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                                                                  Exhibit 10.5.2

DRAFT: 25/02/03

THIS SECOND ISSUER MASTER DEFINITIONS AND CONSTRUCTION SCHEDULE is signed for
the purposes of identification on [5th March], 2003 by:

(1)      ALLEN & OVERY of One New Change, London EC4M 9QQ; and

(2)      SIDLEY AUSTIN BROWN & WOOD of 1 Threadneedle Street, London EC2R 8AW.

1.       DEFINITIONS

         "ADDITIONAL INTEREST" has the meaning given in Condition 4(B) of the
         Second Issuer Notes;

         "AGENT BANK" means Citibank, N.A. London Branch of 5 Carmelite Street,
         London EC4Y 0PA, or such other person for the time being acting as
         agent bank under the Second Issuer Paying Agent and Agent Bank
         Agreement;

         "AGENTS" means the Principal Paying Agent, the US Paying Agent, the
         Registrar, the Transfer Agent and the Agent Bank;

         "AUDITORS" means KPMG Audit Plc of 1 Canada Square, Canary Wharf,
         London E14 5AG or such other internationally recognised independent
         firm of auditors selected from time to time by the Second Issuer with
         the prior consent of the Note Trustee;

         "AUTHORISED DENOMINATIONS" means denominations of, in the case of the
         Series 1 Class A Second Issuer Notes, the Series 1 Class B Second
         Issuer Notes, the Series 1 Class C Second Issuer Notes, the Series 2
         Class A Second Issuer Notes, the Series 2 Class B Second Issuer Notes,
         the Series 2 Class C Second Issuer Notes and the Series 4 Class A
         Second Issuer Notes $1,000 or $10,000 and integral multiples thereof;
         in the case of the Series 3 Class A Second Issuer Notes the Series 3
         Class B Second Issuer Notes, the Series 3 Class C Second Issuer Notes,
         the Series 4 Class B Second Issuer Notes and the Series 4 Class C
         Second Issuer Notes, Euro 500,000 and integral multiples thereof; in
         the case of the Series 5 Class A Second Issuer Notes, the Series 5
         Class B Second Issuer Notes and the Series 5 Class C Second Issuer
         Notes, Pound Sterling 1,000 or Pound Sterling 10,000 and integral
         multiples thereof, and in any case such denominations (in each case) as
         the Note Trustee shall determine and notify to the relevant Second
         Issuer Noteholders;

         "AUTHORISED INVESTMENTS" means:

         (a)  Sterling gilt-edged securities; and

         (b)  Sterling demand or time deposits, certificates of deposit and
              short-term debt obligations (including commercial paper) (which
              may include deposits in any account which earns a rate of
              interest related to LIBOR) provided that in all cases such
              investments have a maturity date of 90 days or less and mature on
              or before the next Interest Payment Date and the short-term
              unsecured, unguaranteed and unsubordinated debt obligations of
              the issuing or guaranteeing entity or entity with which the
              demand or time deposits are made (being an authorised person
              under the FSMA 2000) are rated A-1+ by Standard & Poor's, F1+ by
              Fitch and P-1 by Moody's or their equivalents by three other
              internationally recognised rating agencies;

         "AUTHORISED SIGNATORY" means any authorised signatory referred to in
         the Second Issuer Account Mandate;

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         "BASIC TERMS MODIFICATION" has the meaning given in PARAGRAPH 5 of
         SCHEDULE 4 to the Second Issuer Trust Deed;

         "BOOK-ENTRY INTEREST" means a beneficial interest in a global note
         representing the relevant class of Second Issuer Notes shown on records
         maintained in book-entry form by DTC, Euroclear or Clearstream,
         Luxembourg, as the case may be;

         "BUSINESS DAY" means a day which is a London Business Day, a New York
         Business Day and a TARGET Business Day;

         "CASH MANAGEMENT AGREEMENT" means the cash management agreement entered
         into on the Initial Closing Date between the Cash Manager, the
         Mortgages Trustee, Funding 1, and the Security Trustee (as the same may
         be amended and/or supplemented from time to time);

         "CASH MANAGER" means Halifax PLC in its capacity as cash manager for
         the Mortgages Trustee and Funding 1 pursuant to the terms of the Cash
         Management Agreement;

         "CLASS A SECOND ISSUER NOTE ACCELERATION NOTICE" means a notice issued
         by the Note Trustee to the Second Issuer and the Security Trustee
         declaring the Class A Second Issuer Notes to be due and repayable
         pursuant to Condition 9(A) of the Second Issuer Notes;

         "CLASS B SECOND ISSUER NOTE ACCELERATION NOTICE" means a notice issued
         by the Note Trustee to the Second Issuer and the Security Trustee
         declaring the Class B Second Issuer Notes to be due and repayable
         pursuant to Condition 9(B) of the Second Issuer Notes;

         "CLASS C SECOND ISSUER NOTE ACCELERATION NOTICE" means a notice issued
         by the Note Trustee to the Second Issuer and the Security Trustee
         declaring the Class C Second Issuer Notes to be due and repayable
         pursuant to Condition 9(C) of the Second Issuer Notes;

         "CLASS A SECOND ISSUER NOTEHOLDERS" means the holders for the time
         being of the Class A Second Issuer Notes;

         "CLASS B SECOND ISSUER NOTEHOLDERS" means the holders for the time
         being of the Class B Second Issuer Notes;

         "CLASS C SECOND ISSUER NOTEHOLDERS" means the holders for the time
         being of the Class C Second Issuer Notes;

         "CLASS A SECOND ISSUER NOTES" means the Series 1 Class A Second Issuer
         Notes, the Series 2 Class A Second Issuer Notes, the Series 3 Class A
         Second Issuer Notes, the Series 4 Class A Second Issuer Notes and the
         Series 5 Class A Second Issuer Notes;

         "CLASS B SECOND ISSUER NOTES" means the Series 1 Class B Second Issuer
         Notes, the Series 2 Class B Second Issuer Notes, the Series 3 Class B
         Second Issuer Notes, the Series 4 Class B Second Issuer Notes and the
         Series 5 Class B Second Issuer Notes;

         "CLASS C SECOND ISSUER NOTES" means the Series 1 Class C Second Issuer
         Notes, the Series 2 Class C Second Issuer Notes, the Series 3 Class C
         Second Issuer Notes, the Series 4 Class C Second Issuer Notes and the
         Series 5 Class C Second Issuer Notes;

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         "CLEARSTREAM, LUXEMBOURG" means Clearstream Banking, societe anonyme;

         "CO-ARRANGERS" means JPMorgan and Lehman Brothers;

         "COMMON DEPOSITORY" means Citibank, N.A., in its capacity as common
         depository for Euroclear and Clearstream, Luxembourg;

         "CONDITIONS" or "TERMS AND CONDITIONS" means the terms and conditions
         of the Second Issuer Notes set out in the SCHEDULE 3 to the Second
         Issuer Trust Deed, as any of the same may from time to time be amended,
         varied or restated in accordance with the provisions of the Second
         Issuer Trust Deed and any reference to a numbered Condition shall be
         construed accordingly;

         "CORPORATE SERVICES AGREEMENTS" means, together, the Funding 1
         Corporate Services Agreement, the Second Issuer Corporate Services
         Agreement and the Mortgages Trustee Corporate Services Agreement;

         "CURRENCY SWAP AGREEMENTS" means the Series 1 Class A Second Issuer
         Swap Agreement, the Series 1 Class B Second Issuer Swap Agreement, the
         Series 1 Class C Second Issuer Swap Agreement, the Series 2 Class A
         Second Issuer Swap Agreement, the Series 2 Class B Second Issuer Swap
         Agreement, the Series 2 Class C Second Issuer Swap Agreement, the
         Series 3 Class A Second Issuer Swap Agreement, the Series 3 Class B
         Second Issuer Swap Agreement, the Series 3 Class C Second Issuer Swap
         Agreement, the Series 4 Class A Second Issuer Swap Agreement, the
         Series 4 Class B Second Issuer Swap Agreement and the Series 4 Class C
         Second Issuer Swap Agreement;

         "CURRENCY SWAP PROVIDER" means the relevant swap provider in relation
         to each of the Dollar Currency Swaps or Euro Currency Swaps, as the
         case may be, and "CURRENCY SWAP PROVIDERS" means all of them;

         "CURRENCY SWAP PROVIDER DEFAULT" means the occurrence of an Event of
         Default (as defined in the Currency Swap Agreements) where a Currency
         Swap Provider is the Defaulting Party;

         "DEFAULTING PARTY" has the meaning given to it in the Second Issuer
         Swap Agreements;

         "DEFERRED INTEREST" has the meaning given in Condition 4(B) of the
         Second Issuer Notes;

         "DEFINITIVE SECOND ISSUER NOTES" means the Dollar Definitive Second
         Issuer Notes and the Reg S Definitive Second Issuer Notes;

         "DESIGNATED SUBSIDIARY" has the meaning given in CLAUSE 2.2 of the
         Second Issuer Post-Enforcement Call Option Agreement;

         "DISTRIBUTION COMPLIANCE PERIOD" means the period until and including
         the 40th day after the later of the commencement of the offering of the
         Second Issuer Notes and the Second Issuer Closing Date;

         "DOLLAR CURRENCY EXCHANGE RATE" means the rates at which Dollars are
         converted to Sterling or, as the case may be, Sterling is converted to
         Dollars under the relevant Dollar

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         Currency Swap or, if there is no relevant Dollar Currency Swap
         Agreement in effect at such time, the "SPOT" rate at which Dollars are
         converted to Sterling or, as the case may be, Sterling is converted to
         Dollars on the foreign exchange markets;

         "DOLLAR CURRENCY SWAP AGREEMENTS" means the ISDA master agreements,
         schedules and confirmations relating to the Dollar Currency Swaps to be
         entered into on or before the Second Issuer Closing Date between the
         Second Issuer, the relevant Dollar Currency Swap Provider and the
         Security Trustee (as the same may be amended and/or supplemented from
         time to time);

         "DOLLAR CURRENCY SWAP PROVIDER DEFAULT" means the occurrence of an
         Event of Default (as defined in the Currency Swap Agreements) where a
         Dollar Currency Swap Provider is the Defaulting Party;

         "DOLLAR CURRENCY SWAP PROVIDERS" means the Series 1 Dollar Second
         Issuer Provider, the Series 2 Second Issuer Swap Provider and the
         Series 4 Class A Second Issuer Swap Provider;

         "DOLLAR CURRENCY SWAPS" means the Sterling-Dollar currency swaps which
         enable the Second Issuer to receive and pay amounts under the Second
         Issuer Intercompany Loan in sterling and to receive and pay amounts
         under the Series 1 Second Issuer Notes, the Series 2 Second Issuer
         Notes and the Series 4 Class A Second Issuer Notes;

         "DOLLAR DEFINITIVE SECOND ISSUER NOTES" means the Series 1 Class A
         Definitive Second Issuer Notes, the Series 1 Class B Definitive Second
         Issuer Notes, the Series 1 Class C Definitive Second Issuer Notes, the
         Series 2 Class A Definitive Second Issuer Notes, the Series 2 Class B
         Definitive Second Issuer Notes, the Series 2 Class C Definitive Second
         Issuer Notes and the Series 4 Class A Definitive Second Issuer Notes;

         "DOLLAR GLOBAL SECOND ISSUER NOTES" means the Series 1 Class A Global
         Second Issuer Note, the Series 1 Class B Global Second Issuer Note, the
         Series 1 Class C Global Second Issuer Note, the Series 2 Class A Global
         Second Issuer Note, the Series 2 Class B Global Second Issuer Note, the
         Series 2 Class C Global Second Issuer Note and the Series 4 Class A
         Global Second Issuer Note;

         "DOLLAR INTEREST DETERMINATION DATE" means (other than in respect of
         the Series 1 Class A Second Issuer Notes) two London Business Days
         before the first day of the Interest Period for which the rate will
         apply (or if such day is not a Business Day, the next succeeding
         Business Day);

         "EURIBOR" will be determined by the Agent Bank on the following basis:

         (a)  on the Euro Interest Determination Date, the Agent Bank will
              determine the arithmetic mean, rounded upwards to five decimal
              places, of the offered quotations to leading banks in the
              Euro-zone inter-bank market for three-month euro deposits of
              10,000,000 (or, in the case of the first Interest Period, a
              linear interpolation of such rates for three-month euro
              deposits).

              This will be determined by reference to the display as quoted on
              the Moneyline Telerate Screen No. 248 or, if the Moneyline
              Telerate Screen No. 248 stops providing these quotations, the
              replacement service for the purposes of displaying this
              information will be used. If the replacement service stops
              displaying the

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              information, another page as determined by the Second Issuer with
              the approval of the Note Trustee will be used.

              In each of these cases, the determination will be made at or
              about 11.00 a.m., Brussels time, on that date;

         (b)  if, on any such Euro Interest Determination Date, the screen rate
              is unavailable, the Agent Bank will:

              (1)  request the principal London office of each of the Reference
                   Banks to provide the Agent Bank with its offered quotation
                   to prime banks for euro deposits of the equivalent amount,
                   and for the relevant period, in the Euro-zone inter-bank
                   market as at or about 11.00 a.m. (Brussels time); and

              (2)  calculate the arithmetic mean, rounded upwards to five
                   decimal places, of those quotations;

         (c)  if, on any such Euro Interest Determination Date, the screen rate
              is unavailable and only two or three of the Reference Banks
              provide offered quotations, the relevant rate for that Interest
              Period will be the arithmetic mean of the quotations as
              calculated in paragraph (b); and

         (d)  if, on any such Euro Interest Determination Date, fewer than two
              Reference Banks provide quotations, the Agent Bank will consult
              with the Note Trustee and the Second Issuer for the purpose of
              agreeing a total of two banks in the Euro-zone inter-bank market
              to provide such quotations and the relevant rate for that
              Interest Period will be the arithmetic mean of the quotations as
              calculated in paragraph (b). If no such banks are agreed then the
              relevant rate for that Interest Period will be the rate in effect
              for the last preceding Interest Period for which paragraph (a) or
              (b) was applicable;

         "EUROCLEAR" means Euroclear Bank S.A./N.V., as operator of the
         Euroclear System or the successor for the time being to such business;

         "EURO CURRENCY EXCHANGE RATE" means the rates at which Euro is
         converted to Sterling or, as the case may be, Sterling is converted to
         Euro under the Euro Currency Swap or, if there is no Euro Currency Swap
         Agreement in effect at such time, the "SPOT" rate at which Euro is
         converted to Sterling or, as the case may be, Sterling is converted to
         Euro on the foreign exchange markets;

         "EURO CURRENCY SWAPS" means the Sterling-Euro currency swaps which
         enable the Second Issuer to receive and pay amounts under the Second
         Issuer Intercompany Loan in sterling and to receive and pay amounts
         under the Series 3 Second Issuer Notes, the Series 4 Class B Second
         Issuer Notes and the Series 4 Class C Second Issuer Notes;

         "EURO CURRENCY SWAP AGREEMENTS" means the ISDA master agreements,
         schedules and confirmations relating to the Euro Currency Swaps to be
         entered into on or before the Second Issuer Closing Date between the
         Second Issuer, the Euro Currency Swap Provider and the Security Trustee
         (as the same may be amended and/or supplemented from time to time);

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         "EURO CURRENCY SWAP PROVIDERS" means the Series 3 Second Issuer Swap
         Providers, the Series 4 Class B Second Issuer Swap Provider and the
         Series 4 Class C Second Issuer Swap Provider;

         "EURO CURRENCY SWAP PROVIDER DEFAULT" means the occurrence of an Event
         of Default (as defined in the Euro Currency Swap Agreements) where the
         Euro Currency Swap Provider is the Defaulting Party;

         "EURO INTEREST DETERMINATION DATE" means two TARGET Business Days
         before the first day of the Interest Period for which the rate will
         apply;

         "EVENT OF DEFAULT" means an event of default pursuant to CONDITION 9 of
         the Second Issuer Note Conditions;

         "EXCHANGE RATE" means the exchange rate set out in each swap
         confirmation dated on or about the Second Issuer Closing Date to the
         Currency Swap Agreements;

         "EXTRAORDINARY RESOLUTION" has the meaning set out in PARAGRAPH 23 of
         SCHEDULE 4 to the Second Issuer Trust Deed;

         "FINAL MATURITY DATE" means in respect of:

         (a)  the Series 1 Class A Second Issuer Notes, the Interest Payment
              Date falling in March 2004;

         (b)  the Series 2 Class A Second Issuer Notes, the Interest Payment
              Date falling in September 2007;

         (c)  the Series 3 Class A Second Issuer Notes, the Interest Payment
              Date falling in December 2032;

         (d)  the Series 4 Class A Second Issuer Notes, the Interest Payment
              Date falling in December 2009;

         (e)  the Series 5 Class A Second Issuer Notes, the Interest Payment
              Date falling in June 2042;

         (f)  the Series 1 Class B Second Issuer Notes, the Interest Payment
              Date falling in June 2042;

         (g)  the Series 2 Class B Second Issuer Notes, the Interest Payment
              Date falling in June 2042;

         (h)  the Series 3 Class B Second Issuer Notes, the Interest Payment
              Date falling in June 2042;

         (i)  the Series 4 Class B Second Issuer Notes, the Interest Payment
              Date falling in June 2042;

         (j)  the Series 5 Class B Second Issuer Notes, the Interest Payment
              Date falling in June 2042;

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                                       7


         (k)  the Series 1 Class C Second Issuer Notes, the Interest Payment
              Date falling in June 2042;

         (l)  the Series 2 Class C Second Issuer Notes, the Interest Payment
              Date falling in June 2042;

         (m)  the Series 3 Class C Second Issuer Notes, the Interest Payment
              Date falling in June 2042;

         (n)  the Series 4 Class C Second Issuer Notes, the Interest Payment
              Date falling in June 2042; and

         (o)  the Series 5 Class C Second Issuer Notes, the Interest Payment
              Date falling in June 2042;

         "FINAL REDEMPTION" means the date on which all moneys and other
         liabilities for the time being due or owing by the Second Issuer to the
         Note Trustee on behalf of the Noteholders have been paid in full;

         "FINAL REPAYMENT DATE" means in respect of:

         (a)  the Second Issuer Series 1 Term AAA Advance, the Interest Payment
              Date falling in March 2004;

         (b)  the Second Issuer Series 2 Term AAA Advances, the Interest
              Payment Date falling in September 2007;

         (c)  the Second Issuer Series 3 Term AAA Advances, the Interest
              Payment Date falling in December 2032;

         (d)  the Second Issuer Series 4 Term AAA Advance, the Interest Payment
              Date falling in December 2009;

         (e)  the Second Issuer Series 5 Term AAA Advance, the Interest Payment
              Date falling in June 2042;

         (f)  the Second Issuer Series 1 Term AA Advance, the Interest Payment
              Date falling in June 2042;

         (g)  the Second Issuer Series 2 Term AA Advance, the Interest Payment
              Date falling in June 2042;

         (h)  the Second Issuer Series 3 Term AA Advance, the Interest Payment
              Date falling in June 2042;

         (i)  the Second Issuer Series 4 Term AA Advance, the Interest Payment
              Date falling in June 2042;

         (j)  the Second Issuer Series 5 Term AA Advance, the Interest Payment
              Date falling in June 2042;

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                                       8


         (k)  the Second Issuer Series 1 Term BBB Advance, the Interest Payment
              Date falling in June 2042;

         (l)  the Second Issuer Series 2 Term BBB Advance, the Interest Payment
              Date falling in June 2042;

         (m)  the Second Issuer Series 3 Term BBB Advance, the Interest Payment
              Date falling in June 2042;

         (n)  the Second Issuer Series 4 Term BBB Advance, the Interest Payment
              Date falling in June 2042; and

         (o)  the Second Issuer Series 5 Term BBB Advance, the Interest Payment
              Date falling in June 2042;

         "FINANCIAL ADVISER" means any financial adviser selected by the
         Security Trustee to give such financial advice in relation to the
         Second Issuer Notes as the Security Trustee may request from time to
         time;

         "FINANCIAL PERIOD" means a Financial Year or any other period in
         respect of which accounts are required to be prepared and certified by
         the auditors of the relevant company to enable it to comply with all
         relevant legal and accounting requirements and all requirements of any
         stock exchange on which are securities of the company are listed;

         "FINANCIAL YEAR" means, in the case of the Second Issuer, each
         twelve-month period ending on the last day of the calendar year;

         "FITCH" means Fitch Ratings Limited;

         "FUNDING 1 CORPORATE SERVICES PROVIDER" means Structured Finance
         Management Limited or such other person or persons for the time being
         acting as corporate services provider to Funding 1, Holdings and the
         Post-Enforcement Call Option Holder under the Funding 1 Corporate
         Services Agreement;

         "FUNDING 1 CORPORATE SERVICES AGREEMENT" means in respect of Holdings,
         Funding 1 and the Post-Enforcement Call Option Holder, the agreement
         dated the Initial Closing Date and made between the Funding 1 Corporate
         Services Provider, Holdings, Funding 1, the Post-Enforcement Call
         Option Holder, the Seller and the Security Trustee for the provision by
         the Corporate Services Provider of certain corporate services and
         personnel to Funding 1, Holdings and the Post-Enforcement Call Option
         Holder (as the same may be amended and/or supplemented from time to
         time);

         "FSMA 2000" or "FSMA" means the Financial Services and Market Act 2000
         (as amended from time to time);

         "GLOBAL SECOND ISSUER NOTES" means the global notes issued in respect
         of the Second Issuer Notes, initially in the form of the Dollar Global
         Second Issuer Notes and the Reg S Global Second Issuer Notes;

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                                       9


         "HOLDINGS" means Permanent Holdings Limited (registered number
         4267664), a limited company incorporated under the laws of England and
         Wales, whose registered office is at Blackwell House, Guildhall Yard,
         London EC2V 5AE;

         "ICTA" means the Income and Corporation Taxes Act 1988;

         "INDEPENDENT CERTIFICATES" means certificates of independent parties
         furnished by the Second Issuer to the Note Trustee and/or the Security
         Trustee (as appropriate) and in accordance with sections 314(c) and
         314(d)(1) of the Trust Indenture Act;

         "INITIAL CLOSING DATE" means 14th June, 2002;

         "INITIAL RELEVANT SCREEN RATE" means:

         (a)  in respect of the Series 1 Class A Second Issuer Notes, the
              linear interpolation of the arithmetic mean of the offered
              quotations to leading banks for one-month Dollar deposits and the
              arithmetic mean of the offered quotations to leading banks for
              two-month Dollar deposits and in respect of the Series 1 Class B
              Second Issuer Notes, the Series 1 Class C Second Issuer Notes,
              the Series 2 Second Issuer Notes and the Series 4 Second Issuer
              Notes, the linear interpolation of the arithmetic mean of the
              offered quotations to leading banks for three-month Dollar
              deposits and the arithmetic mean of the offered quotations to
              leading banks for four-month Dollar deposits (rounded upwards, if
              necessary, to five decimal places), displayed on the Moneyline
              Telerate Monitor at Moneyline Telerate Page No. 3750 (or such
              replacement page on that service which displays the information)
              or, if that service ceases to display the information, such other
              screen service as may be determined by the Second Issuer with the
              approval of the Note Trustee;

         (b)  in respect of the Series 3 Second Issuer Notes, the Series 4
              Class B Second Issuer Notes and the Series 4 Class C Second
              Issuer Notes, the linear interpolation of the arithmetic mean of
              the offered quotations to prime banks for three-month Euro
              deposits and the arithmetic mean of the offered quotations to
              prime banks for three-month Euro deposits (rounded upwards, if
              necessary, to 5 decimal places), displayed on the Moneyline
              Telerate monitor at Moneyline Telerate page number 248 (or such
              replacement page on that service which displays the information)
              or, if that service ceases to display the information, such other
              screen service as may be determined by the Second Issuer with the
              approval of the Note Trustee; or

         (c)  in respect of the Series 5 Second Issuer Notes, the linear
              interpolation of the arithmetic mean of the offered quotations to
              leading banks for three-month Sterling deposits and the
              arithmetic mean of the offered quotations to leading banks for
              four-month Sterling deposits (rounded upwards, if necessary, to 5
              decimal places), displayed on the Moneyline Telerate monitor at
              Moneyline Telerate page number 3750 (or such replacement page on
              that service which displays the information) or, if that service
              ceases to display the information, such other screen service as
              may be determined by the Second Issuer with the approval of the
              Note Trustee;

         "INTERCOMPANY LOAN TERMS AND CONDITIONS" means the standard terms and
         conditions incorporated into the Second Issuer Intercompany Loan
         Agreement and signed for the purposes of identification by the Security
         Trustee, the Agent Bank and Funding 1 on the Initial Closing Date;

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                                       10


         "INTEREST AMOUNT" means the amount of interest payable on each Second
         Issuer Note in respect of the relevant Interest Period;

         "INTEREST DETERMINATION DATE" has the meaning given to it in Condition
         4(C) of the Second Issuer Notes;

         "INTEREST PAYMENT DATE" means, as applicable, a Quarterly Interest
         Payment Date and/or a Series 1 Class A Interest Payment Date;

         "INTEREST PERIOD" means:

         (a)  in respect of interest payments made in respect of the Second
              Issuer Notes (other than the Series 1 Class A Second Issuer Notes
              the period from (and including) a Quarterly Interest Payment Date
              (or in respect of the first Interest Period, the Second Issuer
              Closing Date) to (but excluding) the next following (or first)
              Quarterly Interest Payment Date; and

         (b)  in respect of the Series 1 Class A Second Issuer Notes, the
              period from (and including) a Series 1 Class A Interest Payment
              Date (or in respect of the first interest period, the Second
              Issuer Closing Date) to (but excluding) the next following (or
              first) Series 1 Class A Interest Payment Date, except that
              following the occurrence of a Trigger Event or the enforcement of
              the Second Issuer Security in accordance with the Second Issuer
              Deed of Charge, the Interest Period for the Series 1 Class A
              Second Issuer Notes will be the quarterly period from (and
              including) the 10th day of the following earliest to occur of
              September, December, March and June (or, if such day is not a
              Business Day, the next succeeding Business Day) to (but
              excluding) the 10th day of the then next to occur of September,
              December, March and June (or, if such day is not a Business Day,
              the next succeeding Business Day) and thereafter will be the
              quarterly period from (and including) the 10th day of September,
              December, March and June to (but excluding) the next following
              10th day of September, December, March and June;

         "ISSUER ORDER" means a written order or request signed in the name of
         the Second Issuer by two directors of the Second Issuer;

         "ISSUER'S CERTIFICATE" means a certificate signed in the name of the
         Second Issuer by two directors of the Second Issuer;

         "JOINT LEAD MANAGERS" means JPMorgan Securities Ltd. and Lehman
         Brothers International (Europe);

         "LETTER OF REPRESENTATIONS" means the letter of representations to DTC
         dated on or about the Second Issuer Closing Date from the Principal
         Paying Agent and the Second Issuer;

         "LONDON BUSINESS DAY" means a day (other than a Saturday or Sunday) on
         which banks are generally open for business (including dealings in
         foreign currency) in London;

         "LONDON STOCK EXCHANGE" means the London Stock Exchange plc;

         "MANAGERS" means JPMorgan Securities Ltd. and Lehman Brothers
         International (Europe) in respect of [the Series 3 Second Issuer Notes,
         the Series 4 Class B Second Issuer Notes, the

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                                       11


         Series 4 Class C Second Issuer Notes and the Series 5 Second Issuer
         Notes] and Credit Suisse First Boston (Europe) Limited and Deutsche
         Bank AG London in respect of [the Series 3 Class A Second Issuer Notes
         and the Series 5 Class A Second Issuer Notes];

         "MASTER DEFINITIONS AND CONSTRUCTION SCHEDULE" means the Amended and
         Restated Master Definitions and Construction Schedule signed for the
         purposes of identification by Allen & Overy and Sidley Austin Brown &
         Wood on or about the Second Issuer Closing Date, as the same may be
         further amended, restated and supplemented from time to time;

         "NEW YORK BUSINESS DAY" means a day (other than a Saturday or a Sunday)
         on which banks are generally open for business (including dealings in
         foreign currency) in the city of New York;

         "NOTE DETERMINATION DATE" means two Business Days prior to each
         Interest Payment Date;

         "NOTE EVENT OF DEFAULT" means an event of default pursuant to Condition
         9 of the Second Issuer Notes;

         "NOTE PRINCIPAL PAYMENT" means the amount of each principal payment
         payable on each Note;

         "NOTE TRUSTEE" means in relation to the Second Issuer and the Second
         Issuer Trust Deed, U.S. Bank National Association at 1 Federal Street,
         3rd Floor, Boston, Massachusetts 02110 acting as Note Trustee under the
         terms of the Second Issuer Trust Deed or such other person as may from
         time to time be appointed as Note Trustee (or co-trustee) pursuant to
         the Second Issuer Trust Deed;

         "NOTEHOLDERS" means the holders for the time being of the Second Issuer
         Notes;

         "NOTICE" means, in respect of notice being given to the Noteholders, a
         notice duly given in accordance with Condition 14 of the Second Issuer
         Notes;

         "OFFICERS' CERTIFICATE" means an officers certificate furnished by the
         Second Issuer to the Note Trustee and/or the Security Trustee (as
         appropriate) and complying with the provisions of Section 314 of the
         Trust Indenture Act;

         "ONE-MONTH USD-LIBOR" means the London Interbank Offered Rate for
         dollar deposits, as determined by the Agent Bank on the following
         basis:

         (a)  on the applicable Dollar Interest Determination Date applicable
              to the Series 1 Class A Second Issuer Notes, the Agent Bank will
              determine the arithmetic mean, rounded upwards to five decimal
              places, of the offered quotations to leading banks in the London
              inter-bank market for dollar deposits for one-month dollar
              deposits. The One-Month USD-LIBOR for the first Interest Period
              shall be the linear interpolation of the arithmetic mean of such
              offered quotations for the one-month and two-month dollar
              deposits.

<PAGE>
                                       12


              This will be determined by reference to the display as quoted on
              the Moneyline Telerate Screen No. 3750 or, if the Moneyline
              Telerate Screen No. 3750 stops providing these quotations, the
              replacement service for the purposes of displaying this
              information will be used. If the replacement service stops
              displaying the information, another page as determined by the
              Second Issuer with the approval of the Note Trustee will be used.

              In each of these cases, the determination will be made as at or
              about 11.00 a.m., London time, on that date;

         (b)  if, on any such Dollar Interest Determination Date, the screen
              rate is unavailable, the Agent Bank will:

              (1)  request the principal London office of each of the Reference
                   Banks to provide the Agent Bank with its offered quotation
                   to leading banks for dollar deposits of the equivalent
                   amount and for the relevant period, in the London inter-bank
                   market as at or about 11.00 a.m. (London time); and

              (2)  calculate the arithmetic mean, rounded upwards to five
                   decimal places, of those quotations;

         (c)  if, on any such Dollar Interest Determination Date, the screen
              rate is unavailable and only two or three of the Reference Banks
              provide offered quotations, the relevant rate for that Interest
              Period will be the arithmetic mean of the quotations as
              calculated in paragraph (b); and

         (d)  if, on any such Dollar Interest Determination Date, fewer than
              two Reference Banks provide quotations, the Agent Bank will
              consult with the Note Trustee and the Second Issuer for the
              purpose of agreeing a total of two banks to provide such
              quotations and the relevant rate for that Interest Period will be
              the arithmetic mean of the quotations as calculated in paragraph
              (b). If no such banks are agreed then the relevant rate for that
              Interest Period will be the rate in effect for the last preceding
              Interest Period for which paragraph (a) or (b) was applicable;

         "OPINION OF COUNSEL" means an opinion of counsel furnished by the
         Second Issuer to the Note Trustee and/or the Security Trustee (as
         appropriate) and complying with the provisions of Section 314 of the
         Trust Indenture Act;

         "OPTION" has the meaning given to it in CLAUSE 2.2 of the Second Issuer
         Post-Enforcement Call Option Agreement;

         "OPTION EXERCISE DATE" has the meaning ascribed to that expression in
         Condition 10 of the Second Issuer Notes and CLAUSE 2.1 of the Second
         Issuer Post-Enforcement Call Option Agreement;

         "PAYING AGENTS" means the Principal Paying Agent and the US Paying
         Agent;

         "POOL FACTOR" has the meaning given to it in Condition 5(C) of the
         Second Issuer Notes;

<PAGE>
                                       13


         "POST-ENFORCEMENT CALL OPTION HOLDER" means Permanent PECOH Limited
         (registered number 4267666), a limited company incorporated under the
         laws of England and Wales, whose registered office is at Blackwell
         House, Guildhall Yard, London EC2V 5AE;

         "POTENTIAL NOTE EVENT OF DEFAULT" has the same meaning as "POTENTIAL
         SECOND ISSUER EVENT OF DEFAULT";

         "POTENTIAL SECOND ISSUER EVENT OF DEFAULT" or "POTENTIAL SECOND ISSUER
         NOTE EVENT OF DEFAULT" means any condition, event or act which with the
         lapse of time and/or the giving of any notice would constitute a Second
         Issuer Event of Default;

         "PRINCIPAL AMOUNT OUTSTANDING" has the meaning set out in Condition
         5(C) of the Second Issuer Notes;

         "PRINCIPAL PAYING AGENT" means Citibank, N.A. London Branch of 5
         Carmelite Street, London EC4Y 0PA in its capacity as principal paying
         agent in the United Kingdom pursuant to the Second Issuer Paying Agent
         and Agent Bank Agreement;

         "PROSPECTUS" means the prospectus dated [27th February] in relation to
         the issue of the Second Issuer Notes;

         "QUARTERLY INTEREST PAYMENT DATE" means in respect of the Second Issuer
         Notes (other than the Series 1 Class A Second Issuer Notes) the 10th
         day of March, June, September and December in each year (or, if such
         day is not a Business Day, the next succeeding Business Day);

         "RATE OF INTEREST" has the meaning given in Condition 4(C) of the
         Second Issuer Notes;

         "RATING AGENCIES" means Standard & Poor's Rating Services, a division
         of the McGraw-Hill Companies Inc., Moody's Investors Service Limited
         and Fitch Ratings Ltd.;

         "RECEIVER" means any person or persons appointed (and any additional
         person or persons appointed or substituted) as an administrative
         receiver, receiver, manager, or receiver and manager of the Second
         Issuer Charged Property by the Security Trustee pursuant to the Second
         Issuer Deed of Charge;

         "RECORD DATE" in respect of the Definitive Second Issuer Notes means
         the 15th day prior to each Interest Payment Date;

         "REFERENCE BANKS" means the Initial Reference Banks (as defined in
         Condition 4(H) of the Second Issuer Notes) and/or such other bank as
         may be appointed pursuant to Condition 4(H) of the Second Issuer Notes;

         "REG S" means Regulation S under the United States Securities Act of
         1933, as amended;

         "REG S DEFINITIVE SECOND ISSUER NOTES" are, where Definitive Second
         Issuer Notes are issued, the Second Issuer Notes issued by the Second
         Issuer in exchange for the beneficial interests represented by the Reg
         S Global Second Issuer Note of each class;

<PAGE>
                                       14


         "REG S GLOBAL SECOND ISSUER NOTES" means the Series 3 Global Second
         Issuer Notes, the Series 4 Class B Second Issuer Notes, the Series 4
         Class C Second Issuer Notes and the Series 5 Global Second Issuer
         Notes;

         "REGISTER" means the register of noteholders kept by the Registrar and
         which records the identity of each Second Issuer Noteholder and the
         number of Second Issuer Notes which each Second Issuer Noteholder owns;

         "REGISTRAR" means Citibank, N.A. London Branch of 5 Carmelite Street,
         London EC4Y 0PA in its capacity as the registrar appointed by the
         Second Issuer under the Second Issuer Paying Agent and Agent Bank
         Agreement to record the holders of Second Issuer Notes;

         "REGULATIONS" means as the context may require either (i) the Unfair
         Terms in Consumer Contracts Regulations 1999 and/or, as applicable, the
         Unfair Terms in Consumer Contracts Regulations 1994 or (ii) the
         Regulations set out in SCHEDULE 2 to the Second Issuer Paying Agent and
         Agent Bank Agreement;

         "RELEVANT SECOND ISSUER NOTES" has the meaning given in CLAUSE 2.2 of
         the Second Issuer Post-Enforcement Call Option Agreement;

         "RELEVANT MARGIN" means:

         (a)  in respect of the Series 1 Class A Second Issuer Notes, o per
              cent. per annum;

         (b)  in respect of the Series 1 Class B Second Issuer Notes, o per
              cent. per annum up to and including the Interest Period ending in
              December 2008 and thereafter o per cent. per annum;

         (c)  in respect of the Series 1 Class C Second Issuer Notes, o per
              cent. per annum up to and including the Interest Period ending in
              December 2008 and thereafter o per cent. per annum;

         (d)  in respect of the Series 2 Class A Second Issuer Notes, o per
              cent. per annum;

         (e)  in respect of the Series 2 Class B Second Issuer Notes, o per
              cent. per annum up to and including the Interest Period ending in
              December 2008 and thereafter o per cent. per annum;

         (f)  in respect of the Series 2 Class C Second Issuer Notes, o per
              cent. per annum up to and including the Interest Period ending in
              December 2008 and thereafter o per cent. per annum;

         (g)  in respect of the Series 3 Class A Second Issuer Notes, o per
              cent. per annum up to and including the Interest Period ending in
              December 2008 and thereafter o per cent. per annum;

         (h)  in respect of the Series 3 Class B Second Issuer Notes, o per
              cent. per annum up to and including the Interest Period ending in
              December 2008 and thereafter o per cent. per annum;

<PAGE>
                                       15


         (i)  in respect of the Series 3 Class C Second Issuer Notes, o per
              cent. per annum up to and including the Interest Period ending in
              December 2008 and thereafter o per cent. per annum;

         (j)  in respect of the Series 4 Class A Second Issuer Notes, o per
              cent. per annum ;

         (k)  in respect of the Series 4 Class B Second Issuer Notes, o per
              cent. per annum up to and including the Interest Period ending in
              December 2008 and thereafter o per cent. per annum;

         (l)  in respect of the Series 4 Class C Second Issuer Notes, o per
              cent. per annum up to and including the Interest Period ending in
              December 2008 and thereafter o per cent. per annum;

         (m)  in respect of the Series 5 Class A Second Issuer Notes, o per
              cent. per annum up to and including the Interest Period ending in
              December 2008 and thereafter o per cent. per annum;

         (n)  in respect of the Series 5 Class B Second Issuer Notes, o per
              cent. per annum up to and including the Interest Period ending in
              December 2008 and thereafter o per cent. per annum; and

         (o)  in respect of the Series 5 Class C Second Issuer Notes, o per
              cent. per annum to and including the Interest Period ending in
              December 2008 and thereafter o per cent. per annum;

         "RELEVANT SCREEN RATE" means:

         (a)  in respect of the first Interest Period, the Initial Relevant
              Screen Rate; and

         (b) (i)   in respect of subsequent Interest Periods in respect of the
                   Series 1 Class A Second Issuer Notes, the arithmetic mean of
                   the offered quotations to leading banks for one-month Dollar
                   deposits in the London inter-bank market displayed on the
                   Moneyline Telerate Monitor at Moneyline Telerate page number
                   3750;

             (ii)  in respect of subsequent Interest Periods in respect of the
                   Series 1 Class B Second Issuer Notes, the Series 1 Class C
                   Second Issuer Notes, the Series 2 Second Issuer Notes and
                   the Series 4 Class A Second Issuer Notes, the arithmetic
                   mean of the offered quotations to leading banks for
                   three-month Dollar deposits in the London inter-bank market
                   displayed on the Moneyline Telerate Monitor at Moneyline
                   Telerate Page No. 3750;

             (iii) in respect of subsequent Interest Periods in respect of the
                   Series 5 Second Issuer Notes, the arithmetic mean of offered
                   quotations to prime banks for three-month Sterling deposits
                   in the London inter-bank market displayed on the Moneyline
                   Telerate Monitor at Moneyline Telerate Page No. 3750;

             (iv)  in respect of subsequent Interest Periods in respect of the
                   Series 3 Second Issuer Notes, the Series 4 Class B Second
                   Issuer Notes and the Series 4 Class C Second Issuer Notes,
                   the arithmetic mean of offered quotations to prime

<PAGE>
                                       16

                   banks for [three-month] Euro deposits in the Euro-zone
                   inter-bank market displayed on the Moneyline Telerate
                   Monitor at Moneyline Telerate Page No. 248; and

         in each case, displayed on the above-mentioned page of the
         Dow-Jones/Telerate Monitor (or such replacement page on that service
         which displays the information) or, if that service ceases to display
         the information, such other screen service as may be determined by the
         Second Issuer with the approval of the Note Trustee (rounded upwards,
         if necessary, to five decimal places);

         "REPAYMENT DATE" means the earlier to occur of (a) the date when the
         Notes have been redeemed in full and (b) the Funding 1 Interest Payment
         Date in [December 2008];

         "REQUISITE RATINGS" means a rating of P-1 by Moody's, F1+ by Fitch and
         A-1+ by Standard & Poor's;

         "SCHEDULED AMORTISATION INSTALMENT" means:

         (a)  in respect of the Second Issuer Series 3 Term Advance, the
              repayments of principal due on [March 2006] and[June 2006], being
              the Scheduled Repayment Dates of the Second Issuer Series 3 Term
              Advance; or

         (b)  in respect of any New Term Advance which is a Scheduled
              Amortisation Term Advance, the repayments of principal due each
              of the Scheduled Repayments Dates of that Scheduled Amortisation
              Term Advance;

         "SCHEDULED AMORTISATION TERM ADVANCE" means the Second Issuer Series 3
         Term Advance and any New Term Advance that is referred to as such in
         the relevant offering document or propsectus relating to any New
         Issuer;

         "SCHEDULED PRINCIPAL REPAYMENT" means, in respect of the Second Issuer
         Term AAA Advances, the Second Issuer Term AA Advances, the Second
         Issuer Term BBB Advances, or any New Term Advance, the amount of
         principal, if any, scheduled to be repaid in respect of such advance on
         the relevant Scheduled Repayment Date;

         "SCHEDULED REDEMPTION DATES" means:

         (a)  in respect of the Series 1 Class A Second Issuer Notes, the
              Interest Payment Date in March 2004;

         (b)  in respect of the Series 2 Class A Second Issuer Notes, the
              Interest Payment Date in September 2005;

         (c)  in respect of the Series 3 Class A Second Issuer Notes, the
              Interest Payment Dates in March 2006 and June 2006; and

         (d)  in respect of the Series 4 Class A Second Issuer Notes, the
              Interest Payment Date in December 2007;

<PAGE>
                                       17


         "SCHEDULED REPAYMENT DATES" means:

         (a)  in respect of the Second Issuer Series 1 Term AAA Advance, the
              Interest Payment Date in March 2004;

         (b)  in respect of the Second Issuer Series 2 Term AAA Advances, the
              Interest Payment Date in September 2005;

         (c)  in respect of the Second Issuer Series 3 Term AAA Advance, the
              Interest Payment Dates in March 2006 and June 2006;

         (d)  in respect of the Second Issuer Series 4 Term AAA Advance, the
              Interest Payment Date in December 2007;

         (e)  in respect of any New Term Advance which is intended to be a
              Bullet Term Advance, the Scheduled Repayment Date of that Bullet
              Term Advance; and

         (f)  in respect of any New Term Advance which is intended to be a
              Scheduled Amortisation Term Advance, the Scheduled Repayment
              Dates for each of the Scheduled Amortisation Instalments under
              such Scheduled Amortisation Term Advance;

         "SECOND ISSUER" means Permanent Financing (No. 2) PLC (registered no.
         4623188), a public limited company incorporated under the laws of
         England and Wales, whose registered office is at Blackwell House,
         Guildhall Yard, London EC2V 5AE;

         "SECOND ISSUER ACCOUNT BANK" means The Governor and Company of the Bank
         of Scotland, in its capacity as holder of the Second Issuer Transaction
         Account, situated at 116 Wellington Street, Leeds LS1 4LT and such
         other account bank as may be appointed from time to time pursuant to
         the Second Issuer Bank Account Agreement;

         "SECOND ISSUER ACCOUNTS" means the Second Issuer Transaction Account
         and such other bank account(s) held in the name of the Second Issuer
         with the prior written approval of the Security Trustee from time to
         time;

         "SECOND ISSUER AVAILABLE FUNDS" means together Second Issuer Revenue
         Receipts and Second Issuer Principal Receipts;

         "SECOND ISSUER BANK ACCOUNT AGREEMENT" means the bank account agreement
         dated on or about the Second Issuer Closing Date between the Second
         Issuer, the Second Issuer Cash Manager, the Second Issuer Account Bank
         and the Security Trustee (as the same may be amended and/or
         supplemented from time to time);

         "SECOND ISSUER BANK ACCOUNTS" has the same meaning as "SECOND ISSUER
         ACCOUNTS";

         "SECOND ISSUER BULLET TERM ADVANCES" means the Second Issuer Series 1
         Term AAA Advance, the Second Issuer Series 2 Term AAA Advance and the
         Second Issuer Series 4 Term AAA Advance;

         "SECOND ISSUER CASH MANAGEMENT AGREEMENT" means the cash management
         agreement dated on or about the Second Issuer Closing Date between the
         Second Issuer, the Second

<PAGE>
                                       18


         Issuer Cash Manager and the Security Trustee (as the same may be
         amended and/or supplemented from time to time);

         "SECOND ISSUER CASH MANAGEMENT SERVICES" means the services to be
         provided to the Second Issuer and the Security Trustee pursuant to the
         Second Issuer Cash Management Agreement;

         "SECOND ISSUER CASH MANAGER" means Halifax acting pursuant to the
         Second Issuer Cash Management Agreement as agent for the Second Issuer
         and the Security Trustee, to manage all cash transactions and maintain
         certain ledgers on behalf of the Second Issuer;

         "SECOND ISSUER CASH MANAGER TERMINATION EVENT" has the meaning given in
         CLAUSE 12.1 of the Second Issuer Cash Management Agreement;

         "SECOND ISSUER'S CERTIFICATE" means a certificate signed in the name of
         the Second Issuer by two directors of the Second Issuer;

         "SECOND ISSUER CHARGED PROPERTY" means the property charged by the
         Second Issuer pursuant to CLAUSES 3.1 to 3.4 (inclusive) of the Second
         Issuer Deed of Charge;

         "SECOND ISSUER CLOSING DATE" means[6th March], 2003;

         "SECOND ISSUER CORPORATE SERVICES AGREEMENT" means the agreement dated
         on or about the Second Issuer Closing Date and made between the Second
         Issuer Corporate Services Provider, the Second Issuer, the Seller,
         Holdings and the Security Trustee for the provision by the Corporate
         Services Provider of certain corporate services and personnel to the
         Second Issuer (as the same may be amended and/or supplemented from time
         to time);

         "SECOND ISSUER CORPORATE SERVICES FEE LETTER" means the letter dated
         the date of the Second Issuer Corporate Services Agreement between,
         inter alios, the Second Issuer, the Security Trustee, and the Second
         Issuer Corporate Services Provider, setting out the amount of fees
         payable to the Second Issuer Corporate Services Provider by the Second
         Issuer;

         "SECOND ISSUER CORPORATE SERVICES PROVIDER" means Structured Finance
         Management Limited or such other person or persons for the time being
         acting as corporate services provider to the Second Issuer under the
         Second Issuer Corporate Services Agreement;

         "SECOND ISSUER CURRENCY SWAP AGREEMENTS" or "SECOND ISSUER SWAP
         AGREEMENTS" means the Dollar Currency Swap Agreements and the Euro
         Currency Swap Agreements;

         "SECOND ISSUER DEED OF CHARGE" means the deed of charge to be entered
         into on or about the Second Issuer Closing Date between, among others,
         the Second Issuer and the Security Trustee under which the Second
         Issuer charges the Second Issuer Security in favour of the Security
         Trustee for the benefit of the Second Issuer Secured Creditors (as the
         same may be amended and/or supplemented from time to time);

         "SECOND ISSUER EVENT OF DEFAULT" has the meaning given to it in
         Condition 9 of the Second Issuer Notes;

<PAGE>
                                       19


         "SECOND ISSUER INTERCOMPANY LOAN" means the loan of the Second Issuer
         Term Advances made by the Second Issuer to Funding 1 under the Second
         Issuer Intercompany Loan Agreement on or about the Second Issuer
         Closing Date;

         "SECOND ISSUER INTERCOMPANY LOAN ACCELERATION NOTICE" means an
         acceleration notice served by the Security Trustee in relation to the
         enforcement of the Funding 1 Security following a Second Issuer
         Intercompany Loan Event of Default under the Second Issuer Intercompany
         Loan;

         "SECOND ISSUER INTERCOMPANY LOAN AGREEMENT" means the Second Issuer
         Intercompany Loan Confirmation and the Intercompany Loan Terms and
         Conditions together entered into on or about the Second Issuer Closing
         Date by the Second Issuer, Funding 1, the Security Trustee and the
         Agent Bank (as the same may be amended and/or supplemented from time to
         time);

         "SECOND ISSUER INTERCOMPANY LOAN CONFIRMATION" means the loan
         confirmation in respect of the Second Issuer Intercompany Loan
         Agreement entered into on or about the Second Issuer Closing Date and
         made between Funding 1, the Second Issuer and the Security Trustee;

         "SECOND ISSUER INTERCOMPANY LOAN DETERMINATION DATE" means the date
         falling two Business Days prior to each Funding 1 Interest Payment
         Date;

         "SECOND ISSUER INTERCOMPANY LOAN EVENT OF DEFAULT" means the occurrence
         of an event of default by Funding 1 as specified in CLAUSE 14 of the
         Second Issuer Intercompany Loan Terms and Conditions;

         "SECOND ISSUER INTERCOMPANY LOAN LEDGER" means the ledger maintained by
         the Second Issuer Cash Manager which will record payments of interest
         and repayments of principal made on each of the Term Advances on each
         Interest Payment Date under the Second Issuer Intercompany Loan
         Agreement;

         "SECOND ISSUER INTERCOMPANY LOAN TERMS AND CONDITIONS" means the
         Intercompany Loan Terms and Conditions;

         "SECOND ISSUER MASTER DEFINITIONS AND CONSTRUCTION SCHEDULE" means this
         Second Issuer Master Definitions and Construction Schedule signed for
         the purposes of identification by Allen & Overy and Sidley Austin Brown
         & Wood on or about the Second Issuer Closing Date, as the same may be
         amended, restated and supplemented from time to time;

         "SECOND ISSUER NON-STERLING ACCOUNT" means a dollar account and/or a
         euro account, in each case to be opened in the name of the Second
         Issuer and to be held with the Second Issuer Non-Sterling Account Bank
         in accordance with the Second Issuer Bank Account Agreement;

         "SECOND ISSUER NON-STERLING ACCOUNT BANK" means The Governor and
         Company of the Bank of Scotland, in its capacity as holder of the
         relevant Second Issuer Non-Sterling Account, in accordance with the
         Second Issuer Bank Account Agreement;

         "SECOND ISSUER NOTE DETERMINATION DATE" means two Business Days prior
         to each Interest Payment Date;

<PAGE>
                                       20


         "SECOND ISSUER NOTE ACCELERATION NOTICE" means a Class A Second Issuer
         Note Acceleration Notice, a Class B Second Issuer Note Acceleration
         Notice or a Class C Second Issuer Note Acceleration Notice, either
         alone or together;

         "SECOND ISSUER NOTE EVENT OF DEFAULT" an event of default by the Second
         Issuer as defined in Condition 9 of the Second Issuer Notes;

         "SECOND ISSUER NOTEHOLDERS" means the holders for the time being of the
         Second Issuer Notes;

         "SECOND ISSUER NOTES" means the Class A Second Issuer Notes, the Class
         B Second Issuer Notes and the Class C Second Issuer Notes;

         "SECOND ISSUER PAYING AGENT AND AGENT BANK AGREEMENT" means the paying
         agent and agent bank agreement entered into on or about the Second
         Issuer Closing Date between the Second Issuer, the Principal Paying
         Agent, the Agent Bank, the US Paying Agent, the Registrar, the Transfer
         Agent and the Security Trustee which sets out the appointment of the
         Paying Agents, the Registrar, the Transfer Agent and the Agent Bank for
         the Second Issuer Notes (as the same may be amended and/or supplemented
         from time to time);

         "SECOND ISSUER POST-ENFORCEMENT CALL OPTION AGREEMENT" means the
         post-enforcement call option agreement entered into on or about the
         Second Issuer Closing Date between the Second Issuer, the
         Post-Enforcement Call Option Holder and the Security Trustee under
         which the Note Trustee agrees on behalf of the holders of the Class B
         Second Issuer Notes and the Class C Second Issuer Notes that following
         enforcement of the Second Issuer Security, the Post-Enforcement Call
         Option Holder may call for the Class B Second Issuer Notes and the
         Class C Second Issuer Notes (as the same may be amended and/or
         supplemented from time to time);

         "SECOND ISSUER POST-ENFORCEMENT PRIORITY OF PAYMENTS" means the order
         of priority of payments in which the Second Issuer Revenue Receipts and
         the Second Issuer Principal Receipts will be applied following the
         service of a Second Issuer Note Acceleration Notice and a Second Issuer
         Intercompany Loan Acceleration Notice, as set out in Clause 6.4 of the
         Second Issuer Deed of Charge;

         "SECOND ISSUER PRE-ENFORCEMENT PRINCIPAL PRIORITY OF PAYMENTS" means
         the order of priority of payments in which the Second Issuer Principal
         Receipts will be applied until enforcement of the Second Issuer
         Security and as set out in Schedule 2 to the Second Issuer Cash
         Management Agreement;

         "SECOND ISSUER PRE-ENFORCEMENT PRIORITY OF PAYMENTS" means the Second
         Issuer Pre-Enforcement Principal Priority of Payments and the Second
         Issuer Pre-Enforcement Revenue Priority Payments;

         "SECOND ISSUER PRE-ENFORCEMENT REVENUE PRIORITY OF PAYMENTS" means the
         order of priority of payments in which the Second Issuer Revenue
         Receipts will be applied until enforcement of the Second Issuer
         Security and as set out in Schedule 2 to the Second Issuer Cash
         Management Agreement;

         "SECOND ISSUER PRINCIPAL RECEIPTS" means the sum of all principal
         amounts repaid by Funding 1 to the Second Issuer under the terms of the
         Second Issuer Intercompany Loan

<PAGE>
                                       21


         Agreement during the relevant Interest Period, as calculated by the
         Second Issuer Cash Manager four Business Days prior to each Interest
         Payment Date;

         "SECOND ISSUER REVENUE RECEIPTS" means on the date which is four
         Business Days prior to an Interest Payment Date, an amount equal to the
         aggregate of:

         (a)  interest paid by Funding 1 on the relevant Funding 1 Interest
              Payment Date in respect of the Term Advances under the terms of
              the Second Issuer Intercompany Loan Agreement;

         (b)  fees to be paid to the Second Issuer by Funding 1 on the relevant
              Funding 1 Interest Payment Date under the terms of the Second
              Issuer Intercompany Loan Agreement;

         (c)  interest payable on the Second Issuer Bank Accounts and any
              Authorised Investments which will be received on or before the
              relevant Interest Payment Date in respect of the Second Issuer
              Notes;

         (d)  other net income of the Second Issuer including amounts received
              or to be received under the Second Issuer Swap Agreements on or
              before the relevant Interest Payment Date; and

         (e)  if the Second Issuer receives any additional amount from a Second
              Issuer Swap Provider pursuant to section 2(d)(i)(4) of any Second
              Issuer Swap Agreement, and the Second Issuer subsequently
              receives a refund from the relevant taxing authority in respect
              of that additional amount (so that the Second Issuer receives a
              windfall) (for the purposes of this definition, a "REFUND
              PAYMENT"), an amount equal to that Refund Payment;

         "SECOND ISSUER SCHEDULED AMORTISATION TERM ADVANCE" means the Second
         Issuer Series 3 Term AAA Advance;

         "SECOND ISSUER SECURED CREDITORS" means those parties to the Second
         Issuer Deed of Charge who have the benefit of the Second Issuer
         Security being the Security Trustee, the Currency Swap Providers, the
         Note Trustee, the Second Issuer Account Bank, the Paying Agents, the
         Registrar, the Transfer Agent, the Agent Bank, the Corporate Services
         Provider, the Second Issuer Cash Manager and the Second Issuer
         Noteholders;

         "SECOND ISSUER SECURED OBLIGATIONS" means any and all of the moneys and
         liabilities which the Second Issuer covenants to pay or discharge under
         CLAUSE 2 of the Second Issuer Deed of Charge and all other amounts owed
         by it to the Second Issuer Secured Creditors under and pursuant to the
         Transaction Documents;

         "SECOND ISSUER SECURITY" means the security granted by the Second
         Issuer under the Second Issuer Deed of Charge in favour of the Second
         Issuer Secured Creditors;

         "SECOND ISSUER SERIES 1 TERM AA ADVANCE" means the sub-loan of the
         Second Issuer Term AA Advances in the amount of Pound
         Sterling[20,671,206] and corresponding to the issue of the Series 1
         Class B Second Issuer Notes;

<PAGE>
                                       22


         "SECOND ISSUER SERIES 1 TERM AAA ADVANCE" means the sub-loan of the
         Second Issuer Term AAA Advances in the amount of Pound
         Sterling[607,976,654] and corresponding to the issue of the Series 1
         Class A Second Issuer Notes;

         "SECOND ISSUER SERIES 1 TERM ADVANCES" means the Second Issuer Series 1
         Term AAA Advance, the Second Issuer Series 1 Term AA Advance and the
         Second Issuer Series 1 Term BBB Advance;

         "SECOND ISSUER SERIES 1 TERM BBB ADVANCE" means the sub-loan of the
         Second Issuer Term BBB Advances in the amount of Pound
         Sterling[20,671,206] and corresponding to the issue of the Series 1
         Class C Second Issuer Notes;

         "SECOND ISSUER SERIES 2 TERM AA ADVANCE" means the sub-loan of the
         Second Issuer Term AA Advances in the amount of Pound
         Sterling[26,142,996] and corresponding to the issue of the Series 2
         Class B Second Issuer Notes;

         "SECOND ISSUER SERIES 2 TERM AAA ADVANCE" means the sub-loan of the
         Second Issuer Term AAA Advances in the amount of Pound
         Sterling[759,970,817] and corresponding to the issue of the Series 2
         Class A Second Issuer Notes;

         "SECOND ISSUER SERIES 2 TERM ADVANCES" means the Second Issuer Series 2
         Term AAA Advance, the Second Issuer Series 2 Term AA Advance and the
         Second Issuer Series 2 Term BBB Advance;

         "SECOND ISSUER SERIES 2 TERM BBB ADVANCE" means the sub-loan of the
         Second Issuer Term BBB Advances in the amount of Pound
         Sterling[26,142,996] and corresponding to the issue of the Series 2
         Class C Second Issuer Notes;

         "SECOND ISSUER SERIES 3 TERM AA ADVANCE" means the sub-loan of the
         Second Issuer Term AA Advances in the amount of Pound
         Sterling[28,728,127] and corresponding to the issue of the Series 3
         Class B Second Issuer Notes;

         "SECOND ISSUER SERIES 3 TERM AAA ADVANCE" means the sub-loan of the
         Second Issuer Term AAA Advances in the amount of Pound
         Sterling[816,139,984] and corresponding to the issue of the Series 3
         Class A Second Issuer Notes;

         "SECOND ISSUER SERIES 3 TERM ADVANCES" means the Second Issuer Series 3
         Term AAA Advance, the Second Issuer Series 3 Term AA Advance and the
         Second Issuer Series 3 Term BBB Advance;

         "SECOND ISSUER SERIES 3 TERM BBB ADVANCE" means the sub-loan of the
         Second Issuer Term BBB Advances in the amount of Pound
         Sterling[28,728,127] and corresponding to the issue of the Series 3
         Class C Second Issuer Notes;

         "SECOND ISSUER SERIES 4 TERM AA ADVANCE" means the sub-loan of the
         Second Issuer Term AA Advances in the amount of Pound
         Sterling[26,116,480] and corresponding to the issue of the Series 4
         Class B Second Issuer Notes;

         "SECOND ISSUER SERIES 4 TERM AAA ADVANCE" means the sub-loan of the
         Second Issuer Term AAA Advances in the amount of Pound
         Sterling[759,970,817] and corresponding to the issue of the Series 4
         Class A Second Issuer Notes;

<PAGE>
                                       23


         "SECOND ISSUER SERIES 4 TERM ADVANCES" means the Second Issuer Series 4
         Term AAA Advance, the Second Issuer Series 4 Term AA Advance and the
         Second Issuer Series 4 Term BBB Advance;

         "SECOND ISSUER SERIES 4 TERM BBB ADVANCE" means the sub-loan of the
         Second Issuer Term BBB Advances in the amount of Pound
         Sterling[26,116,480] and corresponding to the issue of the Series 4
         Class C Second Issuer Notes;

         "SECOND ISSUER SERIES 5 TERM AA ADVANCE" means the sub-loan of the
         Second Issuer Term AA Advances in the amount of Pound
         Sterling[35,000,000] and corresponding to the issue of the Series 5
         Class B Second Issuer Notes;

         "SECOND ISSUER SERIES 5 TERM AAA ADVANCE" means the sub-loan of the
         Second Issuer Term AAA Advances in the amount of Pound
         Sterling[1,000,000,000] and corresponding to the issue of the Series 5
         Class A Second Issuer Notes;

         "SECOND ISSUER SERIES 5 TERM ADVANCES" means the Second Issuer Series 5
         Term AAA Advance, the Second Issuer Series 5 Term AA Advance and the
         Second Issuer Series 5 Term BBB Advance;

         "SECOND ISSUER SERIES 5 TERM BBB ADVANCE" means the sub-loan of the
         Second Issuer Term BBB Advances in the amount of Pound
         Sterling[35,000,000] and corresponding to the issue of the Series 5
         Class C Second Issuer Notes;

         "SECOND ISSUER SWAP AGREEMENTS" means the Dollar Currency Swap
         Agreements and the Euro Currency Swap Agreements;

         "SECOND ISSUER SWAP EXCLUDED TERMINATION AMOUNT" means, in relation to
         any Second Issuer Swap Agreement, an amount equal to:

         (a)  the amount of any termination payment due and payable to the
              relevant Second Issuer Swap Provider as a result of a Second
              Issuer Swap Provider Default or to the relevant Second Issuer
              Swap Provider following a Second Issuer Swap Provider Downgrade
              Termination Event;

              less

         (b)  the amount, if any, received by the Second Issuer from a
              replacement swap provider upon entry by the Second Issuer into an
              agreement with such replacement swap provider to replace such
              Second Issuer Swap Agreement which has terminated as a result of
              such Second Issuer Swap Provider Default or following the
              occurrence of such Second Issuer Swap Provider Downgrade
              Termination Event;

         "SECOND ISSUER SWAP PROVIDER DEFAULT" means the occurrence of an Event
         of Default (as defined in the Second Issuer Swap Agreements) where a
         Second Issuer Swap Provider is the Defaulting Party;

         "SECOND ISSUER SWAP PROVIDER DOWNGRADE TERMINATION EVENT" means the
         occurrence of an additional termination event following the failure by
         a Second Issuer Swap Provider to comply with the requirements of the
         ratings downgrade provisions set out in the relevant

<PAGE>
                                       24


         Second Issuer Swap Agreement;

         "SECOND ISSUER SWAP PROVIDERS" means the Dollar Currency Swap Providers
         and the Euro Currency Swap Provider or any one of them as the context
         requires;

         "SECOND ISSUER TERM AA ADVANCES" means the Second Issuer Series 1 Term
         AA Advance, the Second Issuer Series 2 Term AA Advance, the Second
         Issuer Series 3 Term AA Advance, the Second Issuer Series 4 Term AA
         Advance and the Second Issuer Series 5 Term AA Advance;

         "SECOND ISSUER TERM AAA ADVANCES" means the Second Issuer Series 1 Term
         AAA Advance, the Second Issuer Series 2 Term AAA Advance, the Second
         Issuer Series 3 Term AAA Advance, the Second Issuer Series 4 Term AAA
         Advance and the Second Issuer Series 5 Term AAA Advance;

         "SECOND ISSUER TERM ADVANCES" means the Second Issuer Term AAA
         Advances, the Second Issuer Term AA Advances and the Second Issuer Term
         BBB Advances;

         "SECOND ISSUER TERM ADVANCES DUE DATES" means the dates being:

         (a)  in relation to the Second Issuer Series 1 Term AAA Advance, the
              Funding 1 Interest Payment Date falling in March 2004;

         (b)  in relation to the Second Issuer Series 2 Term AAA Advance, the
              Funding 1 Interest Payment Date falling in September 2005;

         (c)  in relation to the Second Issuer Series 3 Term AAA Advance, the
              Funding 1 Interest Payment Dates falling in March 2006 and June
              2006;

         (d)  in relation to the Second Issuer Series 4 Term AAA Advance, the
              Funding 1 Interest Payment Date falling in December 2007;

         (e)  in relation to the Second Issuer Series 5 Term AAA Advance, the
              Funding 1 Interest Payment Date falling in December 2008;

         (f)  in relation to the Second Issuer Series 1 Term AA Advance, the
              Funding 1 Interest Payment Date falling after the date on which
              the Second Issuer Series 1 Term AAA Advance has been fully
              repaid;

         (g)  in relation to the Second Issuer Series 2 Term AA Advance, the
              Funding 1 Interest Payment Date falling after the date on which
              the Second Issuer Series 2 Term AAA Advance has been fully
              repaid;

         (h)  in relation to the Second Issuer Series 3 Term AA Advance, the
              Funding 1 Interest Payment Date failing after the date on which
              the Second Issuer Series 3 Term AAA Advance has been fully
              repaid;

<PAGE>
                                       25


         (i)  in relation to the Second Issuer Series 4 Term AA Advance, the
              Funding 1 Interest Payment Date falling on or after the date on
              which the Second Issuer Series 4 Term AAA Advance has been fully
              repaid;

         (j)  in relation to the Second Issuer Series 5 Term AA Advance, the
              Funding 1 Interest Payment Date falling on or after the date on
              which the Second Issuer Series 5 Term AAA Advance has been fully
              repaid;

         (k)  in relation to the Second Issuer Series 1 Term BBB Advance, the
              Funding 1 Interest Payment Date falling on or after the date on
              which the Second Issuer Series 1 Term AA Advance has been fully
              repaid;

         (l)  in relation to the Second Issuer Series 2 Term BBB Advance, the
              Funding 1 Interest Payment Date falling on or after the date on
              which the Second Issuer Series 2 Term AA Advance has been fully
              repaid;

         (m)  in relation to the Second Issuer Series 3 Term BBB Advance, the
              Funding 1 Interest Payment Date falling on or after the date on
              which the Second Issuer Series 3 Term AA Advance has been fully
              repaid;

         (n)  in relation to the Second Issuer Series 4 Term BBB Advance, the
              Funding 1 Interest Payment Date failing on or after the date on
              which the Second Issuer Series 4 Term AA Advance has been fully
              repaid; and

         (o)  in relation to the Second Issuer Series 5 Term BBB Advance, the
              Funding 1 Interest Payment Date falling on or after the date on
              which the Second Issuer Series 5 Term AA Advance has been fully
              repaid.

         "SECOND ISSUER TERM BBB ADVANCES" means the Second Issuer Series 1 Term
         BBB Advance, the Second Issuer Series 2 Term BBB Advance, the Second
         Issuer Series 3 Term BBB Advance, the Second Issuer Series 4 Term BBB
         Advance and the Second Issuer Series 5 Term BBB Advance;

         "SECOND ISSUER TRANSACTION ACCOUNT" means the sterling account in the
         name of the Second Issuer (account number o, Permanent Financing (No.
         2) PLC, sort code [12-08-83]) held with the Second Issuer Account Bank
         (or such other account at such other banks as may for the time being be
         in place with the prior consent of the Security Trustee and designated
         as such;

         "SECOND ISSUER TRANSACTION ACCOUNT MANDATE" means the mandate pursuant
         to which the Second Issuer Transaction Account has been established;

         "SECOND ISSUER TRANSACTION DOCUMENTS" means those Transaction Documents
         to which the Second Issuer is a party, including the Second Issuer
         Intercompany Loan Agreement, the Second Issuer Trust Deed, the Second
         Issuer Paying Agent and Agent Bank Agreement, the Second Issuer Deed of
         Charge, the Second Issuer Cash Management Agreement, the Currency Swap
         Agreements, the Second Issuer Bank Account Agreement, the Second Issuer

<PAGE>
                                       26


         Post-Enforcement Call Option Agreement and the Second Issuer Corporate
         Services Agreement;

         "SECOND ISSUER TRUST DEED" means the trust deed entered into on or
         about the Second Issuer Closing Date between the Second Issuer and the
         Note Trustee constituting the Second Issuer Notes (as the same may be
         amended and/or supplemented from time to time);

         "SECURITIES ACT" means the United States Securities Act of 1933, as
         amended;

         "SECURITY TRUSTEE" means in relation to the Second Issuer, the Second
         Issuer Secured Creditors, the Second Issuer Deed of Charge, the Second
         Issuer Security and the Second Issuer Intercompany Loan Agreement, U.S.
         Bank National Association at 1 Federal Street, 3rd Floor, Boston,
         Massachusetts 02110 acting as Security Trustee under the terms of the
         Second Issuer 1 Deed of Charge or such other person as may from time to
         time be appointed as Security Trustee (or co-trustee) pursuant to the
         Second Issuer Deed of Charge;

         "SELLER" means Halifax plc (registered number 2367076) in its capacity
         as seller of the Loans and their Related Security to the Mortgages
         Trustee pursuant to the terms of the Mortgage Sale Agreement;

         "SENIOR LIABILITIES" means the items listed in paragraphs (a) and (c)
         to (f) of the Second Issuer Pre-Enforcement Revenue Priority of
         Payments;

         "SERIES 1 CLASS A DEFINITIVE SECOND ISSUER NOTES" means the registered
         notes in definitive form which may be issued in respect of the Series 1
         Class A Second Issuer Notes pursuant to, and in the circumstances
         specified in, Condition 1 and includes any replacement for Series 1
         Class A Definitive Second Issuer Notes issued pursuant to Condition 13
         and which are issued substantially in the form described in and set out
         in PART A of SCHEDULE 2 to the Second Issuer Trust Deed;

         "SERIES 1 CLASS B DEFINITIVE SECOND ISSUER NOTES" means the registered
         notes in definitive form which may be issued in respect of the Series 1
         Class B Second Issuer Notes pursuant to, and in the circumstances
         specified in, Condition 1 and includes any replacement for Series 1
         Class B Definitive Second Issuer Notes issued pursuant to Condition 13
         and which are issued substantially in the form described in and set out
         in PART B of SCHEDULE 2 to the Second Issuer Trust Deed;

         "SERIES 1 CLASS C DEFINITIVE SECOND ISSUER NOTES" means the registered
         notes in definitive form which may be issued in respect of the Series 1
         Class C Second Issuer Notes pursuant to, and in the circumstances
         specified in, Condition 1 and includes any replacement for Series 1
         Class C Definitive Second Issuer Notes issued pursuant to Condition 13
         and which are issued substantially in the form described in and set out
         in PART C of SCHEDULE 2 to the Second Issuer Trust Deed;

         "SERIES 1 DEFINITIVE SECOND ISSUER NOTES" means the Series 1 Class A
         Definitive Second Issuer Notes, the Series 1 Class B Definitive Second
         Issuer Notes and the Series 1 Class C Definitive Second Issuer Notes;

         "SERIES 2 CLASS A DEFINITIVE SECOND ISSUER NOTES" means the registered
         notes in definitive form which may be issued in respect of the Series 2
         Class A Second Issuer Notes pursuant to, and in the circumstances
         specified in, Condition 1 and includes any replacement for Series 2

<PAGE>
                                       27


         Class A Definitive Second Issuer Notes issued pursuant to Condition 13
         and which are issued substantially in the form described in and set out
         in PART D of SCHEDULE 2 to the Second Issuer Trust Deed;

         "SERIES 2 CLASS B DEFINITIVE SECOND ISSUER NOTES" means the registered
         notes in definitive form which may be issued in respect of the Series 2
         Class B Second Issuer Notes pursuant to, and in the circumstances
         specified in, Condition 1 and includes any replacement for Series 2
         Class B Definitive Second Issuer Notes issued pursuant to Condition 13
         and which are issued substantially in the form described in and set out
         in PART E of SCHEDULE 2 to the Second Issuer Trust Deed;

         "SERIES 2 CLASS C DEFINITIVE SECOND ISSUER NOTES" means the registered
         notes in definitive form which may be issued in respect of the Series 2
         Class C Second Issuer Notes pursuant to, and in the circumstances
         specified in, Condition 1 and includes any replacement for Series 2
         Class C Definitive Second Issuer Notes issued pursuant to Condition 13
         and which are issued substantially in the form described in and set out
         in PART F of SCHEDULE 2 to the Second Issuer Trust Deed;

         "SERIES 2 DEFINITIVE SECOND ISSUER NOTES" means the Series 2 Class A
         Definitive Second Issuer Notes, the Series 2 Class B Definitive Second
         Issuer Notes and the Series 2 Class C Definitive Second Issuer Notes;

         "SERIES 3 CLASS A DEFINITIVE SECOND ISSUER NOTES" means the registered
         notes in definitive form which may be issued in respect of the Series 3
         Class A Second Issuer Notes pursuant to, and in the circumstances
         specified in, Condition 1 and includes any replacement for Series 3
         Class A Definitive Second Issuer Notes issued pursuant to Condition 13
         and which are issued substantially in the form described in and set out
         in PART G of SCHEDULE 2 to the Second Issuer Trust Deed;

         "SERIES 3 CLASS B DEFINITIVE SECOND ISSUER NOTES" means the registered
         notes in definitive form which may be issued in respect of the Series 3
         Class B Second Issuer Notes pursuant to, and in the circumstances
         specified in, Condition 1 and includes any replacement for Series 3
         Class B Definitive Second Issuer Notes issued pursuant to Condition 13
         and which are issued substantially in the form described in and set out
         in PART H of SCHEDULE 2 to the Second Issuer Trust Deed;

         "SERIES 3 CLASS C DEFINITIVE SECOND ISSUER NOTES" means the registered
         notes in definitive form which may be issued in respect of the Series 3
         Class C Second Issuer Notes pursuant to, and in the circumstances
         specified in, Condition 1 and includes any replacement for Series 3
         Class C Definitive Second Issuer Notes issued pursuant to Condition 13
         and which are issued substantially in the form described in and set out
         in PART I of SCHEDULE 2 to the Second Issuer Trust Deed;

         "SERIES 3 DEFINITIVE SECOND ISSUER NOTES" means the Series 3 Class A
         Definitive Second Issuer Notes, the Series 3 Class B Definitive Second
         Issuer Notes and the Series 3 Class C Definitive Second Issuer Notes;

         "SERIES 4 CLASS A DEFINITIVE SECOND ISSUER NOTES" means the registered
         notes in definitive form which may be issued in respect of the Series 4
         Class A Second Issuer Notes pursuant to, and in the circumstances
         specified in, Condition 1 and includes any replacement for Series 4

<PAGE>
                                       28


         Class A Definitive Second Issuer Notes issued pursuant to Condition 13
         and which are issued substantially in the form described in and set out
         in PART J of SCHEDULE 2 to the Second Issuer Trust Deed;

         "SERIES 4 CLASS B DEFINITIVE SECOND ISSUER NOTES" means the registered
         notes in definitive form which may be issued in respect of the Series 4
         Class B Second Issuer Notes pursuant to, and in the circumstances
         specified in, Condition 1 and includes any replacement for Series 4
         Class B Definitive Second Issuer Notes issued pursuant to Condition 13
         and which are issued substantially in the form described in and set out
         in PART K of SCHEDULE 2 to the Second Issuer Trust Deed;

         "SERIES 4 CLASS C DEFINITIVE SECOND ISSUER NOTES" means the registered
         notes in definitive form which may be issued in respect of the Series 4
         Class C Second Issuer Notes pursuant to, and in the circumstances
         specified in, Condition 1 and includes any replacement for Series 4
         Class C Definitive Second Issuer Notes issued pursuant to Condition 13
         and which are issued substantially in the form described in and set out
         in PART L of SCHEDULE 2 to the Second Issuer Trust Deed;

         "SERIES 4 DEFINITIVE SECOND ISSUER NOTES" means the Series 4 Class A
         Definitive Second Issuer Notes, the Series 4 Class B Definitive Second
         Issuer Notes and the Series 4 Class C Definitive Second Issuer Notes;

         "SERIES 5 CLASS A DEFINITIVE SECOND ISSUER NOTES" means the registered
         notes in definitive form which may be issued in respect of the Series 5
         Class A Second Issuer Notes pursuant to, and in the circumstances
         specified in, Condition 1 and includes any replacement for Series 5
         Class A Definitive Second Issuer Notes issued pursuant to Condition 13
         and which are issued substantially in the form described in and set out
         in PART M of SCHEDULE 2 to the Second Issuer Trust Deed;

         "SERIES 5 CLASS B DEFINITIVE SECOND ISSUER NOTES" means the registered
         notes in definitive form which may be issued in respect of the Series 5
         Class B Second Issuer Notes pursuant to, and in the circumstances
         specified in, Condition 1 and includes any replacement for Series 5
         Class B Definitive Second Issuer Notes issued pursuant to Condition 13
         and which are issued substantially in the form described in and set out
         in PART N of SCHEDULE 2 to the Second Issuer Trust Deed;

         "SERIES 5 CLASS C DEFINITIVE SECOND ISSUER NOTES" means the registered
         notes in definitive form which may be issued in respect of the Series 5
         Class C Second Issuer Notes pursuant to, and in the circumstances
         specified in, Condition 1 and includes any replacement for Series 5
         Class C Definitive Second Issuer Notes issued pursuant to Condition 13
         and which are issued substantially in the form described in and set out
         in PART O of SCHEDULE 2 to the Second Issuer Trust Deed;

         "SERIES 5 DEFINITIVE SECOND ISSUER NOTES" means the Series 5 Class A
         Definitive Second Issuer Notes, the Series 5 Class B Definitive Second
         Issuer Notes and the Series 5 Class C Definitive Second Issuer Notes;

         "SERIES 1 CLASS A SECOND ISSUER NOTES" means the US$[1,000,000,000]
         series 1 class A asset backed floating rate notes due March 2004;

<PAGE>
                                       29


         "SERIES 1 CLASS B SECOND ISSUER NOTES" means the US$[34,000,000] series
         1 class B asset backed floating rate notes due June 2042;

         "SERIES 1 CLASS C SECOND ISSUER NOTES" means the US$[34,000,000] series
         1 class C asset backed floating rate notes due June 2042;

         "SERIES 2 CLASS A SECOND ISSUER NOTES" means the US$[1,250,000,000]
         series 2 class A asset backed floating rate notes due September 2007;

         "SERIES 2 CLASS B SECOND ISSUER NOTES" means the US$[43,000,000] series
         2 class B asset backed floating rate notes due June 2042;

         "SERIES 2 CLASS C SECOND ISSUER NOTES" means the US$[43,000,000] series
         2 class C asset backed floating rate notes due June 2042;

         "SERIES 3 CLASS A SECOND ISSUER NOTES" means the Euro [1,250,000,000]
         series 3 class A asset backed floating rate notes due December 2032;

         "SERIES 3 CLASS B SECOND ISSUER NOTES" means the Euro [44,000,000]
         series 3 class B asset backed floating rate notes due June 2042;

         "SERIES 3 CLASS C SECOND ISSUER NOTES" means the Euro [44,000,000]
         series 3 class C asset backed floating rate notes due June 2042;

         "SERIES 4 CLASS A SECOND ISSUER NOTES" means the US$[1,250,000,000]
         series 4 class A asset backed floating rate notes due December 2009;

         "SERIES 4 CLASS B SECOND ISSUER NOTES" means the Euro [40,000,000]
         series 4 class B asset backed floating rate notes due June 2042;

         "SERIES 4 CLASS C SECOND ISSUER NOTES" means the Euro [40,000,000]
         series 4 class C asset backed floating rate notes due June 2042;

         "SERIES 5 CLASS A SECOND ISSUER NOTES" means the Pound Sterling
         [1,000,000,000] series 5 class A asset backed floating rate notes due
         June 2042;

         "SERIES 5 CLASS B SECOND ISSUER NOTES" means the Pound Sterling
         [35,000,000] series 5 class B asset backed floating rate notes due June
         2042;

         "SERIES 5 CLASS C SECOND ISSUER NOTES" means the Pound Sterling
         [35,000,000] series 5 class C asset backed floating rate notes due June
         2042;

         "SERIES 1 CLASS A SECOND ISSUER NOTEHOLDERS" means the holders for the
         time being of the Series 1 Class A Second Issuer Notes;

         "SERIES 1 CLASS B SECOND ISSUER NOTEHOLDERS" means the holders for the
         time being of the Series 1 Class B Second Issuer Notes;

         "SERIES 1 CLASS C SECOND ISSUER NOTEHOLDERS" means the holders for the
         time being of the Series 1 Class C Second Issuer Notes;

<PAGE>
                                       30


         "SERIES 2 CLASS A SECOND ISSUER NOTEHOLDERS" means the holders for the
         time being of the Series 2 Class A Second Issuer Notes;

         "SERIES 2 CLASS B SECOND ISSUER NOTEHOLDERS" means the holders for the
         time being of the Series 2 Class B Second Issuer Notes;

         "SERIES 2 CLASS C SECOND ISSUER NOTEHOLDERS" means the holders for the
         time being of the Series 2 Class C Second Issuer Notes;

         "SERIES 3 CLASS A SECOND ISSUER NOTEHOLDERS" means the holders for the
         time being of the Series 3 Class A Second Issuer Notes;

         "SERIES 3 CLASS B SECOND ISSUER NOTEHOLDERS" means the holders for the
         time being of the Series 3 Class B Second Issuer Notes;

         "SERIES 3 CLASS C SECOND ISSUER NOTEHOLDERS" means the holders for the
         time being of the Series 3 Class C Second Issuer Notes;

         "SERIES 4 CLASS A SECOND ISSUER NOTEHOLDERS" means the holders for the
         time being of the Series 4 Class A Second Issuer Notes;

         "SERIES 4 CLASS B SECOND ISSUER NOTEHOLDERS" means the holders for the
         time being of the Series 4 Class B Second Issuer Notes;

         "SERIES 4 CLASS C SECOND ISSUER NOTEHOLDERS" means the holders for the
         time being of the Series 4 Class C Second Issuer Notes;

         "SERIES 5 CLASS A SECOND ISSUER NOTEHOLDERS" means the holders for the
         time being of the Series 5 Class A Second Issuer Notes;

         "SERIES 5 CLASS B SECOND ISSUER NOTEHOLDERS" means the holders for the
         time being of the Series 5 Class B Second Issuer Notes;

         "SERIES 5 CLASS C SECOND ISSUER NOTEHOLDERS" means the holders for the
         time being of the Series 5 Class C Second Issuer Notes;

         "SERIES 1 CLASS A GLOBAL SECOND ISSUER NOTE" means a separate global
         note in registered form representing the Series 1 Class A Second Issuer
         Notes;

         "SERIES 1 CLASS B GLOBAL SECOND ISSUER NOTE" means a separate global
         note in registered form representing the Series 1 Class B Second Issuer
         Notes;

         "SERIES 1 CLASS C GLOBAL SECOND ISSUER NOTE" means a separate global
         note in registered form representing the Series 1 Class C Second Issuer
         Notes;

         "SERIES 1 GLOBAL SECOND ISSUER NOTES" means the Series 1 Class A Global
         Second Issuer Note, the Series 1 Class B Global Second Issuer Note and
         the Series 1 Class C Global Second Issuer Note;

         "SERIES 2 CLASS A GLOBAL SECOND ISSUER NOTE" means a separate global
         note in registered form representing the Series 2 Class A Second Issuer
         Notes;

<PAGE>
                                       31


         "SERIES 2 CLASS B GLOBAL SECOND ISSUER NOTE" means a separate global
         note in registered form representing the Series 2 Class B Second Issuer
         Notes;

         "SERIES 2 CLASS C GLOBAL SECOND ISSUER NOTE" means a separate global
         note in registered form representing the Series 2 Class C Second Issuer
         Notes;

         "SERIES 2 GLOBAL SECOND ISSUER NOTES" means the Series 2 Class A Global
         Second Issuer Note, Series 2 Class B Global Second Issuer Note and the
         Series 2 Class C Global Second Issuer Note;

         "SERIES 3 CLASS A GLOBAL SECOND ISSUER NOTE" means a separate global
         note in registered form representing the Series 3 Class A Second Issuer
         Notes;

         "SERIES 3 CLASS B GLOBAL SECOND ISSUER NOTE" means a separate global
         note in registered form representing the Series 3 Class B Second Issuer
         Notes;

         "SERIES 3 CLASS C GLOBAL SECOND ISSUER NOTE" means a separate global
         note in registered form representing the Series 3 Class C Second Issuer
         Notes;

         "SERIES 3 GLOBAL SECOND ISSUER NOTES" means the Series 3 Class A Global
         Second Issuer Note, the Series 3 Class B Global Second Issuer Note and
         the Series 3 Class C Global Second Issuer Note;

         "SERIES 4 CLASS A GLOBAL SECOND ISSUER NOTE" means a separate global
         note in registered form representing the Series 4 Class A Second Issuer
         Notes;

         "SERIES 4 CLASS B GLOBAL SECOND ISSUER NOTE" means a separate global
         note in registered form representing the Series 4 Class B Second Issuer
         Notes;

         "SERIES 4 CLASS C GLOBAL SECOND ISSUER NOTE" means a separate global
         note in registered form representing the Series 4 Class C Second Issuer
         Notes;

         "SERIES 4 GLOBAL SECOND ISSUER NOTES" means the Series 4 Class A Global
         Second Issuer Notes, the Series 4 Class B Global Second Issuer Note and
         the Series 4 Class C Global Second Issuer Note;

         "SERIES 5 CLASS A GLOBAL SECOND ISSUER NOTE" means a separate global
         note in registered form representing the Series 5 Class A Second Issuer
         Notes;

         "SERIES 5 CLASS B GLOBAL SECOND ISSUER NOTE" means a separate global
         note in registered form representing the Series 5 Class B Second Issuer
         Notes;

         "SERIES 5 CLASS C GLOBAL SECOND ISSUER NOTE" means a separate global
         note in registered form representing the Series 5 Class C Second Issuer
         Notes;

         "SERIES 5 GLOBAL SECOND ISSUER NOTES" means the Series 5 Class A Global
         Second Issuer Note, Series 5 Class B Global Second Issuer Note and the
         Series 5 Class C Global Second Issuer Note;

<PAGE>
                                       32


         "SERIES 1 SECOND ISSUER NOTES" means collectively the Series 1 Class A
         Second Issuer Notes, the Series 1 Class B Second Issuer Notes and the
         Series 1 Class C Second Issuer Notes;

         "SERIES 2 SECOND ISSUER NOTES" means collectively the Series 2 Class A
         Second Issuer Notes, the Series 2 Class B Second Issuer Notes and the
         Series 2 Class C Second Issuer Notes;

         "SERIES 3 SECOND ISSUER NOTES" means collectively the Series 3 Class A
         Second Issuer Notes, the Series 3 Class B Second Issuer Notes and the
         Series 3 Class C Second Issuer Notes;

         "SERIES 4 SECOND ISSUER NOTES" means collectively the Series 4 Class A
         Second Issuer Notes, the Series 4 Class B Second Issuer Notes and the
         Series 4 Class C Second Issuer Notes;

         "SERIES 5 SECOND ISSUER NOTES" means collectively the Series 5 Class A
         Second Issuer Notes, the Series 5 Class B Second Issuer Notes and the
         Series 5 Class C Second Issuer Notes;

         "SERIES 1 CLASS A INTEREST PAYMENT DATE" means in respect of the Series
         1 Class A Second Issuer Notes the 10th day of each consecutive month
         (or, if such day is not a Business Day, the next succeeding Business
         Day), until the earliest of (i) the Quarterly Interest Payment Date
         immediately following the occurrence of a Trigger Event and (ii) the
         Quarterly Interest Payment Date immediately following the enforcement
         of the Second Issuer Security in accordance with the Second Issuer Deed
         of Charge, and thereafter the 10th day of September, December, March
         and June in each year (or if such day is not a Business Day, the next
         succeeding Business Day);

         "SERIES 1 CLASS A SECOND ISSUER SWAP" means the sterling-dollar
         currency swap which enables the Second Issuer to receive and pay
         amounts under the Second Issuer Intercompany Loan in sterling and to
         receive and pay amounts under the Series 1 Class A Second Issuer Notes
         in dollars;

         "SERIES 1 CLASS A SECOND ISSUER SWAP AGREEMENT" means the ISDA Master
         Agreement (including the schedule and confirmation thereto) entered
         into on or about the Second Issuer Closing Date between the Series 1
         Class A Second Issuer Swap Provider, the Second Issuer and the Security
         Trustee as amended and supplemented from time to time;

         "SERIES 1 CLASS B SECOND ISSUER SWAP" means the sterling-dollar
         currency swap which enables the Second Issuer to receive and pay
         amounts under the Second Issuer Intercompany Loan in sterling and to
         receive and pay amounts under the Series 1 Class B Second Issuer Notes
         in dollars;

         "SERIES 1 CLASS B SECOND ISSUER SWAP AGREEMENT" means the ISDA Master
         Agreement (including the schedule and confirmation thereto) entered
         into on or about the Second Issuer Closing Date between the Series 1
         Class B Second Issuer Swap Provider, the Second Issuer and the Security
         Trustee as amended and supplemented from time to time;

         "SERIES 1 CLASS C SECOND ISSUER SWAP" means the sterling-dollar
         currency swap which enables the Second Issuer to receive and pay
         amounts under the Second Issuer Intercompany Loan in sterling and to
         receive and pay amounts under the Series 1 Class C Second Issuer Notes
         in dollars;

<PAGE>
                                       33


         "SERIES 1 CLASS C SECOND ISSUER SWAP AGREEMENT" means the ISDA Master
         Agreement (including the schedule and confirmation thereto) entered
         into on or about the Second Issuer Closing Date between the Series 1
         Class C Second Issuer Swap Provider, the Second Issuer and the Security
         Trustee as amended and supplemented from time to time;

         "SERIES 1 CLASS A SECOND ISSUER SWAP PROVIDER" means CDC IXIS Capital
         Markets;

         "SERIES 1 CLASS B SECOND ISSUER SWAP PROVIDER" means CDC IXIS Capital
         Markets;

         "SERIES 1 CLASS C SECOND ISSUER SWAP PROVIDER" means CDC IXIS Capital
         Markets;

         "SERIES 1 SECOND ISSUER SWAP AGREEMENTS" means the Series 1 Class A
         Second Issuer Swap Agreement, the Series 1 Class B Second Issuer Swap
         Agreement and the Series 1 Class C Second Issuer Swap Agreement;

         "SERIES 1 SECOND ISSUER SWAP PROVIDER" means the Series 1 Class A
         Second Issuer Swap Provider, the Series 1 Class B Second Issuer Swap
         Provider and the Series 1 Class C Second Issuer Swap Provider;

         "SERIES 2 CLASS A SECOND ISSUER SWAP" means the sterling-dollar
         currency swap which enables the Second Issuer to receive and pay
         amounts under the Second Issuer Intercompany Loan in sterling and to
         receive and pay amounts under the Series 2 Class A Second Issuer Notes
         in dollars;

         "SERIES 2 CLASS A SECOND ISSUER SWAP AGREEMENT" means the ISDA Master
         Agreement (including the schedule and confirmation thereto) entered
         into on or about the Second Issuer Closing Date between the Series 2
         Class A Second Issuer Swap Provider, the Second Issuer and the Security
         Trustee as amended and supplemented from time to time;

         "SERIES 2 CLASS B SECOND ISSUER SWAP" means the sterling-dollar
         currency swap which enables the Second Issuer to receive and pay
         amounts under the Second Issuer Intercompany Loan in sterling and to
         receive and pay amounts under the Series 2 Class B Second Issuer Notes
         in dollars;

         "SERIES 2 CLASS B SECOND ISSUER SWAP AGREEMENT" means the ISDA Master
         Agreement (including the schedule and confirmation thereto) entered
         into on or about the Second Issuer Closing Date between the Series 2
         Class B Second Issuer Swap Provider, the Second Issuer and the Security
         Trustee as amended and supplemented from time to time;

         "SERIES 2 CLASS C SECOND ISSUER SWAP" means the sterling-dollar
         currency swap which enables the Second Issuer to receive and pay
         amounts under the Second Issuer Intercompany Loan in sterling and to
         receive and pay amounts under the Series 2 Class C Second Issuer Notes
         in dollars;

         "SERIES 2 CLASS C SECOND ISSUER SWAP AGREEMENT" means the ISDA Master
         Agreement (including the schedule and confirmation thereto) entered
         into on or about the Second Issuer Closing Date between the Series 2
         Class C Second Issuer Swap Provider, the Second Issuer and the Security
         Trustee as amended and supplemented from time to time;

<PAGE>
                                       34


         "SERIES 2 SECOND ISSUER SWAP AGREEMENTS" means the Series 2 Class A
         Second Issuer Swap Agreement, the Series 2 Class B Second Issuer Swap
         Agreement and the Series 2 Class C Second Issuer Swap Agreement;

         "SERIES 2 CLASS A SECOND ISSUER SWAP PROVIDER" means JPMorgan Chase
         Bank;

         "SERIES 2 CLASS B SECOND ISSUER SWAP PROVIDER" means JPMorgan Chase
         Bank;

         "SERIES 2 CLASS C SECOND ISSUER SWAP PROVIDER" means JPMorgan Chase
         Bank;

         "SERIES 2 SECOND ISSUER SWAP PROVIDER" means the Series 2 Class A
         Second Issuer Swap Provider, the Series 2 Class B Second Issuer Swap
         Provider and the Series 2 Class C Currency Swap Provider;

         "SERIES 3 CLASS A SECOND ISSUER SWAP" means the sterling-euro currency
         swap which enables the Second Issuer to receive and pay amounts under
         the Second Issuer Intercompany Loan in sterling and to receive and pay
         amounts under the Series 3 Class A Second Issuer Notes in euro;

         "SERIES 3 CLASS A SECOND ISSUER SWAP AGREEMENT" means the ISDA Master
         Agreement (including the schedule and confirmation thereto) entered
         into on or about the Second Issuer Closing Date between the Series 3
         Class A Second Issuer Swap Provider, the Second Issuer and the Security
         Trustee as amended and supplemented from time to time;

         "SERIES 3 CLASS B SECOND ISSUER SWAP" means the sterling-euro currency
         swap which enables the Second Issuer to receive and pay amounts under
         the Second Issuer Intercompany Loan in sterling and to receive and pay
         amounts under the Series 3 Class B Second Issuer Notes in euro;

         "SERIES 3 CLASS B SECOND ISSUER SWAP AGREEMENT" means the ISDA Master
         Agreement (including the schedule and confirmation thereto) entered
         into on or about the Second Issuer Closing Date between the Series 3
         Class B Second Issuer Swap Provider, the Second Issuer and the Security
         Trustee as amended and supplemented from time to time;

         "SERIES 3 CLASS C SECOND ISSUER SWAP" means the sterling-euro currency
         swap which enables the Second Issuer to receive and pay amounts under
         the Second Issuer Intercompany Loan in sterling and to receive and pay
         amounts under the Series 3 Class C Second Issuer Notes in euro;

         "SERIES 3 CLASS C SECOND ISSUER SWAP AGREEMENT" means the ISDA Master
         Agreement (including the schedule and confirmation thereto) entered
         into on or about the Second Issuer Closing Date between the Series 3
         Class C Second Issuer Swap Provider, the Second Issuer and the Security
         Trustee as amended and supplemented from time to time;

         "SERIES 3 CLASS A SECOND ISSUER SWAP PROVIDER" means CDC IXIS Capital
         Markets];

         "SERIES 3 CLASS B SECOND ISSUER SWAP PROVIDER" means CDC IXIS Capital
         Markets;

         "SERIES 3 CLASS C SECOND ISSUER SWAP PROVIDER" means CDC IXIS Capital
         Markets;

<PAGE>
                                       35


         "SERIES 3 SECOND ISSUER SWAP AGREEMENTS" the Series 3 Class A Euro
         Currency Swap Agreement, the Series 3 Class B Euro Currency Swap
         Agreement and the Series 3 Class C Euro Currency Swap Agreement;

         "SERIES 3 SECOND ISSUER SWAP PROVIDER" means the Series 3 Class A
         Second Issuer Swap Provider, the Series 3 Class B Second Issuer Swap
         Provider and the Series 3 Class C Second Issuer Swap Provider;

         "SERIES 4 CLASS A SECOND ISSUER SWAP" means the sterling-dollar
         currency swap which enables the Second Issuer to receive and pay
         amounts under the Second Issuer Intercompany Loan in sterling and to
         receive and pay amounts under the Series 4 Class A Second Issuer Notes
         in dollars;

         "SERIES 4 CLASS A SECOND ISSUER SWAP AGREEMENT" means the ISDA Master
         Agreement (including the schedule and confirmation thereto) entered
         into on or about the Second Issuer Closing Date between the Series 4
         Class A Second Issuer Swap Provider, the Second Issuer and the Security
         Trustee as amended and supplemented from time to time;

         "SERIES 4 CLASS B SECOND ISSUER SWAP" means the sterlingeuro currency
         swap which enables the Second Issuer to receive and pay amounts under
         the Second Issuer Intercompany Loan in sterling and to receive and pay
         amounts under the Series 4 Class B Second Issuer Notes in euro;

         "SERIES 4 CLASS B SECOND ISSUER SWAP AGREEMENT" means the ISDA Master
         Agreement (including the schedule and confirmation thereto) entered
         into on or about the Second Issuer Closing Date between the Series 4
         Class B Second Issuer Swap Provider, the Second Issuer and the Security
         Trustee as amended and supplemented from time to time;

         "SERIES 4 CLASS C SECOND ISSUER SWAP" means the sterling-eurocurrency
         swap which enables the Second Issuer to receive and pay amounts under
         the Second Issuer Intercompany Loan in sterling and to receive and pay
         amounts under the Series 4 Class C Second Issuer Notes in euro;

         "SERIES 4 CLASS C SECOND ISSUER SWAP AGREEMENT" means the ISDA Master
         Agreement (including the schedule and confirmation thereto) entered
         into on or about the Second Issuer Closing Date between the Series 4
         Class C Second Issuer Swap Provider, the Second Issuer and the Security
         Trustee as amended and supplemented from time to time;

         "SERIES 4 SECOND ISSUER SWAP AGREEMENTS" means the Series 4 Class A
         Second Issuer Swap Agreement, the Series 4 Class B Second Issuer Swap
         Agreement and the Series 4 Class C Second Issuer Swap Agreement;

         "SERIES 4 CLASS A SECOND ISSUER SWAP PROVIDER" means Banque AIG;

         "SERIES 4 CLASS B SECOND ISSUER SWAP PROVIDER" means Banque AIG;

         "SERIES 4 CLASS C SECOND ISSUER SWAP PROVIDER" means Banque AIG;

<PAGE>
                                       36


         "SERIES 4 SECOND ISSUER SWAP PROVIDER" means the Series 4 Class A
         Second Issuer Swap Provider, the Series 4 Class B Second Issuer Swap
         Provider and the Series 4 Class C Second Issuer Swap Provider;

         "SPECIFIED OFFICE" means as the context may require, in relation to any
         of the Agents, the office specified against the name of such Agent in
         the Second Issuer Paying Agent and Agent Bank Agreement or such other
         specified notice as may be notified to the Second Issuer and the
         Security Trustee pursuant to the Second Issuer Paying Agent and Agent
         Bank Agreement;

         "STANDARD & POOR'S" means Standard & Poor's Rating Services, a division
         of The McGraw-Hill Companies, Inc. and any successor to its ratings
         business;

         "STERLING INTEREST DETERMINATION DATE" means the first day of the
         Interest Period for which the rate will apply;

         "SUBSCRIPTION AGREEMENT" means the Subscription Agreement relating to
         the sale of the Series 3 Second Issuer Notes, the Series 4 Class B
         Second Issuer Notes, the Series 4 Class C Second Issuer Notes and the
         Series 5 Second Issuer Notes, dated [27th February], 2003 between
         Funding 1, Halifax, the Mortgages Trustee, the Second Issuer and, as
         appropriate, the Joint Lead Managers;

         "STERLING-LIBOR" means the London Interbank Offered Rate for sterling
         deposits, as determined by the Agent Bank on the following basis:

         (a)  on the applicable Sterling Interest Determination Date, the Agent
              Bank will determine the arithmetic mean, rounded upwards to five
              decimal places, of the offered quotations to leading banks in the
              London inter-bank market for sterling deposits for the relevant
              period (or, in the case of the first Interest Period, the linear
              interpolation of the arithmetic mean of such offered quotations
              for three-month and four-month sterling deposits (rounded
              upwards, if necessary, to five decimal places)).

              This will be determined by reference to the display as quoted on
              the Moneyline Telerate Screen No. 3750 or, if the Moneyline
              Telerate Screen No. 3750 stops providing these quotations, the
              replacement service for the purposes of displaying this
              information will be used. If the replacement service stops
              displaying the information, another page as determined by the
              Second Issuer with the approval of the Note Trustee will be used.

              In each of these cases, the determination will be made at or
              about 11.00 a.m., London time, on that date;

         (b)  if, on any such Sterling Interest Determination Date, the screen
              rate is unavailable, the Agent Bank will:

              (1)  request the principal London office of each of the Reference
                   Banks to provide the Agent Bank with its offered quotation
                   to leading banks for sterling deposits of the equivalent
                   amount, and for the relevant period, in the London
                   inter-bank market as at or about 11.00 a.m. (London time);
                   and

              (2)  calculate the arithmetic mean, rounded upwards to five
                   decimal places, of those quotations;

<PAGE>
                                       37


         (c)  if, on any such Sterling Interest Determination Date, the screen
              rate is unavailable and only two or three of the Reference Banks
              provide offered quotations, the relevant rate for that Interest
              Period will be the arithmetic mean of the quotations as
              calculated in paragraph (b); and

         (d)  if, on any such Sterling Interest Determination Date, fewer than
              two Reference Banks provide quotations, the Agent Bank will
              consult with the Note Trustee and the Second Issuer for the
              purpose of agreeing a total of two banks to provide such
              quotations and the relevant rate for that Interest Period will be
              the arithmetic mean of the quotations as calculated in paragraph
              (b). If no such banks are agreed then the relevant rate for that
              Interest Period will be the rate in effect for the last preceding
              Interest Period for which paragraph (a) or (b) was applicable;

         "SUCCESSOR AGENT" means any successor to any Agent who may be appointed
         by the Second Issuer under the Second Issuer Paying Agent and Agent
         Bank Agreement;

         "SUCCESSOR AGENT BANK" means any successor to the Agent Bank who may be
         appointed by the Second Issuer under the Second Issuer Paying Agent and
         Agent Bank Agreement;

         "SUCCESSOR PAYING AGENT" means any successor to any Paying Agent who
         may be appointed by the Second Issuer under the Second Issuer Paying
         Agent and Agent Bank Agreement;

         "SUCCESSOR PRINCIPAL PAYING AGENT" means any successor to the Principal
         Paying Agent who may be appointed by the Second Issuer under the Second
         Issuer Paying Agent and Agent Bank Agreement;

         "TARGET BUSINESS DAY" means a day on which the Trans-European Automated
         Real-time Gross Settlement Express (TARGET) system is open;

         "TERM ADVANCE INTEREST DETERMINATION DATE" has the meaning given in
         CLAUSE 6.2(a)(i) of the Intercompany Loan Terms and Conditions;

         "TERM ADVANCE RATE OF INTEREST" has the meaning given in CLAUSE 6.2 of
         the Intercompany Loan Terms and Conditions;

         "TERM ADVANCE RATING" means the designated ratings which corresponds to
         the ratings assigned on the Second Issuer Closing Date to the
         corresponding class of Second Issuer Notes, the proceeds of which are
         applied by the Second Issuer to make such Term Advance to Funding 1.
         Any subsequent changes made to the ratings of the Second Issuer Notes
         will not affect the Term Advance Ratings of the Term Advances;

         "TERMS AND CONDITIONS" has the same meaning as "CONDITIONS";

         "THREE-MONTH USD-LIBOR" means the London Interbank Offered Rate for
         dollar deposits, as determined by the Agent Bank on the following
         basis:

         (a)  on the applicable Dollar Interest Determination Date applicable
              to the Series 1 Class B Second Issuer Notes, the Series 1 Class C
              Second Issuer Notes, the Series 2 Class A Second Issuer Notes,
              the Series 2 Class B Second Issuer Notes, the Series 2 Class C
              Second Issuer Notes and the Series 4 Class A Second Issuer Notes,
              the Agent Bank will determine the arithmetic mean, rounded
              upwards to five decimal places, of the

<PAGE>
                                       38


              offered quotations to leading banks in the London inter-bank
              market for [three-month] dollar deposits. The Three-Month
              USD-LIBOR for the first Interest Period shall be the linear
              interpolation of the arithmetic mean of such offered quotations
              for three-month and four-month Dollar deposits (rounded upwards,
              if necessary, to five decimal places).

              This will be determined by reference to the display as quoted on
              the Moneyline Telerate Screen No. 3750 or, if the Moneyline
              Telerate Screen No. 3750 stops providing these quotations, the
              replacement service for the purposes of displaying this
              information will be used. If the replacement service stops
              displaying the information, another page as determined by the
              issuer with the approval of the Note Trustee will be used.

              In each of these cases, the determination will be made as at or
              about 11.00 a.m., London time, on that date;

         (b)  if, on any such Dollar Interest Determination Date, the screen
              rate is unavailable, the Agent Bank will:

              (1)  request the principal London office of each of the Reference
                   Banks to provide the Agent Bank with its offered quotation
                   to leading banks for dollar deposits of the equivalent
                   amount and for the relevant period, in the London inter-bank
                   market as at or about 11.00 a.m. (London time); and

              (2)  calculate the arithmetic mean, rounded upwards to five
                   decimal places, of those quotations;

         (c)  if, on any such Dollar Interest Determination Date, the screen
              rate is unavailable and only two or three of the Reference Banks
              provide offered quotations, the relevant rate for that Interest
              Period will be the arithmetic mean of the quotations as
              calculated in paragraph (b); and

         (d)  if, on any such Dollar Interest Determination Date, fewer than
              two Reference Banks provide quotations, the Agent Bank will
              consult with the Note Trustee and the Second Issuer for the
              purpose of agreeing a total of two banks to provide such
              quotations and the relevant rate for that Interest Period will be
              the arithmetic mean of the quotations as calculated in paragraph
              (b). If no such banks are agreed then the relevant rate for that
              Interest Period will be the rate in effect for the last preceding
              Interest Period for which paragraph (a) or (b) was applicable;

         "TRANSACTION" means the transaction contemplated by the Transaction
         Documents;

         "TRANSACTION DOCUMENT" or "RELEVANT DOCUMENT" means any of the
         following documents:

         (a)  the Subscription Agreement;

         (b)  the Underwriting Agreement;

         (c)  the Second Issuer Intercompany Loan Agreement;

         (d)  the Mortgages Trust Deed;

<PAGE>
                                       39


         (e)  the Halifax Deed and Power of Attorney in relation to the
              Mortgages Trust Deed;

         (f)  the Mortgage Sale Agreement;

         (g)  the Seller Power of Attorney;

         (h)  the Second Issuer Deed of Charge;

         (i)  the Second Issuer Power of Attorney;

         (j)  the Funding 1 Deed of Charge;

         (k)  the Funding 1 Power of Attorney;

         (l)  the Funding 1 Liquidity Facility Agreement;

         (m)  the Second Issuer Swap Agreements;

         (n)  the Funding 1 Swap Agreement;

         (o)  the Second Issuer Trust Deed;

         (p)  the Second Issuer Paying Agent and Agent Bank Agreement;

         (q)  the Servicing Agreement;

         (r)  the Cash Management Agreement;

         (s)  the Second Issuer Cash Management Agreement;

         (t)  the Funding 1 Guaranteed Investment Contract;

         (u)  the Mortgages Trustee Guaranteed Investment Contract;

         (v)  the Second Issuer Post-Enforcement Call Option Agreement;

         (w)  the Bank Account Agreement;

         (x)  the Second Issuer Bank Account Agreement;

         (y)  the Funding 1 Corporate Services Agreement;

         (aa) the Second Issuer Corporate Services Agreement;

         (bb) the Mortgages Trustee Corporate Services Agreement; and

         (cc) the Second Start-up Loan Agreement;

         "TRANSFER AGENT" means Citibank, N.A. London Branch of 5 Carmelite
         Street, London EC4Y 0PA in its capacity as the transfer agent appointed
         by the Second Issuer under the Second Issuer Paying Agent and Agent
         Bank Agreement to administer the transfer of Second Issuer Notes;

<PAGE>
                                       40


         "UNDERWRITERS" means J.P. Morgan Securities Inc. and Lehman Brothers
         Inc., in respect of the Series 1 Class A Second Issuer Notes, the
         Series 1 Class B Second Issuer Notes, the Series 1 Class C Second
         Issuer Notes, the Series 2 Class A Second Issuer Notes, the Series 2
         Class B Second Issuer Notes, the Series 2 Class C Second Issuer Notes
         and the Series 4 Class A Second Issuer Notes and Credit Suisse First
         Boston Corporation and Deutsche Bank Securities Inc. in respect of the
         Series 1 Class A Second Issuer Notes, the Series 2 Class A Second
         Issuer Notes and the Series 4 Class A Second Issuer Notes;

         "UNDERWRITING AGREEMENT" means the Underwriting Agreement relating to
         the sale of the Series 1 Second Issuer Notes, the Series 2 Second
         Issuer Notes and the Series 4 Class A Second Issuer Notes dated [27th
         February], 2003 between Funding 1, Halifax, the Mortgages Trustee, the
         Second Issuer and J.P. Morgan Securities Inc., (for and on behalf of
         itself and the other Underwriters);

         "US PAYING AGENT" means Citibank, N.A., New York Branch of 14th Floor,
         Zone 3, 111 Wall Street, New York, New York 10043, as paying agent in
         the United States of America; and

         "USD-LIBOR" means One-month USD-LIBOR and Three-month USD-LIBOR.

2.       INTERPRETATION AND CONSTRUCTION

2.1      Any reference in this Master Definitions and Construction Schedule or
         any Transaction Document to:

         "AFFILIATE" of any person shall be construed as a reference to the
         ultimate holding company of that person or an entity of which that
         person or its ultimate holding company (a) has direct or indirect
         control or (b) owns directly or indirectly more than fifty per cent.
         (50%) of the share capital or similar rights of ownership;

         the "ASSETS" of any person shall be construed as a reference to the
         whole or any part of its business, undertakings, property, intellectual
         property, shares, securities, debts, accounts, revenues (including any
         right to receive revenues), goodwill, shareholdings and uncalled
         capital including premium whether now or hereafter acquired and any
         other assets whatsoever;

         "DIRECTION" or request of the holders of at least 25 per cent. in
         aggregate Principal Amount Outstanding of the Class A Second Issuer
         Notes shall mean:

         (a)  in relation to a matter which, in the opinion of the Note Trustee
              or, as the case may be, the Security Trustee, affects the
              interests of the holders of one class only of the Class A Second
              Issuer Notes, a single direction of the holders of at least 25
              per cent. in aggregate Principal Amount Outstanding of such class
              of Class A Second Issuer Notes;

         (b)  in relation to a matter which, in the opinion of the Note Trustee
              or, as the case may be, the Security Trustee, affects the
              interests of the holders of any two or more classes of the Class
              A Second Issuer Notes but does not give rise to a conflict of
              interest between the holders of such two or more classes of the
              Class A Second Issuer Notes, a single direction of the holders of
              at least 25 per cent. in aggregate Principal Amount Outstanding
              of such two or more classes of the Class A Second Issuer Notes;
              and

<PAGE>
                                       41


         (c)  in relation to a matter which, in the opinion of the Note Trustee
              or, as the case may be, the Security Trustee, affects the
              interests of the holders of any two or more classes of the Class
              A Second Issuer Notes and gives or may give rise to conflict of
              interest between the holders of such two or more classes of the
              Class A Second Issuer Notes, separate directions of the holders
              of at least 25 per cent. in aggregate Principal Amount
              Outstanding of any two or more such classes of the Class A Second
              Issuer Notes,

         and, in the case of (b) above, where the relevant classes of the Class
         A Second Issuer Notes are not all in the same currency, the Principal
         Amount Outstanding of Class A Second Issuer Notes denominated in US
         dollars or euro shall be the equivalent in sterling at the currency
         Swap Rate;

         "DISPOSAL" shall be construed as any sale, lease, transfer, conveyance,
         assignment, assignation, licence, sub-licence or other disposal and
         "DISPOSE" shall be construed accordingly;

         a "GUARANTEE" means any guarantee, bond, indemnity, letter of credit,
         third party security or other legally binding assurance against
         financial loss granted by one person in respect of any indebtedness of
         another person, or any agreement to assume any indebtedness of any
         other person or to supply funds or to invest in any manner whatsoever
         in such other person by reason of, or otherwise in relation to,
         indebtedness of such other person;

         "HOLDING COMPANY" means a holding company within the meaning of Section
         736 of the Companies Act 1985;

         "INDEBTEDNESS" shall be construed so as to include any obligation
         (whether incurred as principal or as surety) for the payment or
         repayment of money, whether present or future, actual or contingent;

         "MONTH" is a reference to a period starting on one day in a calendar
         month and ending on the numerically corresponding day in the next
         calendar month save that, where any such period would otherwise end on
         a day which is not a Business Day, it shall end on the next Business
         Day, unless that day falls in the calendar month succeeding that in
         which it would otherwise have ended, in which case it shall end on the
         preceding Business Day Provided that, if a period starts on the last
         Business Day in a calendar month or if there is no numerically
         corresponding day in the month in which that period ends, that period
         shall end on the last Business Day in that later month (and references
         to "MONTHS" shall be construed accordingly);

         "PARTY" shall be construed as a party to a particular agreement, as the
         case may be;

         "SUBSIDIARY" means, (a) a subsidiary within the meaning of Section 736
         of the Companies Act 1985, and (b) unless the context requires
         otherwise, a subsidiary undertaking within the meaning of Section 258
         of the Companies Act 1985;

         "VAT" means value added tax imposed by the United Kingdom as referred
         to in the Value Added Tax Act 1994 and legislation (whether delegated
         or otherwise) replacing the same or supplemental thereto or in any
         primary or subordinate legislation promulgated by the European Union or
         any official body or agency thereof, and any similar turnover tax
         replacing or introduced in addition to any of the same;

<PAGE>
                                       42


         a "WHOLLY-OWNED SUBSIDIARY" of a company or corporation shall be
         construed as a reference to any company or corporation which has no
         other members except that other company or corporation and that other
         company's or corporation's wholly-owned subsidiaries or persons acting
         on behalf of that other company or corporation or its wholly-owned
         subsidiaries; and

         the "WINDING-UP", "DISSOLUTION" or "ADMINISTRATION" of a company or
         corporation shall be construed so as to include any equivalent or
         analogous proceedings under the law of the jurisdiction in which such
         company or corporation is incorporated or any jurisdiction in which
         such company or corporation carries on business including the seeking
         of liquidation, winding-up, bankruptcy, reorganisation, dissolution,
         administration, arrangement, adjustment, protection or relief of
         debtors.

2.2      "POUND STERLING", "STERLING" or "POUNDS STERLING" denotes the lawful
         currency for the time being of the United Kingdom; "$", "US$", "DOLLAR"
         or "USD" denotes the lawful currency for the time being of the United
         States of America and "Euro", "euro" or "EURO" denotes the single
         currency introduced at the start of the third stage of European
         Economic Monetary Union pursuant to the Treaty of Rome of 25th March,
         1957, as amended by, inter alia, the Single European Act of 1986 and
         the Treaty of European Union of 7th February, 1992 and the Treaty of
         Amsterdam of 2nd October 1997 establishing the European Community, as
         further amended from time to time.

2.3      In this Second Issuer Master Definitions and Construction Schedule and
         in any of the Transaction Documents in which this Second Issuer Master
         Definitions and Construction Schedule is expressed to be incorporated
         or to which this Second Issuer Master Definitions and Construction
         Schedule is expressed to apply:

         (a)  words denoting the singular number only shall include the plural
              number also and vice versa;

         (b)  words denoting one gender only shall include the other genders;

         (c)  words denoting persons only shall include firms and corporations
              and vice versa;

         (d)  references to any statutory provision shall be deemed also to
              refer to any statutory modification or re-enactment thereof or
              any statutory instrument, order or regulation made thereunder or
              under any such re-enactment;

         (e)  references to any agreement or other document (including any of
              the Transaction Documents) shall be deemed also to refer to such
              agreement or document as amended, varied, supplemented or novated
              from time to time;

         (f)  clause, paragraph and schedule headings are for ease of reference
              only;

         (g)  reference to a statute shall be construed as a reference to such
              statute as the same may have been, or may from time to time be,
              amended or re-enacted to the extent such amendment or
              re-enactment is substantially to the same effect as such statute
              on the date hereof;

         (h)  reference to a time of day shall be construed as a reference to
              London time; and

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                                       43


         (i)  references to any person shall include references to his
              successors, transferees and assigns and any person deriving title
              under or through him.

2.4    Any definition that appears in the Second Issuer Agreements that does not
       appear in this Second Issuer Master Definitions and Construction
       Schedule, shall have the meaning given in the Amended and Restated Master
       Definitions and Construction Schedule (as the same may be amended or
       varied from time to time), as the context so requires. In the event of a
       conflict between the definitions in the Second Issuer Master Definitions
       and Construction Schedule and the Amended and Restated Master Definitions
       and Construction Schedule, the definitions in the Second Issuer Master
       Definitions and Construction Schedule shall prevail.

3.     GOVERNING LAW

       This Second Issuer Master Definitions and Construction Schedule is
       governed by, and shall be construed in accordance with, the laws of
       England, and the parties hereto irrevocably submit to the jurisdiction of
       the courts of England.

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                                       44


                                   SIGNATORIES

Signed for the purposes of identification by         )
ALLEN & OVERY                                        )





Signed for the purposes of identification by         )
SIDLEY AUSTIN BROWN & WOOD                           )



<PAGE>

                                                             DRAFT (2): 19.02.03




                             DATED [5TH MARCH], 2003









                         PERMANENT FINANCING (NO. 2) PLC











                        ________________________________

                        SECOND ISSUER MASTER DEFINITIONS
                            AND CONSTRUCTION SCHEDULE
                        ________________________________