holders may recover less rateably than the holders of the
      Issuer's or the Guarantor's unsubordinated liabilities and the holders
      of certain of the Issuer's or the Guarantor's subordinated liabilities.
      If, in any winding-up of the Issuer or the Guarantor (as the case may be),
      the amount payable on or in respect of any Notes and any claims ranking
      equally with the Notes or the Guarantee and any claims ranking equally
      with the Guarantee (as the case may be) are not paid in full, the Holders
      and the holders of other claims ranking equally will share rateably in
      any such distribution of assets of the Issuer or the Guarantor (as the
      case may be) in proportion to the respective amounts to which they are
    entitled.

| |  | 
| |  | 

|(c) | Solvency Condition
|--- | ------------------

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Except in a winding-up or if the FSA has indicated that it has no objection to such payment, (i) all payments by the Issuer on the Notes will be conditional upon the Issuer satisfying the Solvency Condition and (ii) all payments on the Guarantee will be conditional upon the Guarantor satisfying the Solvency Condition, in each case both at the time of and immediately after any such payment and, accordingly, neither the Issuer (in the case of (i)) nor the Guarantor (in the case of (ii)) will make any payment and any such payment shall not be so payable if the Solvency Condition is not so satisfied.

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Neither the Issuer nor the Guarantor, as applicable, may redeem or purchase any of the Notes unless the Issuer, or, as the case may be, the Guarantor, satisfies the Solvency Condition both at the time of and immediately after any such redemption or purchase. The Issuer or, as the case may be, the Guarantor shall satisfy the Solvency Condition (i) if it is able to pay its debts owed to its Senior Creditors as they fall due; and (ii) its Assets exceed its Liabilities (other than its Liabilities to persons who are not Senior Creditors).

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | A report as to whether the Issuer or Guarantor (as the case may be) has satisfied the Solvency Condition, signed by two directors of the Issuer or Guarantor (as the case may be) or, if there is a winding-up of the Issuer or Guarantor, the liquidator of the Issuer or Guarantor (as the case may be) shall, in the absence of manifest error, be treated and accepted by the Issuer, the Guarantor, the Trustee and any Holder as correct and sufficient evidence thereof. The Trustee shall incur no liability to the Holders or Couponholders in respect of reliance on such a report. In a winding-up, the amount payable on the Notes or, as the case may be, the Guarantee will be determined in accordance with the subordination provisions described above and the
provisions of Condition 7(e) or 7(f), as appropriate.                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(d) | Set-Off                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | By acceptance of the Notes,
      each Holder and the Trustee, on behalf of such Holders, will be deemed
      to have waived any right of set-off or counterclaim that such Holders might
      otherwise have against the Issuer or the Guarantor (as the case may be)
      whether prior to or in bankruptcy or winding-up. Notwithstanding the preceding
      sentence, if any of the rights and claims of any Holder are discharged
    by set-off, such Holder will immediately pay an amount equal to the amount
      of such discharge to the Issuer or the Guarantor or, if applicable, the
      liquidator or trustee or receiver of the Issuer or the Guarantor and, until
      such time as payment is made, will hold a sum equal to such amount on trust
      for the Issuer or the Guarantor or, if applicable, the liquidator or the
      trustee or receiver in the Issuer's or the Guarantor's winding-up. Accordingly,
    such discharge will be deemed not to have taken place.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            



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| | 
| | 

| | 
| | 

|3 | Deferred Interest
|- | -----------------

|    |                                     
|--- | ------------------------------------
|(a) | Optional Deferral of Coupon Payments

| |                                                                                                          
| | ---------------------------------------------------------------------------------------------------------
| | The Issuer may elect in its sole discretion to defer Coupon Payments on any Optional Coupon Payment Date.

|    |                  
|--- | -----------------
|(b) | Deferred Interest

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Any Coupon Payment in respect of the Notes not paid on a Coupon Payment Date, together with any other interest in respect thereof not paid on any earlier Coupon Payment Date, in each case, by virtue of Condition 3(a) (as it applies to the Issuer or the Guarantor (by virtue of Condition 2(b)(ii)(2)), shall, so long as the same remains unpaid, constitute "Deferred Interest". Deferred Interest may, at the option of the Issuer, subject to Condition 2, be paid in whole or in any part at any time upon the expiration of not less than seven days' notice to such effect given to the Trustee and to the Principal Paying Agent, and to the Holders in accordance with Condition 14 but any Deferred Interest will, subject to Condition 2, automatically
become immediately due and payable (without the necessity for, any notice to, or objection from, the FSA unless otherwise required at such time) upon the earliest of the following (the "Resumption Date"):

| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i)   | the
      date on which the Issuer or, as the case may be, the Guarantor resumes
    payment of Coupon Payments on the Notes;                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (ii)  | the
      date on which the Issuer, the Guarantor or any other entity directly or
      indirectly controlled by the Issuer or the Guarantor declares or pays a
      dividend or distribution on or makes any other payment on or purchase of
      any Parity Securities or Junior Securities of the Issuer or the Guarantor
      (other than a dividend declared by the Issuer with respect to its ordinary
      shares prior to the date on which the decision to defer the relevant payment
    is notified to Holders in accordance with Condition 15);
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (iii) | the date on which the Issuer, the Guarantor or any other entity directly or indirectly controlled by the Issuer or the Guarantor redeems, purchases or otherwise acquires any Public Market Parity Securities or Public Market Junior Securities of the Issuer or the Guarantor:                                                                                                                                                                                                                                                                               
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (iv)  | the
      date fixed for any redemption or purchase of Notes by or on behalf of the
    Issuer pursuant to Condition 5; and                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (v)   | the commencement of
    the winding-up of the Issuer or, as the case may be, the Guarantor.                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

|
|

| | If notice is given by the Issuer of its intention to pay Deferred Interest in whole or in part, the Issuer shall be obliged (subject to Condition 2) to do so upon the expiration of such notice. Where Deferred Interest is paid in part, each part payment shall be applied in payment of the Deferred Interest accrued due in respect of the relative Coupon Payment Date (or consecutive Coupon Payment Date) furthest from the date of payment. Interest will accrue on Deferred Interest at the then current rate of interest of the Notes.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | For the purposes of this provision, the payment (or declaration of payment) of a dividend or distribution on Junior Securities and Parity Securities shall be deemed to include the making of any interest, coupon or dividend payment (or any payment under any guarantee in respect thereof).

| |                                                                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The obligation to pay Deferred Interest shall not apply as a result of the declaration and payment of any dividends and distributions or the making of any other payment between companies in the Group on any Parity Securities or Junior Securities.

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The obligation to pay any Deferred
    Interest shall not apply as a result of the redemption, purchase or other
    acquisition of Public Market Parity Securities or Public Market Junior Securities
    of the Issuer or the Guarantor where the funds used to redeem, purchase or
    acquire those securities are derived from an issue of Junior Securities or
    Parity Securities of the Issuer or the Guarantor (i) made at any time within
    the six-month period prior to the time of such redemption, purchase or acquisition,
    and (ii) with the same ranking or ranking junior on a return of assets on
    a winding-up or in respect of a distribution or payment of interest, coupons
    or dividends and/or any other amounts thereunder to those securities being
    redeemed, purchased or acquired. The Trustee shall be entitled to rely on
    a certificate signed by two directors of the Issuer or the Guarantor (as
    the case may be) as to whether the redemption, purchase or acquisition falls
    within the exception set out above and, if the Trustee does so rely, such
    certificate shall, in the absence of manifest error, be conclusive and binding
    on the Issuer or the Guarantor (as the case may be) and the Holders.



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| | 
| | 

|(c) | No Default
|--- | ----------

| |                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Notwithstanding any other provision in these Conditions or the Trust Deed, any payment which for the time being is not made by virtue of Condition 3(a) shall not constitute a default for any purpose (including, without limitation, Condition 7) on the part of the Issuer.

|  |        
|- | -------
|4 | Coupons

|    |            
|--- | -----------
|(a) | Coupon Rate

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Notes bear interest from
    (and including) 23 July 2004 to (but excluding) 8 December 2014, at a fixed
    rate of 8.5 per cent. per annum on the outstanding principal amount of the
    Notes (the "Initial Coupon Rate"). From (and including 8 December
    2014), the coupon rate payable on the Notes, in respect of each Coupon Calculation
    Period, will be the rate per annum which is the aggregate of 4.375 per cent.
    and the Gross Redemption Yield of the Benchmark Gilt (the "Reset Coupon
    Rate") in respect of such Coupon Calculation Period, with the price
    of the Benchmark Gilt for this purpose being the arithmetic average (rounded
    up (if necessary) to four decimal places) of the bid and offered prices of
    such Benchmark Gilt quoted on Reuters
Page "DMO/Bench1" (or such other page as may replace it for the purpose
of displaying such information) at 3.00 p.m. (London time) on the relevant Determination
Date, as determined by the Principal Paying Agent, providedthat
if such price does not appear on Reuters Page "DMO/Bench1" on the relevant
Determination Date, then the price of the Benchmark Gilt shall be the arithmetic
average (rounded up (if necessary) to four decimal places) of the bid and offered
prices of such Benchmark Gilt quoted by the Reference Market Makers at 3.00 p.m.
(London time) on the relevant Determination Date on a dealing basis for settlement
on the next following dealing day in London as determined by the Principal Paying
Agent.

|    |                
|--- | ---------------
|(b) | Coupon Payments

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Coupon Payments on the Notes will, subject as set out in Condition 3, be payable from the Issue Date annually in arrear on 8 December of each year (except that the first payment of interest to be made on 8 December 2004 will be in respect of the period from (and including) the Issue Date to (but excluding) 8 December 2004) and will accrue from (and including) the immediately preceding Coupon Payment Date (or the Issue Date, with respect to interest payable on 8 December 2004), to (but excluding) the relevant Coupon Payment Date.

| |                                                                                                          
| | ---------------------------------------------------------------------------------------------------------
| | The Coupon Payment to be made on 8 December 2004 will be £32.05 per £1,000 principal amount of the Notes.

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Where it is necessary to compute an amount of interest in respect of any Notes for a period which is not a Coupon Period, then this shall be calculated on the basis of the actual number of days in the relevant period from (and including) the first day of such period to (but excluding) the last day of such period, divided by the actual number of days from (and including) the most recent Coupon Payment Date (or, if none, the Issue Date) to (but excluding) the next (or first) scheduled Coupon Payment Date.

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | The Notes will cease to bear interest from (and including) the due date for redemption thereof pursuant to Condition 5(b), (c) or (d) unless, upon due presentation, payment of principal in respect of the Notes is improperly withheld or refused, in which event interest shall continue to accrue, and shall be payable, as provided in these Conditions up to (but excluding) the Relevant Date.                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(c) | Publication of
    Reset Coupon Rate                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | The Issuer shall cause the
      Principal Paying Agent to give notice of the Reset Coupon Rate determined
      in accordance with this Condition 4 in respect of each relevant Coupon
      Calculation Period to the Trustee, the other Paying Agents, any stock exchange
      or other relevant authority on which the Notes are for the time being listed
      or admitted to trading and, in accordance with Condition 14, the Holders
      of the Notes as soon as practicable after its determination but in any
    event not later than the fourth Business Day thereafter.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

| | 
| | 



---

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| |                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Reset Coupon Rate so notified may subsequently be amended (or appropriate alternative arrangements made by way of adjustment) without notice in the event of proven or manifest error.

|    |                                        
|--- | ---------------------------------------
|(d) | Determination or Calculation by Trustee

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Trustee may, if the Principal Paying Agent does not at any relevant time for any reason (but without any liability accruing to the Trustee as a result) determine the Reset Coupon Rate in accordance with this Condition 4, determine the Reset Coupon Rate in respect of the relevant Coupon Calculation Period at such rate as, in its absolute discretion (having such regard as it shall think fit to the procedure described in this Condition 4), it shall deem fair and reasonable in all the circumstances and such determination shall be deemed to be a determination thereof by the Principal Paying Agent.

|    |                                                            
|--- | -----------------------------------------------------------
|(e) | Determinations of Principal Paying Agent or Trustee Binding

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | All notifications, opinions, determinations, certificates, calculations, quotations and decisions given, expressed, made or obtained for the purposes of this Condition 4, whether by the Principal Paying Agent or the Trustee, shall (in the case of the Principal Paying Agent, in the absence of wilful default, bad faith or manifest error) be binding on the Issuer, the Guarantor, the Trustee, the Paying Agents and all Holders and (in the absence as aforesaid) no liability to the Holders or the Issuer or the Guarantor shall attach to the Principal Paying Agent or the Trustee in connection with the exercise or non-exercise by them of their powers, duties or discretions.

|  |                    
|- | -------------------
|5 | Optional Redemption

|    |                 
|--- | ----------------
|(a) | No Maturity Date

| |                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Notes are perpetual securities in respect of which there is no maturity date. The Notes are not redeemable at the option of the Holders at any time.

|    |                     
|--- | --------------------
|(b) | Issuer's Call Option

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Issuer may redeem the Notes in whole (but not in part), at its option, on 8 December 2014, or on any Reset Date thereafter, subject to the Solvency Condition being met in relation to the Issuer both at the time of and immediately after such redemption and subject, further, to the Issuer giving at least six months' prior written notice to the FSA and having received consent to such redemption from the FSA, or the period of six months following such notice having expired without any objection to such redemption having been received from the FSA.

|    |                     
|--- | --------------------
|(c) | Tax Event Redemption

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Issuer may redeem the Notes in whole (but not in part) upon the occurrence of a Tax Event subject to the Solvency Condition being met in relation to the Issuer both at the time of and immediately after such redemption and the Issuer giving at least six months' prior written notice thereof to the FSA and having received consent to such redemption from the FSA, or the period of six months following such notice having expired without any objection to such redemption having been received from the FSA.

|    |                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | --------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(d) | Redemption Procedures
|    |                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | (i)                   | Any redemption under
      paragraph (b) above will be at a redemption price equal to the outstanding
    principal amount of the Notes; and                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | (ii)                  | any redemption under
      paragraph (c) as a result of the occurrence of any of the circumstances
      described in paragraph (ii) or (iv) of the definition of Tax Event (set
      out below) will be at a redemption price equal to the outstanding principal
      amount of the Notes and any redemption as a result of the occurrence of
      any of the circumstances described in paragraph (i) or (iii) of the definition
      of Tax Event will be at a redemption price equal to the Make-Whole Redemption
    Price of the Notes.

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | and, in the case of redemption
    under paragraphs (b) and (c) above, shall include all accrued interest (including
    any Deferred Interest) to the Redemption Date and the aggregate amount of
    any Deferred Interest and shall be paid on not less than 30 nor more than
    60 days' notice to the Holders. Prior to the giving of any notice of redemption
    following the occurrence of a Tax Event, the Issuer shall deliver to the
    Trustee (a) a certificate signed by two directors of the Issuer, stating
    that the Issuer is entitled to effect such redemption and setting forth a
    statement of facts showing that the conditions precedent to the right to
    redeem have occurred, and (b) an opinion of independent legal advisers of
    recognised standing to the effect that the Issuer is entitled to exercise
    its right of redemption.



---

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| | 
| | 

| | Any notice of redemption will be irrevocable and will provide details of the Redemption Date. Failure to pay (i) the principal amount of the Notes to be redeemed on the Redemption Date or (ii) any accrued but unpaid payments and any Deferred Interest within 14 days of the Redemption Date, if applicable, will in each such case constitute a Note Default.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|    |          
|--- | ---------
|(e) | Purchases

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Issuer or the Guarantor may, at any time and from time to time, (having given at least six month's prior written notice thereof to the FSA, and having received consent to such purchase from the FSA or the period of six months following such notice having expired without any objection to such purchase having been received from the FSA) purchase outstanding Notes by tender in the open market, or by private agreement, in each case upon the terms and conditions that the Board of Directors of the Issuer or, as the case may be, the Guarantor or an authorised committee of the Board of Directors of the Issuer or, as the case may be, the Guarantor shall determine.

|    |              
|--- | -------------
|(f) | Cancellations

| |                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| | All Notes which are purchased by or on behalf of the Issuer or the Guarantor will forthwith be cancelled and accordingly may not be held, reissued or resold.

|  |         
|- | --------
|6 | Payments

|    |                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ----------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Method of Payment
|    |                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | (i)               | Payments of principal
      and interest will be made by or on behalf of the Issuer against presentation
      and surrender of Notes or, in the case of payments of interest due on a
      Coupon Payment Date or Resumption Date, the appropriate Coupons at the
      specified office of any of the Paying Agents. Payments of interest in respect
      of any period not ending on a Coupon Payment Date or a Resumption Date
      will only be made upon surrender of the relevant Notes. Such payments will
      be made, at the option of the payee, by sterling cheque drawn on, or by
      transfer to a sterling account maintained by the payee with, a bank in
    London.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | (ii)              | Upon the due date for
      redemption of any Notes, any unexchanged Talons relating to such Notes
      (whether or not attached) shall become void and no Coupons shall be delivered
      in respect of such Talons and unmatured Coupons relating to such Notes
      (whether or not attached) shall also become void and no payment shall be
      made in respect of them. If any Note is presented for redemption without
      all unmatured Coupons and any unexchanged Talon relating to it, redemption
      shall be made only against the provision of such indemnity as the Issuer
    may reasonably require.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | (iii)             | On or after the Coupon
      Payment Date for the final Coupon forming part of a Coupon sheet issued
      in respect of any Notes, the Talon forming part of such Coupon sheet may
      be surrendered at the specified office of the Principal Paying Agent in
      exchange for a further Coupon sheet (and another Talon for a further Coupon
      sheet) (but excluding any Coupons that may have become void pursuant to
    Condition 10).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | (iv)              | The names of the initial
      Paying Agents and their initial specified office are set out below. The
      Issuer reserves the right, subject to the prior written approval of the
      Trustee, such approval not to be unreasonably withheld, at any time to
      vary or terminate the appointment of any Paying Agent and to appoint additional
      or other Paying Agents provided that it will at all times maintain (aa)
      a Paying Agent having a specified office in London for so long as the Notes
      are admitted to the Official List of the UK Listing Authority and the rules
      of the UK Listing Authority so require and (bb) a Paying Agent in a European
      Union Member State that will not be obliged to withhold or deduct tax pursuant
      to European Council Directive 2003/48/EC or any other Directive implementing
      the conclusions of the ECOFIN Council meeting of 26-27 November 2000 on
      the taxation of savings income, or any law implementing or complying with,
      or introduced in order to conform to, such Directive. Notice of any such
      termination or appointment and of any change in the specified offices of
      the Paying Agents will be given to the Holders in accordance with Condition
    14.
|    |                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            



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- 29 -


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|(b) | Payments
    subject to Fiscal Laws                                                                                                                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                             
|    | Without prejudice to the terms of Condition 8, all payments made in accordance with these Terms and Conditions shall be made subject to any fiscal or other laws and regulations applicable in the place of payment. No commissions or expenses shall be charged to the Holders in respect of such payments.

|    |                                  
|--- | ---------------------------------
|(c) | Payments on Payment Business Days

| |                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | A Note or Coupon may only be presented for payment on a day which is a Payment Business Day. No further interest or other payment will be made as a consequence of the day on which the relevant Notes or Coupon may be presented for payment under this paragraph falling after the due date.

|  |                                 
|- | --------------------------------
|7 | Defaults; Limitation of Remedies

|    |                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | If a Note Default occurs and
    is continuing, the Trustee may, notwithstanding the provisions of paragraph
    (b) of this Condition 7, institute proceedings for, and/or prove in, the
    winding-up in England and Wales (but
    not elsewhere) of the Issuer (if the Note Default relates to the Issuer)
    and/or the Guarantor (if the Note Default relates to the Guarantor).

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | The Trustee may, at its discretion
    and without further notice, institute such proceedings against the Issuer
    or the Guarantor (as the case may be) as it may think fit to enforce any
    term or condition binding on the Issuer or the Guarantor (as the case may
    be) under the Trust Deed, the Notes or the Coupons (other than for a failure
    to pay which constitutes a Note Default) if the Issuer and/or the Guarantor
    is in default of such term and fails to remedy such default within 14 days
    after notice of the same shall have been given to the Issuer and/or Guarantor
    (as the case may be) by the Trustee, provided that the Issuer and the Guarantor
    (as the case may be) shall not, by virtue of the institution of any such
    proceedings, be obliged to pay any sum or sums, in cash or otherwise, sooner
    than the same would otherwise have been payable by it.

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(c) | The Trustee shall not be bound
    to take any of the actions referred to in paragraph (a) or (b) above against
    the Issuer and/or the Guarantor (as the case may be) to enforce the terms
    of the Trust Deed, the Notes or the Coupons unless (i) it shall have been
    so requested by an Extraordinary Resolution (as defined in the Trust Deed)
    of the Holders or in writing by the Holders of at least one-quarter in principal
    amount of the Notes then outstanding and (ii) it shall have been indemnified
    to its satisfaction.

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(d) | No Holder or Couponholder shall
    be entitled to proceed directly against the Issuer or the Guarantor (as the
    case may be) or to institute proceedings for the winding-up in England and
    Wales of the Issuer or the Guarantor (as the case may be) unless the Trustee,
    having become so bound to proceed, fails to do so within a reasonable period
    and such failure is continuing, and then only to the same extent (but not
    further or otherwise) that the Trustee would have been entitled to the same
    extent (but not further or otherwise) that the Trustee would have been entitled
    to do so. No remedy against the Issuer or the Guarantor (as the case may
    be) shall be available to the Trustee or any Holder or Couponholder (i) for
    the recovery of amounts owing in respect of the Notes or the Coupons other
    than the institution of proceedings for the winding-up in England of the
    Issuer or the Guarantor (as the case may be) and/or proving in such winding-up
    and (ii) for the breach of any other term under the Trust Deed, the Notes
    or the Coupons, other than as provided in paragraph (b) above.

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(e) | On the winding-up in England
    of the Issuer (except, in any such case, a solvent winding-up solely for
    the purpose of a reconstruction or amalgamation or the substitution in place
    of the Issuer of a successor in business of the Issuer (as defined in the
    Trust Deed), the terms of which reconstruction, amalgamation or substitution
    have previously been approved in writing by the Trustee or by an Extraordinary
    Resolution (as defined in the Trust Deed)), there shall be payable by the
    Issuer as debtor in respect of each Note the principal amount of such Note
    together with Deferred Interest, if any, and any accrued interest (other
    than Deferred Interest) but the claim of the holder shall rank in respect
    thereof immediately after all Senior Creditors and pari passuwith
    any Parity Securities. Accordingly, the amount in respect of the Notes that
    holders will receive will be less than the principal amount of such Note
    together with Deferred Interest if any, and any accrued interest (other than
    Deferred Interest) as provided in the Trust Deed, if the Issuer's Assets
    are less than its Liabilities to Senior Creditors and to the extent there
    are any Parity Securities.

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(f) | On the winding-up in England
    of the Guarantor (except, in any such case, a solvent winding-up solely for
    the purpose of a reconstruction or amalgamation or the substitution in place
    of the Guarantor of a successor in business of the Guarantor (as defined
    in the Trust Deed), the terms of which reconstruction, amalgamation or substitution
    have previously been approved in writing by the Trustee or by an Extraordinary
    Resolution (as defined in the Trust Deed)), there shall be payable by the
    Guarantor as debtor in respect of each Note the principal amount of such
    Note together with Deferred Interest, if any, and any accrued interest (other
    than Deferred Interest) but the claim of the holder shall rank in respect
    thereof immediately after all Senior Creditors and pari passu with any Parity
    Securities. Accordingly, the amount in respect of the Notes that holders
    will receive will be less than the principal amount of such Note together
    with Deferred Interest if any, and any accrued interest (other than Deferred
    Interest) as provided in the Trust Deed, if the Guarantor's Assets are less
    than its Liabilities to Senior Creditors and to the extent there are any
    Parity Securities.

| | 
| | 



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| | 
| | 

|  |                   
|- | ------------------
|8 | Additional Amounts

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|All
      payments by or on behalf of the Issuer or the Guarantor of principal and
      interest in respect of the Notes and Coupons will be made without withholding
      or deduction for, or on account of, any present or future taxes, duties,
      assessments or governmental charges of whatever nature imposed, collected,
      withheld, assessed or levied by or on behalf of the United Kingdom, or
      any political subdivision of, or any authority of, or in, the United Kingdom
      having power to tax, unless the withholding or deduction is required by
      law. In such event, the Issuer, or, as the case may be, the Guarantor,
      will pay such additional amounts as shall be necessary in order that the
      net amounts received by the Holders or Couponholders after such withholding
      or deduction shall equal the respective amounts which would have been receivable
      in respect of the Notes or Coupons, as the case may be, in the absence
      of the withholding or deduction ("Additional Amounts"), except
      that no such Additional Amounts shall be payable in relation to any Notes
    or Coupon:

|     |                                                                                                                                                                                                                                                                                                                                                                         
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i)  | presented for payment by, or on behalf of, a
Holder who is liable for such taxes, duties, assessments or governmental charges
in respect of such Notes or Coupon by reason of his having some connection with
the United Kingdom other than the mere holding of such Notes or Coupon; or                                                                                
|     |                                                                                                                                                                                                                                                                                                                                                                         
|(ii) | presented for payment by, or on
      behalf of, a Holder who would be able to avoid such withholding or deduction
      by satisfying any requirement to provide such evidence as is required by
      statute or making a declaration or any other statement or claim, including,
      but not limited to, a declaration of non-residence, but fails to do so;
    or
|     |                                                                                                                                                                                                                                                                                                                                                                         

|(iii) | presented for payment more than 30 days after the Relevant Date, except to the extent that the relevant Holder would have been entitled to such additional amounts on presenting the same for payment on such thirtieth day; or                                                                                                                                                                                                           
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(iv)  | where such withholding
      or deduction is imposed on a payment to an individual and is required to
      be made pursuant to European Council Directive 2003/48/EC or any other
      Directive implementing the conclusions of the ECOFIN Council meeting of
      26-27 November 2000 on the taxation of savings income or any law implementing
      or complying with, or introduced in order to conform to, such Directive;
    or
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(v)   | presented for payment
      by, or on behalf of, a Holder who would have been able to avoid such withholding
      or deduction by presenting the relevant Notes or Coupon to another Paying
    Agent in a Member State of the European Union.                                                                                                                                                                                           

Whenever, in these Conditions,
      reference is made in any context to the payment of principal or interest
      on, or in respect of, any Notes, these terms shall be deemed to include
      the payment of any Additional Amounts to the extent that, in the context,
      Additional Amounts are, were or would be payable.


If the Issuer or the Guarantor
      becomes resident for tax purposes in any jurisdiction other than or in
      addition to the United Kingdom, references in these Terms and Conditions
      to the United Kingdom shall be construed as references to the United Kingdom
      and/or such other jurisdiction, as the case may be.


|9 | Amendments
|- | ----------

Any amendment or variation
      to these Conditions will require the provision of at least 30 days' notice
      to, and receipt of no objection within that period from, the FSA.


|10 | Prescription
|-- | ------------

Notes and Coupons (which,
      for this purpose, shall not include Talons) will become void unless presented
      for payment within a period of 10 years in the case of Notes and five years
      in the case of Coupons from the Relevant Date relating thereto. There shall
      be no prescription period for Talons but there shall not be included in
      any Coupon sheet issued in exchange for a Talon any Coupon the claim in
      respect of which would be void pursuant to this Condition or Condition
      6(a)(ii), or any Talon which would be void pursuant to Condition 6(a)(ii).




---

- 31 -


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|   |                                                               
|-- | --------------------------------------------------------------
|11 | Meetings of Holders, Modification,
    Waiver and Substitution

|                                                                                                                                                                                                                                                                                                         
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The Trust Deed
      contains provisions for convening meetings of Holders to consider any matter
      affecting their interests, including the modification by Extraordinary
      Resolution (as defined in the Trust Deed) of any of these Conditions or
    any of the provisions of the Trust Deed.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The quorum at
      any such meeting for passing an Extraordinary Resolution will be one or
      more persons holding or representing a clear majority in principal amount
      of the Notes for the time being outstanding, or at any adjourned such meeting
      one or more persons being or representing Holders whatever the principal
      amount of the Notes so held or represented, except that at any meeting
      the business of which includes the modification of certain of these Conditions
      and the Trust Deed (including, interalia,the
      provisions regarding subordination referred to in Condition 2, the terms
      concerning
      currency and the due dates for payment of principal or coupon payments
      in respect of the Notes and reducing or cancelling the principal amount
      of any Notes) the quorum will be one or more persons holding or representing
      not less than 75 per cent., or at any adjourned such meeting not less than
    25 per cent., in principal amount of the Notes for the time being outstanding.

|                                                                                                                                                                                
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|An Extraordinary
      Resolution passed at any meeting of Holders will be binding on all Holders,
    whether or not they are present at the meeting, and on all Couponholders.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notwithstanding
      any other provision of these Conditions, the Trustee may agree, without
      the consent of the Holders or Couponholders, to any modification (subject
      to certain exceptions) of, or to any waiver or authorisation of any breach
      or proposed breach of, any of these Conditions or any of the provisions
      of the Trust Deed which, in the opinion of the Trustee, is not materially
      prejudicial to the interests of the Holders or to any modification which
      is of a formal, minor or technical nature or to correct a manifest error
      or to comply with the mandatory provisions of the law of the jurisdiction
    in which the Issuer is incorporated.

|                                                                                                                                                                                                                                                                                              
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Any such modification,
      waiver or authorisation shall be binding on all Holders and all Couponholders
      and, unless the Trustee agrees otherwise, any such modification shall be
      notified to the Holders in accordance with Condition 14 as soon as practicable
    thereafter.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Subject to having
      received consent from the FSA, or the period of six months following the
      giving of prior written notice to the FSA having expired without any objection
      having been received from the FSA, the Trustee may agree with the Issuer
      and the Guarantor, subject to such amendment of the Trust Deed and such
      other conditions as the Trustee may require, but without the consent of
    the Holders or the Couponholders:

|                                                                                                                                                 
|-------------------------------------------------------------------------------------------------------------------------------------------------
|(i) to the substitution
      of the Guarantor in place of the Issuer as principal debtor under the Trust
    Deed, the Notes and the Coupons; or

|                                                                                                                                                                                                                                                                                                                                                                           
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(ii) subject to
      the Notes and the Coupons remaining unconditionally and irrevocably guaranteed
      on a subordinated basis by the Guarantor, to the substitution of a subsidiary
      (as defined in Section 736 of the Companies Act 1985) of the Issuer in
      place of the Issuer as principal debtor under the Trust Deed, the Notes
    and the Coupons; or

(iii) to the substitution
      of (a) a successor in business (as defined in the Trust Deed) to the Guarantor
      or (b) a subsidiary (as defined in Section 736 of the Companies Act 1985)
      of the Guarantor acceptable to the Trustee as guarantor
      of the Notes, in each case in place of the Guarantor,


any such substitution as aforesaid
    being subject to the Trustee being satisfied that the interests of the Holders
    will not be materially prejudiced thereby and compliance with the terms of
    the Trust Deed. In the case of such a substitution the Trustee may agree,
    without the consent of the Holders or Couponholders, to a change of the law
    governing the Notes, the Coupons and/or the Trust Deed provided that such
    change would not in the opinion of the Trustee be materially prejudicial
    to the interests of the Holders.

|12 | Replacement
    of the Notes, Coupons and Talons
|-- | ------------------------------------------------

Should any Note, Coupon or
      Talon be lost, stolen, mutilated, defaced or destroyed it may be replaced
      at the specified office of the Principal Paying Agent (or any other place
      of which notice shall have been given in accordance with Condition 14)
      upon payment by the claimant of the expenses incurred in connection therewith
      and on such terms as to evidence and indemnity as the Issuer may reasonably
      require. Mutilated or defaced Notes, Coupons or Talons must be surrendered
      before any replacement Notes, Coupons or Talons will be issued.




---

- 32 -


---



|   |            
|-- | -----------
|13 | The Trustee

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|The
      Trust Deed contains provisions for the indemnification of the Trustee and
      for its relief from responsibility, including provisions relieving it from
      taking any action unless indemnified to its satisfaction. The Trustee is
      entitled to enter into business transactions with the Issuer, the Guarantor
      or any subsidiary of the Issuer without accounting for any profit resulting
      therefrom. The Trustee is entitled under the Trust Deed to rely on reports
      and certificates addressed and/or delivered to it by the Auditors whether
      or not the same are addressed to the Trustee and whether or not they are
      subject to any limitation on the liability of the Auditors, whether by
      reference to a monetary cap or otherwise. No liability shall attach to
      the Trustee if, as a result of any event outside the control of the Trustee
      or its agent, the Trustee or its agent is unable to comply with any of
    the provisions of these Terms and Conditions.

|   |        
|-- | -------
|14 | Notices

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|Notices
      to Holders will be valid if published in a leading newspaper having general
      circulation in London (which is expected to be the Financial Times). Any
      such notice shall be deemed to have been given on the date of such publication
      or, if published more than once, on the first date on which publication
      is made. Couponholders will be deemed for all purposes to have notice of
      the contents of any notice given to the Holders in accordance with this
    Condition.

|   |               
|-- | --------------
|15 | Further Issues
|   |               

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|The Issuer shall
      be at liberty from time to time, without the consent of the Holders or
      the Couponholders, to create and issue further notes ranking pari passu      in all respects (or in all respects save for the date from which interest
      thereon accrues and the amount of the first payment of interest on such
      further notes) and so that the same shall be consolidated and form a single
      series with the outstanding Notes. Any such Notes shall be constituted
    by a deed supplemental to the Trust Deed.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

|   |       
|-- | ------
|16 | Agents

The Issuer and the Guarantor
      will procure that there shall at all times be a Principal Paying Agent
      so long as any of the Notes is outstanding. If the Principal Paying Agent
      is unable or unwilling to act as such or if it fails to make a determination
      or calculation or otherwise fails to perform its duties under these Conditions
      or the Agency Agreement, as appropriate, the Issuer and the Guarantor shall
      appoint, on terms acceptable to the Trustee, a leading international bank
      in the case of the Principal Paying Agent, acceptable to the Trustee, to
      act as such in its place. Neither the termination of the appointment nor
      the resignation of the Principal Paying Agent will be effective without
      a successor having been appointed.


All calculations and determinations
      made by the Principal Paying Agent in relation to the Notes shall (save
      in the case of manifest error) be final and binding on the Issuer, the
      Guarantor, the Trustee, the Paying Agents, the Holders and the Couponholders.


|17 | Governing Law
|-- | -------------

The Trust Deed, the Notes,
      the Coupons and the Talons are governed by, and shall be construed in accordance
      with, the laws of England.


|18 | Contracts
    (Rights of Third Parties) Act 1999
|-- | ------------------------------------------------

No person shall have any right
      to enforce any term or condition of the Notes by virtue of the Contracts
      (Rights of Third Parties) Act 1999.


|19 | Definitions
|-- | -----------

| |                               
| | ------------------------------
| | In these Terms and Conditions:

"Additional Amounts" has
      the meaning set forth in Condition 8.


"Agency Agreement" means
      the agency agreement dated 23 July 2004 between the Issuer, the Guarantor,
      the Trustee and the Paying Agents, relating to the Notes under which each
      Paying Agent agrees to perfonn the duties required of it under these Conditions.


"Assets" means the
      unconsolidated gross assets of the Issuer or, as the case may be, of the
      Guarantor as shown in the latest published audited balance sheet of the
      Issuer or, as the case may be, the Guarantor, but adjusted for contingent
      assets and for subsequent events, all in such manner as the directors of
      the Issuer or, as the case may be, the Guarantor, or the liquidator of
      the Issuer or, as the case may be, of the Guarantor may determine.




---

- 33 -


---



| | 
| | 

|     | "Benchmark Gilt" means,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(i)  | in relation to any determination
      of the Make-Whole Redemption Amount, such United Kingdom government security
      having a maturity date on or about the next Reset Date as the Principal
      Paying Agent, with the advice of the Reference Market Makers, may determine
    to be appropriate; and                                                                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(ii) | in relation to any
      determination of the Reset Coupon Rate for each Coupon Calculation Period,
      such United Kingdom government security having a maturity date on or about
      the next Reset Date as the Principal Paying Agent, with the advice of the
      Reference Market Makers, may determine to be appropriate, or if any such
      security is no longer in issue, such other United Kingdom government security
      as the Principal Paying Agent may, with the advice of the Reference Market
    Makers, determine to be appropriate at the relevant time.

|                                                                                                                                                                       | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|"Business
      Day" means a day, other than a Saturday or Sunday, on which commercial
    banks and foreign exchange markets are open for general business in London.

|                                                                                                                       | 
|---------------------------------------------------------------------------------------------------------------------- | 
|"Coupon" means
      an interest coupon relating to the Notes and includes, where the context
    so permits, a Talon.

|                                                                                                                                                | 
|----------------------------------------------------------------------------------------------------------------------------------------------- | 
|"Coupon
      Amount" means the amount of interest payable on the presentation and
    surrender of each Coupon for the relevant Coupon Period.

|                                                                                                                                                                                                                                               | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|"Coupon
      Calculation Period" means each period commencing on (and including)
      a Reset Date and ending on (but excluding) the next succeeding Reset Date
    for so long as any Notes are outstanding (as defined in the Trust Deed).

|                                                   | 
|-------------------------------------------------- | 
|"Couponholder" means
    the bearer of any Coupon.

|                                                                                                                                                               | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|"Coupon
      Payment" means with respect to a Coupon Payment Date, the aggregate
    Coupon Amounts for the Coupon Period ending on such Coupon Payment Date.

|                                                                                                      | 
|----------------------------------------------------------------------------------------------------- | 
|"Coupon
      Payment Date" means the date on which Coupon Payments on the Notes
    will be payable.

|                                                                                                                                                                                                                                                                                                                    | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|"Coupon
      Period" means the period beginning on (and including) the Issue Date
      and ending on (but excluding) the first Coupon Payment Date and each successive
      period beginning on (and including) a Coupon Payment Date and ending on
    (but excluding) the next succeeding Coupon Payment Date.

|                                                                       | 
|---------------------------------------------------------------------- | 
|"Deferred
    Interest" has the meaning given to it in Condition 3(b).

"Determination Date" means
      in, relation to a Coupon Calculation Period, the fifth Business Day prior
      to the first day of such Coupon Calculation Period, provided that, if it
      is not possible for any reason to determine the Gross Redemption Yield
      on such day, the Determination Date shall be postponed to the first Business
      Day thereafter on which the Principal Paying Agent determines that it is
      possible to determine the Gross Redemption Yield, provided that such day
      occurs before the first day of such Coupon Calculation Period. If such
      day falls on or after the first day of such Coupon Calculation Period,
      that Determination Date shall instead be the Business Day which is, or
      is nearest to but after, the first day of such Coupon Calculation Period
      and upon which the Principal Paying Agent determines that it is possible
      to determine the Gross Redemption Yield.


"FSA" means the
      Financial Services Authority or any successor regulatory body or other
      governmental authority in the UK exercising prudential supervision of insurance
      companies.


|"FSMA" means
    the Financial Services and Markets Act 2000.
|-------------------------------------------------------------

"Gross Redemption Yield" means,
      with respect to a security, the gross redemption yield on such security,
      as calculated by the Principal Paying Agent on the basis set out by the
      United Kingdom Debt Management Office in the paper "Formulae for Calculating
      Gilt Prices from Yields", page 4, Section One: Price/Yield Formulae "Conventional
      Gilts; Double dated and Undated Gilts with Assumed (or Actual) Redemption
      on a Quasi Coupon Date" (published 8 June 1998, as amended or updated
      from time to time) on an annual compounding basis (and rounded up (if necessary)
      to four decimal places).




---

- 34 -


---



| |                                                                           
| | --------------------------------------------------------------------------
| | "Group" means the Issuer, the Guarantor and their respective Subsidiaries.

| |                                                      
| | -----------------------------------------------------
| | "Guarantor" means Royal & Sun Alliance Insurance plc.

| |                                        
| | ---------------------------------------
| | "Holder" means the bearer of any Notes.

| |                                                                              
| | -----------------------------------------------------------------------------
| | "Issue Date" means 23 July 2004, being the date of initial issue of the Notes

| |                                                         
| | --------------------------------------------------------
| | "Issuer" means Royal & Sun Alliance Insurance Group plc.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 
|"Junior
      Securities" means ordinary shares, preference shares and any other
      securities which rank, as regards distributions on a return of assets on
      a winding-up of the Issuer or the Guarantor or in respect of distributions
      or payments of dividends or interest or any other payments thereon by the
      Issuer or the Guarantor, after the Notes or, as applicable, the Guarantee
      and for the avoidance of doubt, the Issuer's outstanding 7 3/8 per cent.
      Cumulative Irredeemable Preference Shares, and any securities ranking pari
      passu    therewith, shall constitute Junior Securities of the Issuer.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|"Liabilities" means
      the unconsolidated gross liabilities of the Issuer or, as the case may
      be, of the Guarantor as shown in the latest published audited balance sheet
      of the Issuer or, as the case may be, the Guarantor, but adjusted for contingent
      liabilities and for subsequent events, all in such manner as the directors
      of the Issuer or, as the case may be, of the Guarantor, or the liquidator
    of the Issuer or, as the case may be, of the Guarantor may determine.

| |                                                         
| | --------------------------------------------------------
| | "London Stock Exchange" means London Stock Exchange plc.

|                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|"Make
      Whole Redemption Amount", with respect to each Note (which is intended
      solely to compensate Holders for any reinvestment loss from interest rate
      risk, and costs of reinvestment as a result of the early redemption of
    the Notes), will be equal to the sum of:
|                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(a)                                                                                                                                                                                                                                                                                          | the price, expressed
      as a percentage (rounded to four decimal places, 0.00005 being rounded
      upwards) of the principal amount per Note, at which the Gross Redemption
      Yield on the Notes on the Reference Date (assuming for this purpose that
      the principal amount of the Note was payable on 8 December 2014 or, if
      the Redemption Date falls on any subsequent date other than on a Reset
      Date, the next Reset Date falling after such Redemption Date) is equal
      to the Gross Redemption Yield (determined by reference to the middle market
      price) at 3:00 p.m. (London time) on the Reference Date of the Benchmark
    Gilt plus 1 per cent.;
|                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(b)                                                                                                                                                                                                                                                                                          | if the Redemption Date
      is on or within five Business Days following a Coupon Payment Date, the
      Coupon payable thereon on that Coupon Payment Date, to the extent unpaid;
    and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(c)                                                                                                                                                                                                                                                                                          | all Deferred Interest
    and any Additional Amounts.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

"Make Whole Redemption
      Price" means, in respect of each Note, the greater of the Make Whole
      Redemption Amount and the principal amount of such Note.


A "Note Default" with
      respect to the Notes shall occur if the Issuer or the Guarantor (i) on
      a Redemption Date does not pay the principal amount of the Notes or any
      Deferred Interest or any accrued but unpaid interest;
      (ii) on a Resumption Date that is a Coupon Payment Date does not pay any
      Deferred Interest or any accrued but unpaid interest and, in any such case,
      such failure continues for 14 days; or (iii) on any Coupon Payment Date
      which is not an Optional Coupon Payment Date, does not pay any Deferred
      Interest or any accrued but unpaid interest and, in any such case, such
      failure continues for 14 days and for the purposes of this definition,
      a payment shall be deemed to be due even if the Solvency Condition set
      out in Condition 2(c) is not satisfied by the Issuer or the Guarantor,
      as the case may be.


|"Optional
    Coupon Payment Date" means any Coupon Payment Date where:
|-----------------------------------------------------------------------

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i) | (a) a Regulatory Event relating to the Issuer
has occurred prior to such Coupon Payment Date and is continuing on such Coupon
Payment Date or is reasonably likely to occur as a result of making the payments
due on such Coupon Payment Date; and (b) no interest payments had been made on
or no redemption or purchase or acquisition has been made on any Parity Securities
or Junior Securities of the Issuer or the Guarantor and no dividend or distribution
has been declared or paid on any class of share capital of the Issuer in each
case since the date of the commencement of such Regulatory Event; or



---

- 35 -


---



|
|

|(ii) | no interest payments
    have been made on or no redemption or purchase or acquisition has been made
    of any Parity Securities (other than the Notes) or Junior Securities of the
    Issuer or the Guarantor in the financial year of the Issuer in which such
    Coupon Payment Date falls and no dividend or distribution has been declared
    or paid on any class of share capital of the Issuer since the annual general
    meeting of the Issuer immediately preceding such Coupon Payment Date.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                                                                                                                                                                                                                                                                                                                                                       
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|"par redemption price", with respect to each Note, means an amount equal to the sum of its principal amount plus the accrued and unpaid coupon thereon for the then current Coupon Period, all Deferred Interest and, if the Redemption Date is on or within five Business Days following a Coupon Payment Date, the coupon payable thereon with respect to that Coupon Payment Date, to the extent unpaid, and any Additional Amounts.

|                                                                                                                                                                                                                                                                                                                                                                                | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|"Parity
      Securities" means securities (other than ordinary shares and preference
      shares) issued ranking pari passuwith the Notes, or (as applicable)
      the Guarantee in respect of the Notes, as to rights to coupons or interest
      payments and participation in the assets of the Issuer or (as applicable)
    the Guarantor in the event of liquidation.

|                                                                                                                                                                                                   | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|"Paying
      Agents" means the paying agents appointed pursuant to the Agency Agreement
      and such term shall, unless the context otherwise requires, include the
    Principal Paying Agent.

|                                                                                                                                                                                                                                                              | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|"Payment
      Business Day" any day which is (i) a Business Day and (ii) a day,
      other than a Saturday or Sunday, on which commercial banks and foreign
      exchange markets are open for general business in the relevant place of
    presentation.

|                                                                                                                | 
|--------------------------------------------------------------------------------------------------------------- | 
|"Principal
      Paying Agent" means the principal paying agent appointed pursuant
    to the Agency Agreement.

|                                                                                                                      | 
|--------------------------------------------------------------------------------------------------------------------- | 
|"Public
      Market Junior Securities" means Junior Securities held by persons
    other than a member of the Group.

|                                                                                                                      | 
|--------------------------------------------------------------------------------------------------------------------- | 
|"Public
      Market Parity Securities" means Parity Securities held by persons
    other than a member of the Group.

"Recognised Stock Exchange" means
      a recognised stock exchange as defined in Section 841 of the Income and
      Corporation Taxes Act 1988, as the same may be amended from time to time
      and any provisions, statute or statutory instrument replacing the same
      from time to time.


| | "Redemption Date" means any date fixed for redemption pursuant to Condition 5.
| | ------------------------------------------------------------------------------

| |                                                                            
| | ---------------------------------------------------------------------------
| | "Reference Date" means the third Business Day prior to the Redemption Date.

"Reference Market Makers" means
      three brokers of gilts and/or gilt-edged market makers selected by the
      Principal Paying Agent in consultation with the Issuer and the Guarantor.


|    | "Regulatory Event" means:         
|--- | ----------------------------------
|    |                                   
|(a) | with respect to the
    Issuer:   
|    |                                   
|    | (i)                               
|    |                                   
|    | (ii)                              
|    |                                   
|(b) | with respect to the
    Guarantor:
|    |                                   
|    | (i)                               
|    |                                   
|    | (ii)                              



---

- 36 -


---



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|A
        Regulatory Event shall be deemed to be continuing until such date as,
        in the case of (a)(i) or (b)(i), the relevant applicable regulatory capital
        or capital ratios have been restored or improved to the satisfaction
        of the FSA or the request is otherwise withdrawn or addressed to the
        satisfaction of the FSA or, in the case of (a)(ii) or (b)(ii), the first
        date on which the Group or, as the case may be, the Guarantor meets
        the relevant minimum applicable regulatory capital or capital ratios
        as determined
        and is certified to the Trustee by the board of directors of the Issuer
        in the case of (a)(ii) or the board of directors of the Guarantor in
        the case of (b)(ii).

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|"Relevant
        Date" in respect of a payment means the date on which such payment
        first becomes due, except that if the full amount of the moneys payable
        has not been duly received by the Principal Paying Agent or the Trustee
        on or prior to such due date, it means the date on which, the full amount
        of such moneys having been so received, notice to that effect is duly
        given to the Holders in accordance with Condition 14.

|                                                                                                                                                           
|-----------------------------------------------------------------------------------------------------------------------------------------------------------
|"Reset
        Date" means 8 December 2014 and each Coupon Payment Date falling
        on or nearest to the fifth anniversary of the preceding Reset Date.

|                                                                        
|------------------------------------------------------------------------
|"Resumption
        Date" has the meaning given to it in Condition 3(b).

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|"Senior
        Creditors" means all creditors of the Issuer or the Guarantor (as
        the case may be) including, in the case of the Guarantor, all policyholders
        of the Guarantor (and, for the avoidance of doubt, the claims of policyholders
        shall include all amounts to which they would be entitled under applicable
        legislation or rules relating to the winding-up of insurance companies
        to reflect any right to receive or expectation of receiving benefits
        which policyholders may have) who are (i) unsubordinated creditors of
        the Issuer or the Guarantor (as the case may be) or (ii) holders of dated
        subordinated indebtedness of the Issuer or the Guarantor (as the case
        may be) or (iii) other subordinated creditors of the Issuer or the Guarantor
        (as the case may be) other than (x) holders of undated or perpetual subordinated
        indebtedness and (y) those whose claims rank or are expressed to rank pari
        passuwith (including holders of Parity Securities) or junior to
        (including holders of Junior Securities) the claims of the Holders.

| | 
| | 

|"Solvency
        Condition" has the meaning set forth in Condition 2(c).
|-------------------------------------------------------------------------

|                                                                                                                        
|------------------------------------------------------------------------------------------------------------------------
|"Subsidiary" means
        a subsidiary undertaking within the meaning of Section 258 of the Companies
        Act 1985.

|                                                 
|-------------------------------------------------
|"Talon" means
        a talon for future Coupons.

"Tax
    Event" means an event where the Issuer and/or the Guarantor determines
    that (i) in making any Coupon Payments or payments of Deferred Interest on
    the Notes or under the Guarantee (as the case may be), it has paid, or will
    or would on the next Coupon Payment Date be required to pay, otherwise than
    as a result of a Change of Law (as defined in (iv) below), Additional Amounts
    in accordance with Condition 9 and such requirement or circumstance cannot
    be avoided by the Issuer or the Guarantor (as the case may be) taking reasonable
    measures available to it; (ii) as a result of a Change of Law any of the
    events mentioned in (i) above shall occur and such requirement or circumstance
    cannot be avoided by the Issuer or the Guarantor (as the case may be) taking
    reasonable measures available to it; (iii) payments, including payment of
    Deferred Interest on the next Interest Payment Date in respect of any Notes
    would, otherwise than as a result of a Change of Law (as defined in (iv)
    below), be treated as "distributions" within the meaning of Section
    209 of the Income and Corporation Taxes Act 1988 of the United Kingdom (as
    amended, re-enacted or replaced), or would be treated in such a way under
    any other provision of that Act or any Finance Act (as amended, re-enacted
    or replaced) that the Issuer would not obtain full or substantially full
    relief in respect of those payments for the purposes of United Kingdom corporation
    tax or (iv) as a result of a Change in Law, which for the purposes of the
    definition of Tax Event means a change in, or amendment to, or the official
    announcement of a change in, or amendment to, the laws or regulations of
    the United Kingdom or any political subdivision or any authority thereof
    or therein having power to tax (including any treaty to which the United
    Kingdom is a party), or any change in the application of or official interpretation
    of those laws or regulations (or the official announcement of any such change),
    which change or amendment becomes, or would become, effective on or after
    the Issue Date, there is a substantial risk that the Issuer will not obtain
    full or substantially full relief for the purposes of United Kingdom corporation
    tax for any payment of interest including, for the avoidance of doubt, where
    the Issuer may be unable to claim or surrender losses as group relief, and
    such requirement or circumstance cannot be avoided by the Issuer taking reasonable
    measures available to it.

"Trust
    Deed" means the trust deed dated 23 July 2004 between the Issuer, the
    Guarantor and the Trustee.

"Trustee" means Citicorp
Trustee Company Limited.



---

- 37 -


---





PRINCIPAL PAYING AGENT
  CITIBANK,
      N.A.5 Carmelite Street 
  London
    EC2Y 0PA

PAYING AGENT

DEXlA BANQUE INTERNATIONALE
      A LUXEMBOURG, SOCIÉTÉ ANONYME69,route d'Esch 
  L-2953
      Luxembourg



---

- 38 -





---





Form of Coupon

On the front: 
ROYAL & SUN ALLIANCE INSURANCE GROUP PLC £450,000,000 8.5 per cent. Cumulative Step-up Perpetual Subordinated Notes

Guaranteed on a subordinated
    basis by ROYAL & SUN ALLIANCE INSURANCE PLC 
  Note in the principal amount of £[1,000/10,000/100,000] 
  Coupon for the amount due on 8 December 2004/2005/2006/2007/20[].
  Coupon due on [] 20[]/[] in accordance with the Conditions 
  This Coupon is payable to bearer (subject to the Conditions endorsed on
      the Note to which this Coupon relates, which shall be binding upon the
      holder of this Coupon whether or not it is for the time being attached
      to such Note) at the specified offices of the Paying Agents set out on
      the reverse hereof (or any further or other Paying Agents or specified
      offices duly appointed or nominated and notified to the Noteholders).

|If
    the Note to which this Coupon relates shall have become due and payable before
    the maturity date of this Coupon, this Coupon shall become void and no payment
    shall be made in respect of it.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

ANY UNITED STATES PERSON WHO
    HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES
    INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND
1287(a) OF THE INTERNAL REVENUE CODE.

ROYAL & SUN ALLIANCE INSURANCE GROUP PLCBy: 
Director

|Cp No. |  | Denomination            |  | ISlN         |  | Series |  | Certif.
No.
|------ |  | ----------------------- |  | ------------ |  | ------ |  | -----------
|       |  |                         |  |              |  |        |  |            
|       |  | £[1,000/10,000/100,000] |  | XS0197028714 |  |        |  |            
|       |  |                         |  |              |  |        |  |            
|       |  |                         |  |              |  |        |  |            



On the back:

PRINCIPAL PAYING AGENT 
CITIBANK, N.A.5 Carmelite Street 
London EC2Y 0PA

PAYING AGENT
  DEXlA BANQUE INTERNATIONALE A LUXEMBOURG, SOCIÉTÉ ANONYME69, route d'Esch 
L-2953 Luxembourg



---

- 39 -


---



Form of Talon

On the front:

ROYAL & SUN ALLIANCE INSURANCE GROUP PLC

£450,000,000 8.5 per cent. Cumulative Step-up Perpetual Subordinated Notes
Guaranteed on a subordinated basis by ROYAL & SUN ALLIANCE INSURANCE PLC

Note in the principal amount
of £[1,000/10,000/100,000]

After all the Coupons appertaining to the Note to which this Talon is attached have matured further Coupons appertaining to the Note will be issued at the specified offices of the Paying Agents set out on the reverse hereof (or any further or other Paying Agents or specified offices duly appointed or nominated and notified to the Noteholders) upon production and surrender of this Talon, subject to the Conditions endorsed on the Note to which this Talon appertains.

If the Note to which this Talon relates shall have become due and payable before the original due date for exchange of this Talon, this Talon shall become void and no exchange shall be made in respect of it.

ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.

ROYAL & SUN ALLIANCE INSURANCE GROUP PLC

By:

Authorised Signatory

|Talon No. |  |  | Denomination            |  |  | lSlN         |  |  | Series |  |  | Certif. No. | 
|--------- |  |  | ----------------------- |  |  | ------------ |  |  | ------ |  |  | ----------- | 
|1         |  |  | £[1,000/10,000/100,000] |  |  | XS0197028714 |  |  |        |  |  |             | 
|          |  |  |                         |  |  |              |  |  |        |  |  |             | 

On the back:

PRINCIPAL PAYING AGENT 
CITIBANK, N.A.5 Carmelite Street 
London EC2Y 0PA

PAYING AGENT

DEXIA BANQUE INTERNATIONALE
      A LUXEMBOURG, SOCIÉTÉ ANONYME69, route d'Esch 
L-2953 Luxembourg



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Schedule 2 
  Part 1 
  Form of Temporary Global Note

ISIN: XS0197028714

ROYAL & SUN ALLIANCE INSURANCE GROUP PLC 
(Incorporated with limited liability in England and Wales) £450,000,000

8.5 per cent. Cumulative Step-up Perpetual Subordinated Notes guaranteed on a subordinated basis by 
ROYAL & SUN ALLIANCE INSURANCE PLC 
(Incorporated with limited liability in England and Wales)

|This is to certify that the bearer is entitled to the sum of
|------------------------------------------------------------

FOUR HUNDRED AND FIFTY MILLION
POUNDS (£450,000,000)

on such date as such principal
    sum may become payable in accordance with the Trust Deed (as defined below)
    and with the terms and conditions (the "Conditions") of
    the Notes designated above (the "Notes") set
    out in Schedule 1 to the trust deed dated 23 July 2004(the "Trust
    Deed") between Royal & Sun Alliance lnsurance Group plc (the "Issuer"),Royal & Sun
    Alliance lnsurance plc as Guarantor and Citicorp Trustee Company Limited
    as trustee upon presentation and surrender of this Temporary Global Note
    and to interest on such principal sum at the rates and on the dates determined
    in accordance with the Conditions and such other amounts as may be payable
    under the
Conditions, all subject to and in accordance with the Conditions.

On or after 3 September 2004
    (the "Exchange
      Date") this Temporary Global Note may be exchanged in whole or
      part (free of charge to the holder) by its presentation and, on exchange
      in full, surrender to or to the order of the Principal Paying Agent for
      interests in a permanent Global Note (the "Global Note")
      in
      bearer form in an aggregate principal amount equal to the principal amount
      of this Temporary Global Note submitted for exchange with respect to which
      there shall be presented to the Principal Paying Agent a certificate dated
      no earlier than the Exchange Date from Euroclear Bank S.A./N.V., as operator
      of the Euroclear System ("Euroclear")
or Clearstream Banking, societ6 anonyme ("Clearstream, Luxembourg")
substantially
to the following effect:

"CERTIFICATE 
  ROYAL & SUN ALLIANCE INSURANCE GROUP PLC 
£450,000,000 
8.5 per cent. Cumulative Step-up Perpetual Subordinated Notes 
Common Code 019702871 lSlN XS0197028714 (the "Notes")

This is to certify that, based
    solely on certificates we have received in writing, by tested telex or by
    electronic transmission from member organisations appearing in our records
    as persons being entitled to a portion of the principal amount set out below
    (our "Member Organisations")substantially to the effect
    set out in the temporary global Note in respect of the Notes, as of the date
    hereof, £450,000,000principal amount of the Notes (1) is owned
    by persons that are not citizens or residents of the United States, domestic
    partnerships, domestic corporations or any estate or trust the income of
    which is subject to United States federal income taxation regardless of its
    source ("United States persons"),(2) is owned by
    United States persons that (a) are foreign branches of United States financial
    institutions
    (as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v) ("financial
    institutions")) purchasing for their own account or for resale,
    or (b) acquired the Notes through foreign branches of United States financial
    institutions and who hold the Notes through such United States financial
    institutions on the date hereof (and in either case (a) or (b), each such
    United States financial institution has agreed, on its own behalf or through
    its agent, that we may advise the Issuer or the Issuer's agent that it will
    comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal
    Revenue Code of 1986, as amended, and the regulations thereunder), or (3)
    is owned by United States or foreign financial institutions for purposes
    of resale during the restricted period (as defined in U.S. Treasury Regulations
    Section 1.163-5(c)(2)(i)(D)(7), and to the further effect that United States
    or foreign financial institutions described in clause (3) above (whether
    or not also described in clause (1) or (2)) have certified that they have
    not acquired the Notes for purposes of resale directly or indirectly to a
    United States person or to a person within the United States or its possessions.





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We further certify (1) that we are not making available herewith for exchange (or, if relevant, exercise of any rights or collection of any interest) any portion of such temporary global Note excepted in such certificates and (2) that as of the date hereof we have not received any notification from any of our Member Organisations to the effect that the statements made by such Member Organisation with respect to any portion of the part submitted herewith for exchange (or, if relevant, exercise of any rights or collection of any interest) are no longer true and cannot be relied upon as of the date hereof.

We understand that this certificate is required in connection with certain tax laws of the United States. In connection therewith, if administrative or legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably authorise you to produce this certificate to any interested party in such proceedings.

Yours faithfully

[EUROCLEAR BANK S.A./N.V.,
as operator of the Euroclear System] or [CLEARSTREAM BANKING SOCIÉTÉ ANONYME]

By:                                                    Dated:

Any person appearing in the records of Euroclear or Clearstream, Luxembourg as entitled to an interest in this Temporary Global Note may require the exchange of an appropriate part of this Temporary Global Note for an equivalent interest in the Global Note by delivering or causing to be delivered to Euroclear or Clearstream, Luxembourg a certificate dated not more than 15 days before the Exchange Date in substantially the following form (copies of which will be available at the office of Euroclear in Brussels and Clearstream, Luxembourg in Luxembourg):



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"CERTIFICATE 
ROYAL & SUN ALLIANCE INSURANCE GROUP PLC £450,000,000
8.5 per cent. Cumulative Step-up Perpetual Subordinated Notes 
Common Code 019702871 lSlN XS0197028714 (the "Notes")

|To: | Euroclear Bank S.A./N.V., as operator of the
Euroclear System or Clearstream Luxembourg, société anonyme
|--- | --------------------------------------------------------------------------------------------------------

This is to certify that as of
    the date hereof, and except as set out below, the Notes held by you for our
    account (1) are owned by person(s) that are not citizens or residents of
    the United States, domestic partnerships, domestic corporations or any estate
    or trust the income of which is subject to United States federal income taxation
    regardless of its source ("United
      States person(s)"), (2) are owned by United States person(s) that
      (a) are foreign branches of United States financial institutions (as defined
      in U.S. Treasury Regulations Section 1.1 65-12(c)(1)(v) ("financial
      institutions")) purchasing for their own account or for resale,
      or (b) acquired the Notes through foreign branches of United States financial
institutions and who hold the Notes through such United States financial institutions
      on the date hereof (and in either case (a) or (b), each such United States
      financial institution hereby agrees, on its own behalf or through its agent,
      that you may advise the Issuer or the Issuer's agent that it will comply
      with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal
      Revenue Code of 1986, as amended, and the regulations thereunder), or (3)
      are owned by United States or foreign financial institution(s) for purposes
      of resale during the restricted period (as defined in U.S. Treasury Regulations
      Section 1.163-5(c)(2)(i)(D)(7)), and in addition if the owner of the Notes
      is a United States or foreign financial institution described in clause
      (3) above (whether or not also
described in clause(1) or (2)) this is to further certify that such financial institution has not acquired the Notes for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions.

As used herein, "United
States" means the United States of America (including the States and the District of Columbia) and its "possessions" include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands.

We undertake to advise you promptly by tested telex on or prior to that date on which you intend to submit your certificate relating to the Notes held by you for our account in accordance with your documented procedures if any applicable statement herein is not correct on such date, and in the absence of any such notification it may be assumed that this certificate applies as of such date.

This certificate excepts and does not relate to [ ] principal amount of such interest in the Notes in respect of which we are not able to certify and as to which we understand exchange for an equivalent interest in the Global Note (or, if relevant, exercise of any rights or collection of any interest) cannot be made until we do so certify.

We understand that this certificate is required in connection with certain tax laws of the United States. In connection therewith, if administrative or legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably authorise you to produce this certificate to any interested party in such proceeding.

Dated:

By:



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|                                   
|-----------------------------------
|[Name of person giving certificate]

|As, or as agent for the beneficial owner(s) of the above Notes to which this certificate relates."
|--------------------------------------------------------------------------------------------------

|                                                                                                                                                                                                                                                                                                                                                                         
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Upon any exchange of a part of this Temporary Global Note for an equivalent interest in the Global Note, the portion of the principal amount hereof so exchanged shall be endorsed by or on behalf of the Principal Paying Agent in the Schedule hereto, whereupon the principal amount hereof shall be reduced for all purposes by the amount so exchanged and endorsed.

|                                                                                                                                                                                           
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The Global Note will be exchangeable in accordance with its terms for definitive Notes (the "Definitive
    Notes") in bearer form with Coupons attached and one Talon for further Coupons.

This Temporary Global Note is subject to the Conditions and the Trust Deed and until the whole of this Temporary Global Note shall have been exchanged for equivalent interests in the Global Note its holder shall be entitled to the same benefits as if he were the holder of the Global Note for interests in which it may be exchanged (or the relevant part of it as the case may be) except that (unless exchange of this Temporary Global Note for the relevant interest in the Global Note shall be improperly withheld or refused by or on behalf of the Issuer) no person shall be entitled to receive any payment on this Temporary Global Note.

This Temporary Global Note shall not be valid or become obligatory for any purpose until authenticated by or on behalf of the Principal Paying Agent.

This Temporary Global Note shall be governed by and construed in accordance with English law.

|In witness whereof the Issuer has caused this Temporary Global Note to be signed on its behalf.
|-----------------------------------------------------------------------------------------------

|                   | 
|------------------ | 
|Dated 23 July 2004

ROYAL & SUN ALLIANCE
GROUP PLC

By:

This Temporary Global Note is authenticated by or on behalf of the Principal Paying Agent.

By:

Authorised Signatory

ANY UNITED STATES PERSON WHO
    HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES
    INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND
    1287(a) OF THE INTERNAL REVENUE CODE.



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Schedule of Exchanges for Interests in the Global Note

The following exchanges of an interest in this Temporary Global Note for an interest in the Global Note have been made:

|Date of Exchange | Amount of decrease in    | Principal amount of   | Notation made   
|---------------- | ------------------------ | --------------------- | ----------------
|                 | principal amount of this | this Temporary Global | by or on behalf 
|                 | Temporary Global Note    | Note following such   | of the Principal
|                 |                          | decrease              | Paying Agent    



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Schedule 2 
  Part 2 
  Form of permanent Global Note

ISIN: XS0197028714

ROYAL & SUN ALLIANCE
      INSURANCE GROUP PLC 
  (Incorporated with limited liability in England and
Wales)
£450,000,000

8.5 per cent. Cumulative
      Step-up Perpetual Subordinated Notes 
  guaranteed on a subordinated basis
      by 
  ROYAL & SUN ALLIANCE INSURANCE PLC 
  (Incorporated with limited liability
in England and Wales)

|This is to certify that the bearer is entitled to the sum of
|------------------------------------------------------------

FOUR HUNDRED AND FIFTY MILLION POUNDS (£450,000,000)

on such date as such principal sum may become payable in accordance with the Trust Deed (as defined below) and with the terms and conditions (the "Conditions") of the Notes designated above (the "Notes") set out in Schedule 1 to the trust deed dated 23 July 2004 (the "Trust
      Deed") between Royal & Sun Alliance lnsurance Group plc (the "lssuer"), Royal & Sun Alliance lnsurance plc as Guarantor and Citicorp Trustee Company Limited as trustee (the "Trustee") upon presentation and surrender of this Global Note and to interest on such principal sum at the rates and on the dates determined in accordance with the Conditions and such other amounts as may be payable under the Conditions, all subject to
and in accordance with the Conditions.

The aggregate principal amount from time to time of this Global Note shall be that amount not exceeding £450,000,000 as shall be shown by the latest entry in the fourth column of Schedule A hereto, which shall be completed by or on behalf of the Principal Paying Agent upon exchange of the whole or a part of the Temporary Global Note initially representing the Notes for a corresponding interest herein or upon the redemption or purchase and cancellation of Notes represented hereby or exchanged for Definitive Notes as described below.

This Global Note is exchangeable in whole but not in part (free of charge to the holder) for the Definitive Notes described below (1) if this Global Note is held on behalf of Euroclear or Clearstream, Luxembourg or the Alternative Clearing System (each as defined under "Notices" below) and any such clearing system is closed for business for a continuous period of 14 days (other than by reason of holidays, statutory or otherwise) or announces an intention permanently to cease business or does in fact do so by such holder giving notice to the Trustee, or (2) if the lssuer would suffer a material disadvantage in respect of the Notes as a result of a change in the laws or regulations (taxation or otherwise) of any jurisdiction referred to
in Condition 9 which would not be suffered were the Notes in definitive form and a certificate to such effect signed by two Directors of the lssuer is delivered to the Trustee, by the lssuer giving notice to the Principal Paying Agent, the Trustee and the Noteholders, of its intention to exchange this Global Note for Definitive Notes on or after the Exchange Date specified in the notice.

On or after the Exchange Date
    the holder of this Global Note may surrender this Global Note to or to the
    order of the Principal Paying Agent. In exchange for this Global Note, the
    lssuer shall deliver, or procure the delivery of, an equal aggregate principal
    amount of duly executed and authenticated Definitive Notes having attached
    to them all Coupons in respect of interest which has not already been paid
on this Global Note and one Talon for further Coupons.





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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|"Exchange
    Date" means a day falling not less than 60 days after that on which the notice requiring exchange is given and on which banks are open for business in the city in which the specified office of the Principal Paying Agent is located and except in the case of exchange pursuant to (1) above in the cities in which Euroclear and Clearstream, Luxembourg or, if relevant, the Alternative Clearing System (each as defined under "Notices" below) are located.

|                                                                                                                                                                                                                                                                                                                                                                         
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Except as otherwise described herein, this Global Note is subject to the Conditions and the Trust Deed and, until it is exchanged for Definitive Notes, its holder shall be entitled to the same benefits as if it were the holder of the Definitive Notes for which it may be exchanged and as if such Definitive Notes had been issued on the date of this Global Note.

|                                                                                                                   
|-------------------------------------------------------------------------------------------------------------------
|The Conditions shall be modified with respect to Notes represented by this Global Note by the following provisions:

|        
|--------
|Payments

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Payments of principal and interest in respect of the Notes represented by this Global Note will be made against presentation for endorsement and, if no further payment falls to be made in respect of such Notes, surrender of this Global Note to or to the order of the Principal Paying Agent or such other Paying Agent as shall have been notified to the Noteholders for such purpose. A record of each payment so made will be endorsed in the appropriate schedule to this Global Note, which endorsement will be prima
    facie evidence that such payment has been made in respect of such Notes.

|       
|-------
|Notices

So long as the Notes are represented
    by this Global Note or this Global Note is held on behalf of Euroclear Bank
    S.A./N.V. as operator of the Euroclear System ("Euroclear")
    or Clearstream Banking, société anonyme ("Clearstream, Luxembourg") or any other
    clearing system as shall have been approved by the Trustee (the "Alternative
    Clearing System"), notices to Noteholders may be given by delivery of
    the relevant notice to Euroclear and Clearstream, Luxembourg or, as the case
    may be, the Alternative Clearing System for communication by them to entitled
    accountholders in substitution for publication as required by the Conditions.

|Prescription
|------------

Claims against the Issuer in respect of principal and interest on the Notes while the Notes are represented by this Global Note will become void unless it is presented for payment within a period of 10 years (in the case of principal) and five years (in the case of interest) from the appropriate Relevant Date (as defined in Condition 20 of the Notes).

Meetings

For the purposes of any meeting
    of Noteholders, the holder hereof shall be treated as having one vote in
    respect of each £1,000 principal amount of Notes for which this Global Note
may be exchanged.

Purchase and Cancellation

Cancellation of any Note required by the Conditions to be cancelled following its purchase will be effected by reduction in the principal amount of this Global Note.

Trustee's Powers

In considering the interests of holders of Notes while this Global Note representing such Notes is held on behalf of a clearing system the Trustee may have regard to any information provided to it by such clearing system or its operator as to the identity (either individually or by category) of its
    accountholders with entitlements to this Global Note and may consider such
interests as if such accountholders were the holder of this Global Note.



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| | 
| | 

|Redemption at the option of the lssuer
|--------------------------------------

The option of the lssuer provided for in Condition 6 of the Notes shall be exercised by the lssuer giving notice to the relevant clearing system for communication by it to entitled accountholders (subject to the provisions of paragraph headed "Notices" above) within the time limits set out in and containing the information required by that Condition.

This Global Note shall not be valid or become obligatory for any purpose until authenticated by or on behalf of the Principal Paying Agent. 
This Global Note is governed by and shall be construed in accordance with English law. 
In witness whereof the lssuer has caused this Global Note to be signed on its behalf. 
Dated 23 July 2004 ROYAL & SUN ALLIANCE INSURANCE GROUP PLC
By: 
This Global Note is authenticated by or on behalf of the Principal Paying Agent.
By:

Authorised Signatory

ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.



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Schedule A 
  Principal Amount of this Global Note

The aggregate principal amount of this Global Note is as shown by the latest entry made by or on behalf of the Principal Paying Agent in the fourth column below. Increases in the principal amount of this Global Note following exchanges of a part of the Temporary Global Note for interests in this Global Note and reductions in the principal amount of this Global Note following redemption or the purchase and cancellation of Notes are entered in the second and third columns below.

|Date    |  |  | Reason for change in |  |  | Amount of such |  |  | Initial principal |  |  | Notation       | 
|------- |  |  | -------------------- |  |  | -------------- |  |  | ----------------- |  |  | -------------- | 
|        |  |  | the principal amount |  |  | change         |  |  | amount and        |  |  | made by or on  | 
|        |  |  | of this Global Note1 |  |  |                |  |  | principal amount  |  |  | behalf of the  | 
|        |  |  |                      |  |  |                |  |  | of this Global    |  |  | Principal      | 
|        |  |  |                      |  |  |                |  |  | Note following    |  |  | Paying Agent   | 
|        |  |  |                      |  |  |                |  |  | such change       |  |  | (other than in | 
|        |  |  |                      |  |  |                |  |  |                   |  |  | respect of the | 
|        |  |  |                      |  |  |                |  |  |                   |  |  | initial        | 
|        |  |  |                      |  |  |                |  |  |                   |  |  | principal      | 
|        |  |  |                      |  |  |                |  |  |                   |  |  | amount)        | 
|        |  |  |                      |  |  |                |  |  |                   |  |  |                | 
|23 July |  |  | Not applicable       |  |  | Not applicable |  |  | £ zero            |  |  | Not applicable | 
|2004    |  |  |                      |  |  |                |  |  |                   |  |  |                | 

|  |                                                                                                                                                            
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                            
|  |                                                                                                                                                            
|  |                                                                                                                                                            
|  |                                                                                                                                                            
|  |                                                                                                                                                            
|  |                                                                                                                                                            
| 
|1 | State whether increase/reduction following (1) exchange of part of Temporary Global Note (2) redemption of Notes or (3) purchase and cancellation of Notes.



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Schedule B 
  Interest Payments in respect of this Global Note

The following payments of interest
    in respect of this Global Note and the Notes represented by this Global Note
    have been made:

|Date made | Amount of interest due | Amount of interest paid | Notation made by or
|--------- | ---------------------- | ----------------------- | -------------------
|          | and payable            |                         | on behalf of the   
|          |                        | Principal Paying       
|          |                        | Agent                  



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Schedule 3 
  Provisions for Meetings of Noteholders

|Interpretation
|--------------

|  |                  
|- | -----------------
|1 | In this Schedule:

|    |                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------
|1.1 | references to a meeting are to a meeting of Noteholders and include, unless the context otherwise requires, any adjournment

|    |                                                                           
|--- | --------------------------------------------------------------------------
|1.2 | "agent" means a holder of a voting certificate or a proxy for a Noteholder

|    |                                                                                             
|--- | --------------------------------------------------------------------------------------------
|1.3 | "block voting instruction" means an instruction issued in accordance with paragraphs 8 to 14

|    |                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.4 | "Extraordinary Resolution" means a resolution passed at a meeting duly convened and held in accordance with this Trust Deed by a majority of at least 75 per cent. of the votes cast

|    |                                                                                                 
|--- | ------------------------------------------------------------------------------------------------
|1.5 | "voting certificate" means a certificate issued in accordance with paragraphs 5, 6, 7 and 14 and

|    |                                                                                                                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.6 | references to persons representing a proportion of the Notes are to Noteholders or agents holding or representing in the aggregate at least that proportion in principal amount of the Notes for the time being outstanding.

|                   |                                                                                                                                                                      
|------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Powers of meetings
|                   |                                                                                                                                                                      
|2                  | A meeting shall, subject to the Conditions and without prejudice to any powers conferred on other persons by this Trust Deed, have power by Extraordinary Resolution:

|    |                                                                                                                                                                                                                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1 | to sanction any proposal by the Issuer, the Guarantor or the Trustee for any modification, abrogation, variation or compromise of, or arrangement in respect of, the rights of the Noteholders and/or the Couponholders against the Issuer or the Guarantor, whether or not those rights arise under this Trust Deed, the Notes or the Coupons

|    |                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.2 | to sanction the exchange or substitution for the Notes of, or the conversion of the Notes into, shares, notes or other obligations or securities of the Issuer, the Guarantor or any other entity

|    |                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------
|2.3 | to assent to any modification of this Trust Deed, the Notes or the Coupons proposed by the Issuer, the Guarantor or the Trustee

|    |                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------
|2.4 | to authorise anyone to concur in and do anything necessary to carry out and give effect to an Extraordinary Resolution

|    |                                                                                              
|--- | ---------------------------------------------------------------------------------------------
|2.5 | to give any authority, direction or sanction required to be given by Extraordinary Resolution

|    |                                                                                                                                                                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.6 | to appoint any persons (whether Noteholders or not) as a committee or committees to represent the Noteholders' interests and to confer on them any powers or discretions which the Noteholders could themselves exercise by Extraordinary Resolution

|    |                                                          
|--- | ---------------------------------------------------------
|2.7 | to approve a proposed new Trustee and to remove a Trustee

|    |                                                                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.8 | to approve the substitution of any entity for the Issuer or the Guarantor (or any previous substitute) as principal debtor or guarantor under this Trust Deed and

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.9 | to discharge or exonerate the Trustee from
any liability in respect of any act or omission for which it may become responsible
under this Trust Deed, the Notes or the Coupons provided that the special quorum
provisions in paragraph 19 shall apply to any Extraordinary Resolution (a "special
quorum resolution") for the purpose of sub-paragraph 2.2 or 2.8 or for
the purpose of making a modification to this Trust Deed, the Notes or the Coupons
which would have the effect of:



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| |      |                                                                                                                                                                                                                                          
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i)  | modifying
      the maturity of the Notes or the dates on which interest is payable on
    them or the circumstances in which interest may be deferred or                                                                                
| |      |                                                                                                                                                                                                                                          
| | (ii) | reducing
      or cancelling the principal amount of, any premium payable on redemption
      of, or interest on, or varying the method of calculating the rate of interest
    or reducing the minimum rate of interest on, the Notes or
| |      |                                                                                                                                                                                                                                          

| | (iii) | changing the currency of payment of the Notes or                                                                                                                     
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                      
| | (iv)  | modifying the provisions
    of Conditions 2 or 3                                                                                                                    
| |       |                                                                                                                                                                      
| | (v)   | modifying the provisions
      in this Schedule concerning the quorum required at a meeting or the majority
      required to pass an Extraordinary Resolution
    or
| |       |                                                                                                                                                                      
| | (vi)  | modifying
    or cancelling the Guarantee or                                                                                                                         
| |       |                                                                                                                                                                      
| | (vii) | amending this proviso.                                                                                                                                               

| |  | 
| |  | 

|Convening a meeting
|-------------------

|  |                                                                                                                                                                                                                                                                                                                                                                                                               
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3 | The Issuer, the Guarantor or the Trustee may at any time convene a meeting. If it receives a written request by Noteholders holding at least 10 per cent. in principal amount of the Notes for the time being outstanding and is indemnified to its satisfaction against all costs and expenses, the Trustee shall convene a meeting. Every meeting shall be held at a time and place approved by the Trustee.

|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4 | At least 21 days' notice (exclusive of the day on which the notice is given and of the day of the meeting) shall be given to the Noteholders. A copy of the notice shall be given by the party convening the meeting to the other parties. The notice shall specify the day, time and place of meeting and, unless the Trustee otherwise agrees, the nature of the resolutions to be proposed and shall explain how Noteholders may appoint proxies or representatives, obtain voting certificates and use block voting instructions and the details of the time limits applicable.

Arrangements for voting

|5 | If a holder of a Note (whether in definitive form or represented by a Global Note) wishes to obtain a voting certificate in respect of it for a meeting, he must deposit it for that purpose at least 48 hours before the time fixed for the meeting with a Paying Agent or arrange for it to be held to the order of a Paying Agent with a bank or other depositary nominated by the Paying Agent for the purpose. The Paying Agent shall then issue a voting certificate in respect of it.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|  |                            
|- | ---------------------------
|6 | A voting certificate shall:

|    |                                      
|--- | -------------------------------------
|6.1 | be a document in the English language

|    |         
|--- | --------
|6.2 | be dated

|    |                                                                                
|--- | -------------------------------------------------------------------------------
|6.3 | specify the meeting concerned and the serial numbers of the Notes deposited and

|    |                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------
|6.4 | entitle, and state that it entitles, its bearer to attend and vote at that meeting in respect of those Notes.



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|  |                                                                                                                                    
|- | -----------------------------------------------------------------------------------------------------------------------------------
|7 | Once a Paying Agent has issued a voting certificate for a meeting in respect of a Note, it shall not release the Note until either:

|    |                                  
|--- | ---------------------------------
|7.1 | the meeting has been concluded or

|    |                                                                 
|--- | ----------------------------------------------------------------
|7.2 | the voting certificate has been surrendered to the Paying Agent.

|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|8 | If a holder of a Note (whether in definitive form or represented by a Global Note) wishes the votes attributable to it to be included in a block voting instruction for a meeting, then, at least 48 hours before the time fixed for the meeting, (i) he must deposit the Note for that purpose with a Paying Agent or arrange for it to be held to the order of a Paying Agent with a bank or other depositary nominated by the Paying Agent for the purpose and (ii) he or a duly authorised person on his behalf must direct the Paying Agent how those votes are to be cast. The Paying Agent shall issue a block voting instruction in respect of the votes attributable to all Notes so deposited.

|  |                                  
|- | ---------------------------------
|9 | A block voting instruction shall:

|    |                                      
|--- | -------------------------------------
|9.1 | be a document in the English language

|    |         
|--- | --------
|9.2 | be dated

|    |                              
|--- | -----------------------------
|9.3 | specify the meeting concerned

|    |                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|9.4 | list the total number and serial numbers of the Notes deposited, distinguishing with regard to each resolution between those voting for and those voting against it

|    |                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------
|9.5 | certify that such list is in accordance with Notes deposited and directions received as provided in paragraphs 8, 11 and 14 and

|    |                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------
|9.6 | appoint a named person (a "proxy") to
    vote at that meeting in respect of those Notes and in accordance with that
    list.

| |                                 
| | --------------------------------
| | A proxy need not be a Noteholder

|   |                                                                                                                           
|-- | --------------------------------------------------------------------------------------------------------------------------
|10 | Once a Paying Agent has issued a block voting instruction for a meeting in respect of the votes attributable to any Notes:

|     |                                                                                                             
|---- | ------------------------------------------------------------------------------------------------------------
|10.1 | it shall not release the Notes, except as provided in paragraph 11, until the meeting has been concluded and

|     |                                                                                                                                                                                                                                         
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.2 | the directions to which it gives effect may not be revoked or altered during the period commencing 48 hours before the time fixed for the meeting and ending with the termination or adjournment for more than five days of the meeting.

|   |                                                                                                                                                                                                                                                                                                       
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|11 | If the receipt for a Note deposited with a Paying Agent in accordance with paragraph 8 is surrendered to the Paying Agent at least 48 hours before the time fixed for the meeting, the Paying Agent shall release the Note and exclude the votes attributable to it from the block voting instruction.

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|12 | Each block voting instruction shall be deposited at least 24 hours before the time fixed for the meeting at such place as the Trustee shall designate or approve, and in default it shall not be valid unless the chairman of the meeting decides otherwise before the meeting proceeds to business. If the Trustee requires, a notarially certified copy of each block voting instruction shall be produced by the proxy at the meeting but the Trustee need not investigate or be concerned with the validity of the proxy's appointment.



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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|13 | A vote cast in accordance with a block voting instruction shall be valid even if it or any of the Noteholders' instructions pursuant to which it was executed has previously been revoked or amended, unless written intimation of such revocation or amendment is received from the relevant Paying Agent by the lssuer or the Trustee at its registered office or by the chairman of the meeting in each case at least 24 hours before the time fixed for the meeting.

|   |                                                                                                                                                            
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|14 | No Note may be deposited with or to the order of a Paying Agent at the same time for the purposes of both paragraph 5 and paragraph 8 for the same meeting.

|         |                                                                                                                                                                                                                                                                                                                                                              
|-------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Chairman
|         |                                                                                                                                                                                                                                                                                                                                                              
|15       | The chairman of a meeting shall be such person as the Trustee may nominate in writing, but if no such nomination is made or if the person nominated is not present within 15 minutes after the time fixed for the meeting the Noteholders or agents present shall choose one of their number to be chairman, failing which the Issuer may appoint a chairman.

|   |                                                                                                                                                                    
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|16 | The chairman may, but need not, be a Noteholder
or agent. The chairman of an adjourned meeting need not be the same person as
the chairman of the original meeting.

Attendance

|17 | The following may attend and speak at a meeting:
|-- | ------------------------------------------------

|     |                       
|---- | ----------------------
|17.1 | Noteholders and agents

|     |             
|---- | ------------
|17.2 | the chairman

|     |                                                                                                                                       
|---- | --------------------------------------------------------------------------------------------------------------------------------------
|17.3 | the Issuer, the Guarantor and the Trustee (through their respective representatives) and their respective financial and legal advisers

|     |                                            
|---- | -------------------------------------------
|17.4 | any other person authorised by the Trustee.
|     |                                            
|     | No-one
    else may attend or speak.       

|                      
|----------------------
|Quorum and Adjournment
|                      
|18                    
|                      

|19 | One or more Noteholders or agents present in
person shall be a quorum:
|-- | ----------------------------------------------------------------------

|     |                                                                                                                          
|---- | -------------------------------------------------------------------------------------------------------------------------
|19.1 | in the cases marked "No minimum proportion" in
the table below, whatever the proportion of the Notes which they represent

|     |                                                                                                
|---- | -----------------------------------------------------------------------------------------------
|19.2 | in any other case, only if they represent the proportion of the Notes shown by the table below.

| | 
| | 

| |                    |  |                                                    |  |                                                               | 
| | ------------------ |  | -------------------------------------------------- |  | ------------------------------------------------------------- | 
| | Column 1           |  | Column 2                                           |  | Column 3                                                      | 
| |                    | 
| | Purpose of meeting |  | Any meeting except one referred to in
    column 3 |  | Meeting previously adjourned through
        want of a quorum | 
| |                    |  |                                                    | 
| |                    |  | Required proportion                                |  | Required proportion                                           | 
| |                    |  |                                                    |  |                                                               | 



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| |                                                |  |                  |  |                       | 
| | ---------------------------------------------- |  | ---------------- |  | --------------------- | 
| |                                                |  |                  |  |                       | 
| | Column 1                                       |  | Column 2         |  | Column 3              | 
| |                                                | 
| | To pass a special quorum resolution            |  | 75 per cent.     |  | 25 per cent.          | 
| |                                                | 
| | To pass any other
    Extraordinary Resolution |  | A clear majority |  | No minimum proportion | 
| |                                                | 
| | Any other purpose                              |  | 10 per cent.     |  | No minimum proportion | 
| |                                                |  |                  |  |                       | 

| | 
| | 

|20 | The chairman may with the consent of (and shall if directed by) a meeting adjourn the meeting from time to time and from place to place. Only business which could have been transacted at the original meeting may be transacted at a meeting adjourned in accordance with this paragraph or paragraph 18.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|   |                                                                                                                                                                                                                                                                                     
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|21 | At least 10 days' notice of a meeting adjourned through want of a quorum shall be given in the same manner as for an original meeting and that notice shall state the quorum required at the adjourned meeting. No notice need, however, otherwise be given of an adjourned meeting.

|       |                                                                                                                                                                                                                                                                                                      
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Voting
|       |                                                                                                                                                                                                                                                                                                      
|22     | Each question submitted to a meeting shall be decided by a show of hands unless a poll is (before, or on the declaration of the result of, the show of hands) demanded by the chairman, the Issuer, the Guarantor, the Trustee or one or more persons representing at least 2 per cent. of the Notes.

|   |                                                                                                                                                                                                                                      
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|23 | Unless a poll is demanded a declaration by
the chairman that a resolution has or has not been passed shall be conclusive
evidence of the fact without proof of the number or proportion of the votes cast
in favour of or against it.

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|24 | If a poll is demanded, it shall be taken in
such manner and (subject as provided below) either at once or after such adjournment
as the chairman directs. The result of the poll shall be deemed to be the resolution
of the meeting at which it was demanded as at the date it was taken. A demand
for a poll shall not prevent the meeting continuing for the transaction of business
other than the question on which it has been demanded.

|   |                                                                                                      
|-- | -----------------------------------------------------------------------------------------------------
|25 | A poll demanded on the election of a chairman
or on a question of adjournment shall be taken at once.

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|26 | On a show of hands every person who is present in person and who produces a Note or a voting certificate or is a proxy has one vote. On a poll every such person has one vote for each £1,000 principal amount of Notes so produced or represented by the voting certificate so produced or for which he is a proxy or representative. Without prejudice to the obligations of proxies, a person entitled to more than one vote need not use them all or cast them all in the same way.

|                                                          |                                                                                                                                                            
|--------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|27                                                        | In case of equality of votes the chairman shall
both on a show of hands and on a poll have a casting vote in addition to any
other votes which he may have.
|                                                          |                                                                                                                                                            
|Effect and Publication
    of an Extraordinary Resolution
|                                                          |                                                                                                                                                            

|28 | An Extraordinary Resolution shall be binding on all the Noteholders, whether or not present at the meeting, and on all the Couponholders and each of them shall be bound to give effect to it accordingly. The passing of such a resolution shall be conclusive evidence that the circumstances justify its being passed. The Issuer shall give notice of the
    passing of an Extraordinary Resolution to Noteholders within 14 days but
    failure to do so shall not invalidate the resolution.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|       
|-------
|Minutes

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|29 | Minutes shall be made of all resolutions and proceedings at every meeting and, if purporting to be signed by the chairman of that meeting or of the next succeeding meeting, shall be conclusive evidence of the matters in them. Until the contrary is proved every meeting for which minutes have been so made and signed shall be deemed to have been duly convened and held and all resolutions passed or proceedings transacted at it to have been duly passed and transacted.

Trustee's Power to Prescribe Regulations

|30 | Subject to all other provisions in this Trust
Deed the Trustee may without the consent of the Noteholders prescribe such further
regulations regarding the holding of meetings and attendance and voting at them
as it in its sole discretion determines including (without limitation) such requirements
as the Trustee thinks reasonable to satisfy itself that the persons who purport
to make any requisition in accordance with this Trust Deed are entitled to do
so and as to the form of voting certificates or block voting instructions so
as to satisfy itself that persons who purport to attend or vote at a meeting
are entitled to do so.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



---

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|                                                                                                   
|---------------------------------------------------------------------------------------------------
|In witness whereof this Trust Deed has been executed as a deed on the date stated at the beginning.

THE COMMON SEALof ROYAL & SUN ALLIANCE INSURANCE GROUP PLC
was affixed in the presence of:

| | ANDREW HASTE
| | ------------

| |              
| | -------------
| | GEORGE CULMER

THE COMMON SEALof ROYAL & SUN ALLIANCE INSURANCE PLC
was affixed in the presence of:

| | ANDREW HASTE
| | ------------

| |              
| | -------------
| | GEORGE CULMER

THE COMMON SEALof ClTlCORP TRUSTEE COMPANY LIMITED

was affixed in the presence of:



|DAVID
    MARES |  |  | VIOLA
    JAPAUL |  |  |  | 
|--------------- |  |  | ---------------- |  |  |  | 
|                |  |  |                  |  |  |  | 
|                |  |  |                  |  |  |  | 
|                |  |  |                  |  |  |  | 
|                |  |  |                  |  |  |  | 
|Director        |  |  | Director         |  |  |  | 



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