<PAGE>
                                                                     EXHIBIT 4.4


================================================================================

DRAFT: 25/02/03

                                  ALLEN & OVERY
                                     London

                             DATED [6th March], 2003


                         PERMANENT FINANCING (NO. 2) PLC

                                       and

                         U.S. BANK NATIONAL ASSOCIATION

                                       and

                                   HALIFAX plc

                                       and

                                 CITIBANK, N.A.

                                       and

                         CITIBANK, N.A., NEW YORK BRANCH

                                       and

                THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND

                                       and

                            CDC IXIS CAPITAL MARKETS

                                       and

                               JPMORGAN CHASE BANK

                                       and

                                   BANQUE AIG

                                     - and -

                      STRUCTURED FINANCE MANAGEMENT LIMITED

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

                          SECOND ISSUER DEED OF CHARGE

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


================================================================================

<PAGE>


                                    CONTENTS

<Table>
<Caption>
Clause                                                                                                    Page
<S>      <C>                                                                                              <C>
1.       Interpretation......................................................................................3
2.       Second Issuer's Covenant to Pay.....................................................................3
3.       Security and Declaration of Trust...................................................................3
4.       Release of Second Issuer Charged Property...........................................................5
5.       Payments out of the Second Issuer Accounts, Authorised Investments and
         Application of Cash Prior to Enforcement............................................................6
6.       Payments out of the Second Issuer Accounts upon Enforcement.........................................8
7.       Conflict...........................................................................................14
8.       The Security Trustee's Powers......................................................................16
9.       Receiver...........................................................................................19
10.      Protection of Third Parties........................................................................22
11.      Protection of Security Trustee and Receiver........................................................22
12.      Expenses and Indemnity.............................................................................23
13.      Protection of Security.............................................................................25
14.      Crystallisation....................................................................................25
15.      Power of Attorney, etc.............................................................................27
16.      Other Security, etc................................................................................27
17.      Avoidance of Payments..............................................................................28
18.      Set off............................................................................................29
19.      Execution of Documents.............................................................................29
20.      Exercise of Certain Rights.........................................................................29
21.      Covenants and Warranties...........................................................................31
22.      Supplements to the Trustee Acts....................................................................34
23.      Supplemental Provisions regarding the Security Trustee.............................................40
24.      Remuneration and Indemnification of the Security Trustee...........................................44
25.      Appointment of New Security Trustee and Removal of Security Trustee................................46
26.      Retirement of Security Trustee.....................................................................47
27.      Trust Indenture Act Prevails.......................................................................47
28.      Notices and Demands................................................................................47
29.      Further Provisions.................................................................................49
30.      Choice of Law......................................................................................50

Signatories.................................................................................................52

Schedules

1.       Power of Attorney..................................................................................56
2.       Form of Notice of Assignment and Consent to Assignment.............................................58
</Table>


<PAGE>

THIS SECOND ISSUER DEED OF CHARGE is made on [6th March], 2003

Between:

(1)      PERMANENT FINANCING (NO. 2) PLC, (registered number 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 (the "Second Issuer");

(2)      U.S. BANK NATIONAL ASSOCIATION, a national banking association formed
         under the laws of the United States of America, acting through its
         office situated at 1 Federal Street, 3rd Floor, Boston, Massachusetts,
         02110 (acting in its capacity as the Security Trustee);

(3)      U.S. BANK NATIONAL ASSOCIATION, a national banking association formed
         under the laws of the United States of America, acting through its
         office situated at 1 Federal Street, 3rd Floor, Boston, Massachusetts,
         02110 (acting in its capacity as the Note Trustee);

(4)      CITIBANK, N.A., acting through its office is at 5 Carmelite Street,
         London EC4Y 0PA and acting in its capacity as the Agent Bank;

(5)      CITIBANK, N.A., acting through its office is at 5 Carmelite Street,
         London EC4Y 0PA and acting in its capacity as the Principal Paying
         Agent;

(6)      CITIBANK, N.A., acting through its office is at 5 Carmelite Street,
         London EC4Y 0PA and acting in its capacity as the Registrar;

(7)      CITIBANK, N.A., acting through its office is at 5 Carmelite Street,
         London EC4Y 0PA and acting in its capacity as the Transfer Agent;

(8)      HALIFAX plc, a public limited company incorporated under the laws of
         England and Wales whose registered office is at Trinity Road, Halifax,
         West Yorkshire HX1 2RG acting in its capacity as the Second Issuer Cash
         Manager;

(9)      THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND, established by an Act
         of the Parliament of Scotland in 1695, as amended, acting through its
         office situated at 16 Wellington Street, Leeds LS1 4LT, and acting in
         its capacity as the Second Issuer Account Bank;

(10)     CITIBANK, N.A., NEW YORK BRANCH, whose principal office is at 14th
         Floor, Zone 3, 111 Wall Street, New York, New York 10043 acting in its
         capacity as the US Paying Agent;

(11)     CDX IXIS CAPITAL MARKETS, acting through its London branch located at
         Cannon Bridge, 25 Dowgate Hill, London EC4R 2GN acting in its capacity
         as Series 1 Second Issuer Swap Provider, in respect of 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;

(12)     JPMORGAN CHASE BANK, whose principal office is at 270 Park Avenue, New
         York, New York 10017-2070 acting in its capacity as Series 2 Second
         Issuer Swap Provider in respect of 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;

(13)     CDX IXIS CAPITAL MARKETS, acting through its London branch located at
         Cannon Bridge, 25 Dowgate Hill, London EC4R 2GN acting in its capacity
         as Series 3 Second Issuer



<PAGE>
                                       2



         Swap Provider in respect of the Series 3 Class A Second Issuer Swap
         Agreement, the Series 3 Class B Second Issuer Swap Agreement and the
         Series 3 Class C Second Issuer Swap Agreement;

(14)     BANQUE AIG, whose principal office is at 46, rue de Bassano, 75008
         Paris, France, acting in its capacity as Series 4 Second Issuer Swap
         Provider, in respect of 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; and

(15)     STRUCTURED FINANCE MANAGEMENT LIMITED, (registered number 3853947),
         whose registered office is at Blackwell House, Guildhall Yard, London
         EC2V 5AE acting in its capacity as the Corporate Services Provider
         under the terms of the Second Issuer Corporate Services Agreement.

Whereas:

(A)      This Deed secures and will secure, inter alia, the Second Issuer
         Secured Obligations.

(B)      The Second Issuer will on the date of this Deed issue the Second Issuer
         Notes pursuant to the Second Issuer Trust Deed.

(C)      By the Second Issuer Paying Agent and Agent Bank Agreement, the Paying
         Agents and the Agent Bank have agreed to provide certain agency
         services on behalf of the Second Issuer for the benefit of the
         Noteholders.

(D)      By the Second Issuer Cash Management Agreement, the Second Issuer Cash
         Manager has agreed to act as cash manager and to provide certain
         administration and cash management services to the Second Issuer.

(E)      By the Second Issuer Bank Account Agreement, the Second Issuer Account
         Bank has agreed to provide certain bank account services to the Second
         Issuer.

(F)      By the Series 1 Second Issuer Swap Agreements, each Series 1 Second
         Issuer Swap Provider has agreed to enter into dollar/sterling currency
         swaps with the Second Issuer in relation to the Series 1 Second Issuer
         Notes.

(G)      By the Series 2 Second Issuer Swap Agreements, each Series 2 Second
         Issuer Swap Provider has agreed to enter into dollar/sterling currency
         swaps with the Second Issuer in relation to the Series 2 Second Issuer
         Notes.

(H)      By the Series 3 Second Issuer Swap Agreements, each Series 3 Second
         Issuer Swap Provider has agreed to enter into euro/sterling currency
         swaps with the Second Issuer in relation to the Series 3 Second Issuer
         Notes.

(I)      By the Series 4 Second Issuer Swap Agreements, each Series 4 Second
         Issuer Swap Provider has agreed to enter into dollar/sterling currency
         swaps with the Second Issuer in relation to the Series 4 Class A Second
         Issuer Notes and euro/sterling currency swaps with the Second Issuer in
         relation to the Series 4 Class B Second Issuer Notes and the Series 4
         Class C Second Issuer Notes.

(J)      By the Second Issuer Corporate Services Agreement, the Corporate
         Services Provider has agreed to act as corporate services provider to
         the Second Issuer.


<PAGE>
                                       3


IT IS AGREED as follows:

1.       INTERPRETATION

         The Amended and Restated Master Definitions and Construction Schedule
         and the Second Issuer Master Definitions and Construction Schedule
         signed for the purposes of identification by Allen & Overy and Sidley
         Austin Brown & Wood on [5th March], 2003 are expressly and specifically
         incorporated into this Deed and, accordingly, the expressions defined
         in the Amended and Restated Master Definitions and Construction
         Schedule and the Second Issuer Master Definitions and Construction
         Schedule shall, except where the context otherwise requires and save
         where otherwise defined herein, have the same meanings in this Deed and
         this Deed shall be construed in accordance with the interpretation
         provisions set out in Clause 2 of the Second Issuer Master Definitions
         and Construction Schedule. In the event of a conflict between the
         Amended and Restated Master Definitions and Construction Schedule and
         the Second Issuer Master Definitions and Construction Schedule, the
         Second Issuer Master Definitions and Construction Schedule shall
         prevail.

2.       SECOND ISSUER'S COVENANT TO PAY

         The Second Issuer covenants with and undertakes to the Security Trustee
         for itself and on trust for the Second Issuer Secured Creditors that it
         will, subject to the provisions of the Second Issuer Transaction
         Documents:

         (a)      duly and punctually pay and discharge all monies and
                  liabilities whatsoever which now are or at any time hereafter
                  may (whether before or after demand) become due and payable to
                  the Security Trustee (whether for its own account or as
                  trustee for the Second Issuer Secured Creditors) or any of the
                  other Second Issuer Secured Creditors by the Second Issuer
                  whether actually or contingently, under this Deed or any other
                  Second Issuer Transaction Document; and

         (b)      observe, perform and satisfy all its other obligations and
                  liabilities under this Deed and/or any other Second Issuer
                  Transaction Document.

3.       SECURITY AND DECLARATION OF TRUST

3.1      CONTRACTUAL RIGHTS

         The Second Issuer, by way of first fixed security for the payment or
         discharge of the Second Issuer Secured Obligations, subject to Clause 4
         (Release of Second Issuer Charged Property), hereby assigns to the
         Security Trustee all of its right, title, interest and benefit, present
         and future, in, to and under the Second Issuer Transaction Documents
         including, without limitation, all rights to receive payment of any
         amounts which may become payable to the Second Issuer thereunder and
         all payments received by the Second Issuer thereunder including,
         without limitation, all rights to serve notices and/or make demands
         thereunder and/or to take such steps as are required to cause payments
         to become due and payable thereunder and all rights of action in
         respect of any breach thereof and all rights to receive damages or
         obtain other relief in respect thereof, TO HOLD the same unto the
         Security Trustee absolutely.

3.2      SECOND ISSUER ACCOUNTS

         The Second Issuer, by way of first fixed security for the payment or
         discharge of the Second Issuer Secured Obligations, subject to Clause 4
         (Release of Second Issuer Charged Property),



<PAGE>
                                       4


         hereby assigns to the Security Trustee all its right, title, interest
         and benefit, present and future, in and to all moneys now or at any
         time hereafter standing to the credit of the Second Issuer Accounts,
         together with all interest accruing from time to time thereon and the
         debt represented thereby, TO HOLD the same unto the Security Trustee
         absolutely.

3.3      AUTHORISED INVESTMENTS

         The Second Issuer, by way of first fixed security for the payment or
         discharge of the Second Issuer Secured Obligations, subject to Clause 4
         (Release of Second Issuer Charged Property), hereby charges by way of
         first fixed charge in favour of the Security Trustee all its right,
         title, interest and benefit, present and future, in and to such
         Authorised Investments to be made from time to time by or on behalf of
         the Second Issuer using moneys standing to the credit of the Second
         Issuer Accounts and all moneys, income and proceeds payable thereunder
         or accrued thereon and the benefit of all covenants relating thereto
         and all rights and remedies for enforcing the same, TO HOLD the same
         unto the Security Trustee absolutely.

3.4      FLOATING CHARGE

         The Second Issuer, by way of security for the payment or discharge of
         the Second Issuer Secured Obligations, subject to Clause 4 (Release of
         Second Issuer Charged Property), hereby charges to the Security Trustee
         by way of first floating charge the whole of its undertakings and all
         its property and assets whatsoever and wheresoever, present and future,
         including without limitation its uncalled capital, other than any
         property or assets from time to time or for the time being by Clauses
         3.1 (Contractual Rights) to 3.3 (Authorised Investments) (inclusive)
         effectively charged by way of fixed charge or otherwise effectively
         assigned as security. The floating charge hereby created is a
         qualifying floating charge for the purpose of paragraph 14 of Schedule
         B1 of the Insolvency Act 1986.

3.5      FULL TITLE GUARANTEE

         Each of the dispositions, assignments or charges over property effected
         in or pursuant to Clauses 3.1 (Contractual Rights) to 3.4 (Floating
         Charge) (inclusive) is made with full title guarantee.

3.6      ACKNOWLEDGEMENTS AND UNDERTAKINGS

         Each of the Second Issuer Secured Creditors hereby acknowledges the
         assignments, charges and other security interests made or granted by
         the foregoing provisions of this Clause 3 and undertakes to the
         Security Trustee not to do anything inconsistent with the security
         given under or pursuant to this Deed or knowingly to prejudice the
         security granted to the Security Trustee pursuant to this Clause 3 or
         the Second Issuer Charged Property or the Security Trustee's interest
         therein provided that, without prejudice to Clause 9 (Receiver),
         nothing in this Deed shall be construed as limiting the rights
         exercisable by the aforesaid parties in accordance with the terms of
         the Second Issuer Transaction Documents.

3.7      DECLARATION OF TRUST

         Each of the Second Issuer Secured Creditors hereby declares the
         Security Trustee, and the Security Trustee hereby declares itself,
         trustee of all the covenants, undertakings, charges, assignments,
         assignations and other security interests made or given or to be made
         or given under or pursuant to this Deed and the other Second Issuer
         Transaction Documents for the Second Issuer Secured Creditors in
         respect of the Second Issuer Secured Obligations owed to each of them
         respectively upon and subject to the terms and conditions of this Deed.




<PAGE>
                                       5


3.8      SECURITY TRUSTEE'S DISCRETION

         Subject to Clause 23.6 (Consent of Security Trustee), without prejudice
         to the rights of the Security Trustee after the security created under
         this Deed has become enforceable, the Second Issuer hereby authorises
         the Security Trustee, prior to the security created by this Deed
         becoming enforceable, to exercise, or refrain from exercising, all
         rights, powers, authorities, discretions and remedies under or in
         respect of the Second Issuer Transaction Documents referred to in
         Clause 3.1 (Contractual Rights) in such manner as the Security Trustee
         in its absolute discretion shall think fit. For the avoidance of doubt,
         the Security Trustee shall not be required to have regard to the
         interests of the Second Issuer in the exercise or non-exercise of any
         such rights, powers, authorities, discretions and remedies or to comply
         with any direction given by the Second Issuer in relation thereto.

4.       RELEASE OF SECOND ISSUER CHARGED PROPERTY

4.1      PRIOR TO PAYMENT OR DISCHARGE OF SECOND ISSUER SECURED OBLIGATIONS

(a)      Except to the extent expressly provided in this Clause 4, the Security
         Trustee shall, release, reassign or discharge the Second Issuer Charged
         Property or any part thereof only upon receipt of a written request
         from the Second Issuer accompanied by (i) an Officers' Certificate and
         (ii) certificates of independent parties in accordance with Sections
         314(c) and 314(d)(1) of the Trust Indenture Act (the "Independent
         Certificates") or an Opinion of Counsel to the effect that the Trust
         Indenture Act does not require any such Independent Certificates;

(b)      Prior to the release of any part of the Second Issuer Charged Property,
         the Second Issuer shall, in addition to any obligation imposed in this
         Clause 4.1 or elsewhere in this Deed, furnish to the Security Trustee
         an Officers' Certificate certifying or stating the opinion of each
         person signing such certificate as to the fair value of that part of
         the Second Issuer Charged Property to be so released. The officers so
         certifying may consult with, and may conclusively rely upon a
         certificate as to the fair value of such property provided to such
         officers by an internationally recognised financial institution with
         expertise in such matters;

(c)      Whenever the Second Issuer is required to furnish to the Security
         Trustee an Officers' Certificate certifying or stating the opinion of
         any signer thereof as to the matters described in the preceding
         paragraph, the Second Issuer shall also deliver to the Security Trustee
         an Independent Certificate as to the same matters, if the fair value of
         that part of the Second Issuer Charged Property to be so released (and
         of all other such property made the basis of any such release since the
         commencement of the Second Issuer's then current fiscal year, as set
         forth in the certificates delivered pursuant to this Clause 4.1), is 10
         per cent. or more of the Principal Amount Outstanding of the Second
         Issuer Notes, but such Independent Certificate need not be furnished
         with respect to any property so released if the fair value thereof as
         set forth in the related Officers' Certificate is less than US$25,000
         or less than one per cent. of the Principal Amount Outstanding of the
         Second Issuer Notes;

(d)      Whenever any part of the Second Issuer Charged Property is to be
         released from the security constituted by this Deed, the Second Issuer
         shall also furnish to the Security Trustee an Officer's Certificate
         certifying or stating the opinion of each person signing such
         certificate that in the opinion of such person the proposed release
         will not impair the security under this Deed in contravention of the
         provisions hereof; and

(e)      Notwithstanding anything to the contrary contained herein, the Second
         Issuer may (a) make cash payments out of the Second Issuer Account
         relating to the Second Issuer Notes as and to the extent permitted or
         required by the Second Issuer Transaction Documents and (b) take any




<PAGE>
                                       6


         other action permitted or required by the Second Issuer Transaction
         Documents not inconsistent with the Trust Indenture Act.

4.2      ON PAYMENT OR DISCHARGE OF SECOND ISSUER SECURED OBLIGATIONS

         Upon the irrevocable and unconditional payment or discharge (or any
         combination of the foregoing) of all the Second Issuer Secured
         Obligations, the Security Trustee shall, at the written request and
         cost of the Second Issuer, release, reassign or discharge the Second
         Issuer Charged Property to, or to the order of, the Second Issuer.

4.3      DISPOSAL OF AUTHORISED INVESTMENTS

         Upon the Second Issuer Cash Manager, on behalf of the Second Issuer and
         the Security Trustee, making a disposal of any Authorised Investment
         charged pursuant to Clause 3.3 (Authorised Investments), the Security
         Trustee shall, if so requested in writing by and at the sole cost and
         expense (on an indemnity basis) of the Second Issuer, but without being
         responsible for any loss, costs, claims or liabilities whatsoever
         occasioned and howsoever arising by so acting upon such request,
         release, reassign or discharge from the encumbrances constituted by
         this Deed the relevant Authorised Investments, provided that the
         proceeds of such disposal are paid into an account charged pursuant to
         Clauses 3.2 (Second Issuer Accounts) in accordance with Clause 5.5
         (Authorised Investments).

4.4      WITHDRAWALS FROM SECOND ISSUER ACCOUNTS

         From time to time there shall be deemed to be released from the
         encumbrances constituted by this Deed all amounts which the Second
         Issuer Cash Manager, on behalf of the Second Issuer and the Security
         Trustee, is permitted to withdraw from the Second Issuer Accounts
         pursuant to Clauses 5.2 (Pre-Enforcement Priorities of Payment) and 5.3
         (Payments under the Second Issuer Cash Management Agreement) and any
         such release will take effect immediately upon the relevant withdrawal
         being made provided that where the relevant amount is transferred to
         another bank account of the Second Issuer such bank account shall
         thereupon become subject to the encumbrances constituted by this Deed.

5.       PAYMENTS OUT OF THE SECOND ISSUER ACCOUNTS, AUTHORISED INVESTMENTS AND
         APPLICATION OF CASH PRIOR TO ENFORCEMENT

5.1      FOLLOWING SERVICE OF A SECOND ISSUER NOTE ACCELERATION NOTICE

         No payment, transfer or withdrawal from the Second Issuer Accounts may
         be made under this Clause 5 at any time after a Second Issuer Note
         Acceleration Notice has been served in respect of the Second Issuer.

5.2      PRE-ENFORCEMENT PRIORITIES OF PAYMENT

         Notwithstanding the security rights created by or pursuant to Clause 3
         (Security and Declaration of Trust), but prior to the service of a
         Second Issuer Note Acceleration Notice on the Second Issuer, the Second
         Issuer Cash Manager, on behalf of the Second Issuer and the Security
         Trustee, shall:

         (a)      withdraw, or shall instruct the Second Issuer Account Bank or
                  cause the Second Issuer Account Bank to be instructed, to
                  withdraw (unless the intended recipient of the relevant
                  payment agrees otherwise) moneys from the Second Issuer
                  Accounts (subject to Clause 5.8 (VAT) below) to be applied in
                  the order of priority on the



<PAGE>
                                       7


                  specified dates (and in each case only if and to the extent
                  that payments or provisions of a higher order of priority have
                  been made in full and to the extent that such withdrawal does
                  not cause the Second Issuer Accounts to become overdrawn) as
                  set out in Schedule 2 of the Second Issuer Cash Management
                  Agreement (the "Second Issuer Pre-Enforcement Priority of
                  Payments"); and

         (b)      instruct the Second Issuer Swap Providers to pay to the
                  specified bank account of the Principal Paying Agent amounts
                  due to be paid on dates specified in the Second Issuer Swap
                  Agreements.

5.3      PAYMENTS UNDER THE SECOND ISSUER CASH MANAGEMENT AGREEMENT

         Notwithstanding the security rights created by or pursuant to Clause 3
         (Security and Declaration of Trust), but prior to the service of a
         Second Issuer Note Acceleration Notice on the Second Issuer, the Second
         Issuer Cash Manager, on behalf of the Second Issuer and the Security
         Trustee, shall withdraw, or shall instruct the Second Issuer Account
         Bank or cause the Second Issuer Account Bank to be instructed, to
         withdraw (unless the intended recipient of the relevant payment agrees
         otherwise) moneys from the Second Issuer Accounts for application on
         any Business Day in making any payments due to be made subject to and
         in accordance with the Second Issuer Cash Management Agreement (but
         only to the extent that such withdrawal does not cause the Second
         Issuer Accounts to become overdrawn).

5.4      INVESTMENTS IN AUTHORISED INVESTMENTS

         The Security Trustee may request the Second Issuer Cash Manager to (or
         the Second Issuer Cash Manager may request the Security Trustee to)
         invest in the names of the Security Trustee and the Second Issuer,
         jointly, moneys standing from time to time and at any time standing to
         the credit of the Second Issuer Accounts in Authorised Investments in
         accordance with the following provisions:

         (a)      any costs properly and reasonably incurred in making and
                  changing investments will be reimbursed to the Second Issuer
                  Cash Manager and the Security Trustee; and

         (b)      all income or proceeds following the disposal or maturity of
                  Authorised Investments shall be credited to the Second Issuer
                  Accounts.

5.5      AUTHORISED INVESTMENTS

         Notwithstanding the security rights created by or pursuant to Clause 3
         (Security and Declaration of Trust), Authorised Investments may, on any
         Business Day, be sold or redeemed or disposed of or realised or
         otherwise deposited subject always to the other provisions hereof
         (including without limitation Clauses 3.3 (Authorised Investments) and
         4.3 (Disposal of Authorised Investments)).

5.6      MANAGEMENT AND APPLICATION OF FUNDS

         The Second Issuer shall take or cause to be taken such action as may
         from time to time be necessary on its part to ensure that the Second
         Issuer Accounts shall from time to time be credited with all amounts
         received by the Second Issuer and falling within any of the following
         categories:

         (a)      amounts received by the Second Issuer from or on behalf of
                  Funding 1 pursuant to the provisions of the Second Issuer
                  Intercompany Loan Agreement;

<PAGE>
                                       8


         (b)      interest received on the Second Issuer Accounts;

         (c)      amounts received by the Second Issuer from the Dollar Currency
                  Swap Providers under the Dollar Currency Swap Agreements;

         (d)      amounts received by the Second Issuer from the Euro Currency
                  Swap Providers under the Euro Currency Swap Agreements;

         (e)      the proceeds arising from the disposal of any Authorised
                  Investments and any and all income or other distributions
                  received by the Second Issuer in respect thereof or arising
                  from the proceeds of any Authorised Investments;

         (f)      amounts received by the Second Issuer from the Security
                  Trustee in its capacity as security trustee under the Funding
                  1 Deed of Charge or a Receiver following the service of a
                  Second Issuer Intercompany Loan Enforcement Notice; and

         (g)      such other payments received by the Second Issuer as are, or
                  ought in accordance with this Deed to be, comprised in the
                  Second Issuer Charged Property.

5.7      ENFORCEMENT WHEN NOT ALL AMOUNTS DUE AND PAYABLE

         If the Security Trustee enforces the Second Issuer Security at a time
         when either no amounts or not all amounts owing in respect of the
         Second Issuer Secured Obligations have become due and payable, the
         Security Trustee (or a Receiver) may, for so long as no such amounts or
         not all such amounts have become due and payable, pay any monies
         referred to in Clause 6 (Payments out of the Second Issuer Accounts
         Upon Enforcement) into, and retain such monies in, an interest-bearing
         account (a "retention account") to be held by it as security and
         applied by it in accordance with Clause 6 as and when any of the
         amounts referred to therein become due and payable.

5.8      VAT

         If any sums which are payable by the Second Issuer under Clause 5.2
         (Pre-Enforcement Priorities of Payments) or Clause 6 (Payments out of
         Second Issuer Accounts upon Enforcement) of this Deed are subject to
         VAT, the Second Issuer shall make payment of the amount in respect of
         VAT to the relevant person in accordance with the order of priorities
         set out in those clauses.

6.       PAYMENTS OUT OF THE SECOND ISSUER ACCOUNTS UPON ENFORCEMENT

6.1      AFTER A SECOND ISSUER NOTE ACCELERATION NOTICE

         From and including the time when a Second Issuer Note Acceleration
         Notice (which has not been withdrawn) has been served on the Second
         Issuer:

         (a)      no amount may be withdrawn from the Second Issuer Accounts
                  without the prior written consent of the Security Trustee; and

         (b)      if not already crystallised, any charge created under or
                  pursuant to this Deed, which is a floating charge, shall
                  immediately and without further action on the part of the
                  Security Trustee, crystallise.

<PAGE>
                                       9


6.2      PAYMENT OF SECOND ISSUER REVENUE RECEIPTS AFTER SERVICE OF A SECOND
         ISSUER NOTE ACCELERATION NOTICE BUT PRIOR TO THE SERVICE OF A SECOND
         ISSUER INTERCOMPANY LOAN ENFORCEMENT NOTICE

         From and including the time when a Second Issuer Note Acceleration
         Notice has been served on the Second Issuer but prior to the service by
         the Security Trustee of a Second Issuer Intercompany Loan Enforcement
         Notice, all Second Issuer Revenue Receipts received or recovered by the
         Security Trustee or any Receiver for the benefit of the Second Issuer
         Secured Creditors in respect of the Second Issuer Secured Obligations
         shall be held by the Security Trustee or any Receiver, as the case may
         be, on trust to be applied in accordance with Clauses 5.2 to 5.6
         (inclusive) and 5.7 but as if:

         (a)      each of the references in the Second Issuer Pre-Enforcement
                  Revenue Priority of Payments to the Security Trustee included
                  a reference to any Receiver appointed by the Security Trustee;

         (b)      any reference in the Second Issuer Pre-Enforcement Revenue
                  Priority of Payments to an amount payable by the Second Issuer
                  which is not an Second Issuer Secured Obligation were deleted;
                  and

         (c)      Clause 5.2 (Pre-Enforcement Priorities of Payment) and the
                  Second Issuer Pre-Enforcement Revenue Priority of Payments
                  were expressed to be subject to the provisions of Clause 5.7
                  (Enforcement When Not All Amounts Due and Payable).

6.3      PAYMENT OF SECOND ISSUER PRINCIPAL RECEIPTS AFTER SERVICE OF A SECOND
         ISSUER NOTE ACCELERATION NOTICE BUT PRIOR TO THE SERVICE OF A SECOND
         ISSUER INTERCOMPANY LOAN ENFORCEMENT NOTICE

         From and including the time when a Second Issuer Note Acceleration
         Notice has been served on the Second Issuer but prior to the service by
         the Security Trustee of a Second Issuer Intercompany Loan Enforcement
         Notice, all Second Issuer Principal Receipts received or recovered by
         the Security Trustee or any Receiver for the benefit of the Second
         Issuer Secured Creditors in respect of the Second Issuer Secured
         Obligations shall be held by it on trust to be applied (save to the
         extent required otherwise by law) on each Interest Payment Date in the
         following order of priority (in each case only if and to the extent
         that payments or provisions of a higher order of priority have been
         made in full):

(a)      first, pro rata and pari passu to repay the Second Issuer Class A Notes
         as follows:

         (i)      any principal amounts received by the Second Issuer from
                  Funding 1 in respect of the Second Issuer Series 1 Term AAA
                  Advance on each Funding 1 Interest Payment Date, shall be paid
                  by the Second Issuer to the Series 1 Class A Second Issuer
                  Swap Provider, and on each Interest Payment Date the Series 1
                  Class A Second Issuer Notes will be redeemed in amounts
                  corresponding to the principal exchange amounts (if any)
                  received from the Series 1 Class A Second Issuer Swap Provider
                  under the Series 1 Class A Second Issuer Swap;

         (ii)     any principal amounts received by the Second Issuer from
                  Funding 1 in respect of the Second Issuer Series 2 Term AAA
                  Advance on each Funding 1 Interest Payment Date, shall be paid
                  by the Second Issuer to the Series 2 Class A Second Issuer
                  Swap Provider, and on each Interest Payment Date the Series 2
                  Class A Second Issuer Notes will be redeemed in amounts
                  corresponding to the principal exchange amounts


<PAGE>
                                       10


                  (if any) received from the Series 2 Class A Second Issuer Swap
                  Provider under the Series 2 Class A Second Issuer Swap;

         (iii)    any principal amounts received by the Second Issuer from
                  Funding 1 in respect of the Second Issuer Series 3 Term AAA
                  Advance on each Funding 1 Interest Payment Date, shall be paid
                  by the Second Issuer to the Series 3 Class A Second Issuer
                  Swap Provider, and on each Interest Payment Date the Series 3
                  Class A Second Issuer Notes will be redeemed in amounts
                  corresponding to the principal exchange amounts (if any)
                  received from the Series 3 Class A Second Issuer Swap Provider
                  under the Series 3 Class A Second Issuer Swap;

         (iv)     any principal amounts received by the Second Issuer from
                  Funding 1 in respect of the Second Issuer Series 4 Term AAA
                  Advance on each Funding 1 Interest Payment Date, shall be paid
                  by the Second Issuer to the Series 4 Class A Second Issuer
                  Swap Provider, and on each Interest Payment Date the Series 4
                  Class A Second Issuer Notes will be redeemed in amounts
                  corresponding to the principal exchange amounts (if any)
                  received from the Series 4 Class A Second Issuer Swap Provider
                  under the Series 4 Class A Second Issuer Swap; and

         (v)      any principal amounts received by the Second Issuer from
                  Funding 1 in respect of the Second Issuer Series 5 Term AAA
                  Advance on each Funding 1 Interest Payment Date shall be
                  applied by the Second Issuer to redeem the Series 5 Class A
                  Second Issuer Notes on such Interest Payment Date.

(b)      secondly, pro rata and pari passu, to repay the Second Issuer Class B
         Notes as follows:

         (i)      any principal amounts received by the Second Issuer from
                  Funding 1 in respect of the Second Issuer Series 1 Term AA
                  Advance on each Funding 1 Interest Payment Date, shall be paid
                  by the Second Issuer to the Series 1 Class B Second Issuer
                  Swap Provider, and on each Interest Payment Date the Series 1
                  Class B Second Issuer Notes will be redeemed in amounts
                  corresponding to the principal exchange amounts (if any)
                  received from the Series 1 Class B Second Issuer Swap Provider
                  under the Series 1 Class B Second Issuer Swap;

         (ii)     any principal amounts received by the Second Issuer from
                  Funding 1 in respect of the Second Issuer Series 2 Term AA
                  Advance on each Funding 1 Interest Payment Date, shall be paid
                  by the Second Issuer to the Series 2 Class B Second Issuer
                  Swap Provider, and on each Interest Payment Date the Series 2
                  Class B Second Issuer Notes will be redeemed in amounts
                  corresponding to the principal exchange amounts (if any)
                  received from the Series 2 Class B Second Issuer Swap Provider
                  under the Series 2 Class B Second Issuer Swap;

         (iii)    any principal amounts received by the Second Issuer from
                  Funding 1 in respect of the Second Issuer Series 3 Term AA
                  Advance on each Funding 1 Interest Payment Date, shall be paid
                  by the Second Issuer to the Series 3 Class B Second Issuer
                  Swap Provider, and on each Interest Payment Date the Series 3
                  Class B Second Issuer Notes will be redeemed in amounts
                  corresponding to the principal exchange amounts (if any)
                  received from the Series 3 Class B Second Issuer Swap Provider
                  under the Series 3 Class B Second Issuer Swap Agreement;

         (iv)     any principal amounts received by the Second Issuer from
                  Funding 1 in respect of the Second Issuer Series 4 Term AA
                  Advance on each Funding 1 Interest Payment Date, shall be paid
                  by the Second Issuer to the Series 4 Class B Second Issuer
                  Swap



<PAGE>
                                       11


                  Provider, and on each Interest Payment Date the Series 4 Class
                  B Second Issuer Notes will be redeemed in amounts
                  corresponding to the principal exchange amounts (if any)
                  received from the Series 4 Class B Second Issuer Swap Provider
                  under the Series 4 Class B Second Issuer Swap; and

         (v)      any principal amounts received by the Second Issuer from
                  Funding 1 in respect of the Second Issuer Series 5 Term AA
                  Advance on each Funding 1 Interest Payment Date shall be
                  applied by the Second Issuer towards redemption of the Series
                  5 Class B Second Issuer Notes on such Interest Payment Date.

(c)      thirdly, pro rata and pari passu to repay the Second Issuer Class C
         Notes as follows:

         (i)      any principal amounts received by the Second Issuer from
                  Funding 1 in respect of the Second Issuer Series 1 Term BBB
                  Advance on each Funding 1 Interest Payment Date, shall be paid
                  by the Second Issuer to the Series 1 Class C Second Issuer
                  Swap Provider, and on each Interest Payment Date the Series 1
                  Class C Second Issuer Notes will be redeemed in amounts
                  corresponding to the principal exchange amounts (if any)
                  received from the Series 1 Class C Second Issuer Swap Provider
                  under the Series 1 Class C Second Issuer Swap;

         (ii)     any principal amounts received by the Second Issuer from
                  Funding 1 in respect of the Second Issuer Series 2 Term BBB
                  Advance on each Funding 1 Interest Payment Date, shall be paid
                  by the Second Issuer to the Series 1 Class C Second Issuer
                  Swap Provider, and on each Interest Payment Date the Series 2
                  Class C Second Issuer Notes will be redeemed in amounts
                  corresponding to the principal exchange amounts (if any)
                  received from the Series 2 Class C Second Issuer Swap Provider
                  under the Series 2 Class C Second Issuer Swap;

         (iii)    any principal amounts received by the Second Issuer from
                  Funding 1 in respect of the Second Issuer Series 3 Term BBB
                  Advance on each Funding 1 Interest Payment Date, shall be paid
                  by the Second Issuer to the Series 3 Class C Second Issuer
                  Swap Provider, and on each Interest Payment Date the Series 3
                  Class C Second Issuer Notes will be redeemed in amounts
                  corresponding to the principal exchange amounts (if any)
                  received from the Series 3 Class C Second Issuer Swap Provider
                  under the Series 3 Class C Second Issuer Swap;

         (iv)     any principal amounts received by the Second Issuer from
                  Funding 1 in respect of the Second Issuer Series 4 Term BBB
                  Advance on each Funding 1 Interest Payment Date, shall be paid
                  by the Second Issuer to the Series 4 Class C Second Issuer
                  Swap Provider, and on each Interest Payment Date the Series 4
                  Class C Second Issuer Notes will be redeemed in amounts
                  corresponding to the principal exchange amounts (if any)
                  received from the Series 4 Class C Second Issuer Swap Provider
                  under the Series 4 Class C Second Issuer Swap; and

         (v)      any principal amounts received by the Second Issuer from
                  Funding 1 in respect of the Second Issuer Series 5 Term BBB
                  Advance on each Funding 1 Interest Payment Date shall be
                  applied by the Second Issuer towards redemption of the Series
                  5 Class C Second Issuer Notes on such Interest Payment Date.


<PAGE>
                                       12


6.4      PAYMENT OF SECOND ISSUER REVENUE RECEIPTS AND SECOND ISSUER PRINCIPAL
         RECEIPTS AFTER SERVICE OF A SECOND ISSUER NOTE ACCELERATION NOTICE AND
         SERVICE OF A SECOND ISSUER INTERCOMPANY LOAN ENFORCEMENT NOTICE

         All Second Issuer Revenue Receipts and Second Issuer Principal Receipts
         received or recovered by the Security Trustee or any Receiver, after
         the service of a Second Issuer Note Acceleration Notice and after the
         service of a Second Issuer Intercompany Loan Enforcement Notice, for
         the benefit of the Second Issuer Secured Creditors in respect of the
         Second Issuer Secured Obligations, shall be held by it in the Second
         Issuer Accounts on trust to be applied (save to the extent required
         otherwise by law), on each Interest Payment Date, in the following
         order of priority (and, in each case, only if and to the extent that
         payments or provisions of a higher order of priority have been made in
         full):

(a)      first, to pay pro rata and pari passu amounts due to:

         (i)     the Security Trustee and any Receiver appointed by the Security
                 Trustee together with interest and any amount in respect of VAT
                 on those amounts and any amounts then due or to become due to
                 the Security Trustee and the Receiver under the provisions of
                 this Deed;

         (ii)    the Note Trustee together with interest and any amount in
                 respect of VAT on those amounts and any amounts then due or to
                 become due and payable to the Note Trustee under the provisions
                 of this Deed; and

         (iii)   the Agent Bank, the Paying Agents, the Registrar and the
                 Transfer Agent together with interest and any amount in respect
                 of VAT on those amounts and any costs, charges, liabilities and
                 expenses then due or to become due and payable to them under
                 the provisions of the Second Issuer Paying Agent and Agent Bank
                 Agreement;

(b)     secondly, to pay pro rata and pari passu amounts due and payable
        (together with any amount in respect of VAT on those amounts) to the
        Second Issuer Cash Manager under the Second Issuer Cash Management
        Agreement and to the Corporate Services Provider under the Second Issuer
        Corporate Services Agreement and to the Second Issuer Account Bank under
        the Second Issuer Bank Account Agreement;

(c)      thirdly, to pay pro rata and pari passu:

         (i)     amounts due to the Series 1 Class A Second Issuer Swap Provider
                 in respect of the Series 1 Class A Second Issuer Swap
                 (including any termination payment but excluding any Second
                 Issuer Swap Excluded Termination Amount) and from amounts
                 received from the Series 1 Class A Second Issuer Swap Provider
                 in respect of the Series 1 Class A Second Issuer Swap to pay
                 interest and principal due and payable on the Series 1 Class A
                 Second Issuer Notes;

         (ii)    amounts due to the Series 2 Class A Second Issuer Swap Provider
                 in respect of the Series 2 Class A Second Issuer Swap
                 (including any termination payment but excluding any Second
                 Issuer Swap Excluded Termination Amount) and from amounts
                 received from the Series 2 Class A Second Issuer Swap Provider
                 in respect of the Series 2 Class A Second Issuer Swap to pay
                 interest and principal due and payable on the Series 2 Class A
                 Second Issuer Notes;

         (iii)   amounts due to the Series 3 Class A Second Issuer Swap Provider
                 in respect of the Series 3 Class A Second Issuer Swap
                 (including any termination payment but



<PAGE>
                                       13


                 excluding any Second Issuer Swap Excluded Termination Amount)
                 and from amounts received from the Series 3 Class A Second
                 Issuer Swap Provider in respect of the Series 3 Class A Second
                 Issuer Swap to pay interest and principal due and payable on
                 the Series 3 Class A Second Issuer Notes;

         (iv)    amounts due to the Series 4 Class A Second Issuer Swap Provider
                 in respect of the Series 4 Class A Second Issuer Swap
                 (including any termination payment but excluding any Second
                 Issuer Swap Excluded Termination Amount) and from amounts
                 received from the Series 4 Class A Second Issuer Swap Provider
                 in respect of the Series 4 Class A Second Issuer Swap to pay
                 interest and principal due and payable on the Series 4 Class A
                 Second Issuer Notes; and

         (v)     interest and principal on the Series 5 Class A Second Issuer
                 Notes;

(d)      fourthly, to pay pro rata and pari passu:

         (i)     amounts due to the Series 1 Class B Second Issuer Swap Provider
                 in respect of the Series 1 Class B Second Issuer Swap
                 (including any termination payment but excluding any Second
                 Issuer Swap Excluded Termination Amount) and from amounts
                 received from the Series 1 Class B Second Issuer Swap Provider
                 in respect of the Series 1 Class B Second Issuer Swap to pay
                 interest and principal due and payable on the Series 1 Class B
                 Second Issuer Notes;

         (ii)    amounts due to the Series 2 Class B Second Issuer Swap Provider
                 in respect of the Series 2 Class B Second Issuer Swap
                 (including any termination payment but excluding any Second
                 Issuer Swap Excluded Termination Amount) and from amounts
                 received from the Series 2 Class B Second Issuer Swap Provider
                 in respect of the Series 2 Class B Second Issuer Swap to pay
                 interest and principal due and payable on the Series 2 Class B
                 Second Issuer Notes;

         (iii)   amounts due to the Series 3 Class B Second Issuer Swap Provider
                 in respect of the Series 3 Class B Second Issuer Swap
                 (including any termination payment but excluding any Second
                 Issuer Swap Excluded Termination Amount) and from amounts
                 received from the Series 3 Class B Second Issuer Swap Provider
                 in respect of the Series 3 Class B Second Issuer Swap to pay
                 interest and principal due and payable on the Series 3 Class B
                 Second Issuer Notes;

         (iv)    amounts due to the Series 4 Class B Second Issuer Swap Provider
                 in respect of the Series 4 Class B Second Issuer Swap
                 (including any termination payment but excluding any Second
                 Issuer Swap Excluded Termination Amount) and from amounts
                 received from the Series 4 Class B Second Issuer Swap Provider
                 in respect of the Series 4 Class B Second Issuer Swap to pay
                 interest and principal due and payable on the Series 4 Class B
                 Second Issuer Notes; and

         (v)     interest and principal due and payable on the Series 5 Class B
                 Second Issuer Notes;

(e)      fifthly, to pay pro rata and pari passu:

         (i)     amounts due to the Series 1 Class C Second Issuer Swap Provider
                 in respect of the Series 1 Class C Second Issuer Swap
                 (including any termination payment but excluding any Second
                 Issuer Swap Excluded Termination Amount) and from amounts
                 received from the Series 1 Class C Second Issuer Swap Provider
                 in respect of the


<PAGE>
                                       14


                 Series 1 Class C Second Issuer Swap to pay interest and
                 principal due and payable on the Series 1 Class C Second
                 Issuer Notes;

         (ii)    amounts due to the Series 2 Class C Second Issuer Swap Provider
                 in respect of the Series 2 Class C Second Issuer Swap
                 (including any termination payment but excluding any Second
                 Issuer Swap Excluded Termination Amount) and from amounts
                 received from the Series 2 Class C Second Issuer Swap Provider
                 in respect of the Series 2 Class C Second Issuer Swap to pay
                 interest and principal due and payable on the Series 2 Class C
                 Second Issuer Notes;

         (iii)   amounts due to the Series 3 Class C Second Issuer Swap Provider
                 in respect of the Series 3 Class C Second Issuer Swap
                 (including any termination payment but excluding any Second
                 Issuer Swap Excluded Termination Amount) and from amounts
                 received from the Series 3 Class C Second Issuer Swap Provider
                 in respect of the Series 3 Class C Second Issuer Swap to pay
                 interest and principal due and payable on the Series 3 Class C
                 Second Issuer Notes;

         (iv)    amounts due to the Series 4 Class C Second Issuer Swap Provider
                 in respect of the Series 4 Class C Second Issuer Swap
                 (including any termination payment but excluding any Second
                 Issuer Swap Excluded Termination Amount) and from amounts
                 received from the Series 4 Class C Second Issuer Swap Provider
                 in respect of the Series 4 Class C Second Issuer Swap to pay
                 interest and principal due and payable on the Series 4 Class C
                 Second Issuer Notes; and

         (v)     interest and principal due and payable on the Series 5 Class C
                 Second Issuer Notes;

(f)      sixthly, to pay pro rata and pari passu amounts due to:

         (i)     the Series 1 Second Issuer Swap Provider, following a Second
                 Issuer Swap Provider Default or a Second Issuer Swap Provider
                 Downgrade Termination Event by the Series 1 Second Issuer Swap
                 Provider;

         (ii)    the Series 2 Second Issuer Swap Provider, following a Second
                 Issuer Swap Provider Default or a Second Issuer Swap Provider
                 Downgrade Termination Event by the Series 2 Second Issuer Swap
                 Provider;

         (iii)   the Series 3 Second Issuer Swap Provider, following a Second
                 Issuer Swap Provider Default or a Second Issuer Swap Provider
                 Downgrade Termination Event by the Series 3 Second Issuer Swap
                 Provider; and

         (iv)    the Series 4 Second Issuer Swap Provider, following a Second
                 Issuer Swap Provider Default or a Second Issuer Swap Provider
                 Downgrade Termination Event by the Series 4 Second Issuer Swap
                 Provider.

7.       CONFLICT

7.1      SECOND ISSUER SECURED CREDITORS

         Subject to Clause 7.2 and except as otherwise expressly provided in
         this Deed, the Security Trustee shall have regard to the interests of
         the Second Issuer Secured Creditors only as regards the exercise and
         performance of all powers, rights, trusts, authorities, duties and
         discretions of the Security Trustee in respect of the Second Issuer
         Charged Property, under this Deed or any other Second Issuer
         Transaction Document to which the Security Trustee is



<PAGE>
                                       15


         a party or the rights or benefits in respect of which are comprised in
         the Second Issuer Charged Property (except where specifically provided
         otherwise).

7.2      NOTEHOLDERS

(a)      If (in the Security Trustee's sole opinion) there is or may be a
         conflict of interest between the Class A Noteholders and any other
         Second Issuer Secured Creditor, then, subject to Condition 11 of the
         Second Issuer Notes, the Security Trustee will have regard to the
         interests of the Class A Noteholders only;

(b)      subject to paragraph (a) above, if (in the Security Trustee's sole
         opinion) there is or may be a conflict of interest between the Class B
         Noteholders and any other Second Issuer Secured Creditor then, subject
         to Condition 11 of the Second Issuer Notes, the Security Trustee will
         have regard to the interests of the Class B Noteholders only;

(c)      subject to paragraphs (a) and (b) above, if (in the Security Trustee's
         sole opinion) there is or may be a conflict of interest between the
         Class C Noteholders and any other Second Issuer Secured Creditor then,
         subject to Condition 11 of the Second Issuer Notes, the Security
         Trustee will have regard to the interests of the Class C Noteholders
         only;

(d)      subject to paragraphs (a) to (c) above and paragraphs (e) and (f)
         below, if (in the Security Trustee's sole opinion) there is or may be a
         conflict between the respective interests of the Second Issuer Swap
         Providers and any of the other Second Issuer Secured Creditors, other
         than the Noteholders, the Security Trustee will have regard to the
         interests of the Second Issuer Swap Providers;

(e)      subject to paragraph (f) below if, in the Security Trustee's sole
         opinion, there is a conflict between the respective interests of the
         Dollar Currency Swap Providers and the Euro Currency Swap Provider then
         the Security Trustee will have regard to the interests of the highest
         ranking swap providers (being the Series 1 Class A Dollar Currency Swap
         Provider, the Series 2 Class A Dollar Currency Swap Provider, the
         Series 3 Class A Euro Currency Swap Provider and the Series 4 Class A
         Dollar Currency Swap Provider) only; and thereafter the Security
         Trustee will have regard to the next highest ranking swap providers
         (being the Series 1 Class B Dollar Currency Swap Provider, the Series 2
         Class B Dollar Currency Swap Provider, the Series 3 Class B Euro
         Currency Swap Provider and the Series 4 Class B Dollar Currency Swap
         Provider);

(f)      if, in the Security Trustee's sole opinion, there is a conflict between
         the respective interests of the Second Issuer Swap Providers with the
         equal ranking as set out in paragraph (e) above, then the Security
         Trustee will have regard to the interests of the relevant Second Issuer
         Swap Provider or Second Issuer Swap Providers in respect of the Second
         Issuer Notes with the greatest principal amount outstanding; and

(g)      subject to paragraphs (a) to (f) above, if (in the Security Trustee's
         sole opinion) there is or may be a conflict between the respective
         interests of any of the Second Issuer Secured Creditors, other than the
         Noteholders and the Second Issuer Swap Providers, the Security Trustee
         will have regard to the interests of the Second Issuer Secured Creditor
         who ranks highest in the order of priority of payments set out in
         Clause 6.4 above.


<PAGE>
                                       16


7.3      ACKNOWLEDGEMENT

         Each of the Second Issuer Secured Creditors hereby acknowledges and
         concurs with the provisions of Clauses 7.1 and 7.2 and each of them
         agrees that it shall have no claim against the Security Trustee as a
         result of the application thereof.

8.       THE SECURITY TRUSTEE'S POWERS

8.1      PRIOR NOTIFICATION

         The Security Trustee shall, if reasonably practicable, give prior
         notification to the Seller of the Security Trustee's intention to
         enforce the security created by this Deed, provided always that the
         failure of the Security Trustee to provide such notification shall not
         prejudice the ability of the Security Trustee to enforce the security
         created by this Deed.

8.2      ENFORCEABLE

         Without prejudice to the provisions of Clauses 8.5 (Law of Property Act
         1925) and 9.1 (Appointment), (i) the security created under this Deed
         shall become immediately enforceable and (ii) the power of sale and
         other powers conferred by Section 101 of the Law of Property Act 1925
         (the "1925 Act"), as varied or amended by this Deed, shall, in
         accordance with this Clause 8, be exercisable by the Security Trustee,
         in each case at any time following service of a Second Issuer Note
         Acceleration Notice or, if there are no Second Issuer Notes
         outstanding, following a default in payment of any other Second Issuer
         Secured Obligations on its due date. Without prejudice to the
         effectiveness of any service of the Second Issuer Note Acceleration
         Notice, the Note Trustee shall serve a copy of any Second Issuer Note
         Acceleration Notice on each of the Second Issuer Secured Creditors,
         Funding 1 and the Rating Agencies.

8.3      AMOUNTS DUE

         Notwithstanding any other provision of this Deed, all amounts owing
         under the Second Issuer Secured Obligations shall be deemed to have
         become due for the purposes of Section 101 of the 1925 Act and (to the
         extent applicable) the statutory power of sale and of appointing a
         Receiver which are conferred on the Security Trustee under the 1925 Act
         (as varied or extended by this Deed) only (and for no other purpose)
         and all other powers shall be deemed to arise immediately after
         execution of this Deed but shall only become enforceable in accordance
         with Clause 8.2 (Enforceable) above. For the avoidance of doubt, the
         Security Trustee shall not be required to have regard to the interests
         of the Second Issuer in the exercise of its rights, powers,
         authorities, discretions and remedies under this Deed.

8.4      POWER OF SALE

         Section 103 of the 1925 Act shall not apply in relation to any of the
         charges contained in this Deed and the statutory power of sale (as
         extended by this Deed) and all other powers shall be exercisable at any
         time after service of a Second Issuer Note Acceleration Notice.

8.5      LAW OF PROPERTY ACT 1925

         The provisions of the 1925 Act relating to the power of sale and the
         other powers conferred by Section 101(1) and (2) are hereby extended in
         relation to the Second Issuer (as if such extensions were contained
         therein) to authorise the Security Trustee at its absolute discretion
         at any time following the occurrence of a Second Issuer Note Event of
         Default and subject to



<PAGE>
                                       17


         the Security Trustee being indemnified and/or secured to its
         satisfaction in relation to the exercise of such powers:

         (a)      to make demand in the name of the Second Issuer Secured
                  Creditors or in its own right for any moneys and liabilities
                  in respect of the Second Issuer Charged Property;

         (b)      to sell, transfer, convey, vary or otherwise dispose of the
                  Second Issuer's title to or interest in the Second Issuer
                  Charged Property, and to do so for any shares, debentures or
                  other securities including, without limitation, any Authorised
                  Investments whatsoever comprising part thereof, or in
                  consideration of an agreement to pay all or part of the
                  purchase price at a later date or dates, or an agreement to
                  make periodical payments, whether or not the agreement is
                  secured by an Encumbrance or a guarantee, or for such other
                  consideration whatsoever as the Security Trustee may in its
                  absolute discretion think fit, and also to grant any option to
                  purchase, and to effect exchanges of, the whole or any part of
                  the Second Issuer Charged Property (and nothing shall preclude
                  any such disposal being made to a Second Issuer Secured
                  Creditor);

         (c)      with a view to or in connection with the sale of the Second
                  Issuer Charged Property, to carry out any transaction, scheme
                  or arrangement which the Security Trustee may, in its absolute
                  discretion, consider appropriate;

         (d)      to insure the Second Issuer Charged Property against such
                  risks and for such amounts as the Security Trustee may in its
                  absolute discretion consider prudent; and

         (e)      to do all or any of the things or exercise all or any of the
                  powers which are mentioned or referred to in Clause 9.6
                  (Powers) as if each of them was expressly conferred on the
                  Security Trustee by this Deed and which may not be included in
                  paragraphs (a) to (d) above.

8.6      DELEGATION TO RECEIVER

         In addition and without prejudice to any of its statutory powers, the
         Security Trustee may at any time by deed delegate to any Receiver all
         or any of the extended powers of leasing, surrendering or accepting
         surrenders of leases conferred on the Security Trustee by this Deed.

8.7      ADDITIONAL POWERS

         The Security Trustee shall have the power to insure against any
         liabilities or obligations arising:

         (a)      as a result of the Security Trustee acting or failing to act
                  in a certain way (other than which may arise from its
                  negligence or wilful default or that of its officers or
                  employees);

         (b)      as a result of any act or failure to act by any person or
                  persons to whom the Security Trustee has delegated any of its
                  trusts, rights, powers, duties, authorities or discretions, or
                  appointed as its agent (other than which may arise from such
                  person's negligence or wilful default);

         (c)      in connection with the Second Issuer Charged Property; or


<PAGE>
                                       18


         (d)      in connection with or arising from the enforcement of the
                  security created by this Deed.

         The Security Trustee shall not be under any obligation to insure in
         respect of such liabilities and/or obligations or to require any other
         person to maintain insurance, but to the extent that it does so, the
         Second Issuer shall quarterly and on written request pay all insurance
         premiums and expenses which the Security Trustee may properly incur in
         relation to such insurance. If the Second Issuer fails to pay such
         premiums or expenses or to reimburse the Security Trustee therefor, the
         Security Trustee shall be entitled to be indemnified out of the Second
         Issuer Charged Property in respect thereof and, in the case of a Second
         Issuer Note Acceleration Notice having been served, the indemnification
         of the Security Trustee in respect of all such insurance premiums and
         expenses shall be payable in priority to payments to the Second Issuer
         Noteholders and all other Second Issuer Secured Creditors and otherwise
         in accordance with this Deed.

8.8      APPLICATION TO COURT

         The Security Trustee may at any time after the occurrence of a Second
         Issuer Note Event of Default apply to the Court for an order that the
         powers and trusts of this Deed be exercised or carried into execution
         under the direction of the Court and for the appointment of a Receiver
         of the Second Issuer Charged Property or any part thereof and for any
         other order in relation to the execution and administration of the
         powers and trusts hereof as the Security Trustee shall deem expedient,
         and it may assent to or approve any application to the Court made at
         the instance of any of the Second Issuer Noteholders.

8.9      AUTHORISED INVESTMENTS

         Any moneys which under the trusts of this Deed ought to or may be
         invested by the Security Trustee (or by the Cash Manager on its behalf)
         after the occurrence of a Second Issuer Note Event of Default may be
         invested in the name of the Security Trustee or in the name of any
         nominee on its behalf and under the control of the Security Trustee in
         any Authorised Investments and the Security Trustee may at any time
         vary or transfer (or direct the Cash Manager to vary or transfer) any
         of such Authorised Investments for or into other such Authorised
         Investments as the Security Trustee at its absolute discretion may
         determine, and shall not be responsible (save where any loss results
         from the Security Trustee's fraud, wilful default or negligence or that
         of its officers or employees) for any loss occasioned by reason of any
         such investments whether by depreciation in value or otherwise,
         provided that such Authorised Investments were made in accordance with
         the foregoing provisions.

8.10     DEFICIENCY OR ADDITIONAL PAYMENT

         The Security Trustee shall have no responsibility whatsoever to any
         Second Issuer Secured Creditor as regards any deficiency or additional
         payment, as the case may be, which might arise because the Security
         Trustee is subject to any Tax in respect of the Second Issuer Charged
         Property or any part thereof or any income therefrom or any proceeds
         thereof or is required to make any withholding or deduction from any
         payment to any Second Issuer Secured Creditor.

8.11     APPLICATION OF FUNDS

         If, after the service of a Second Issuer Note Acceleration Notice, the
         amount of the moneys at any time available for payment of principal and
         interest in respect of any Second Issuer Notes under Clause 6 (Payments
         out of the Second Issuer Accounts upon Enforcement) shall be less



<PAGE>
                                       19


         than one-tenth of the Principal Amount Outstanding of all the Second
         Issuer Notes then outstanding, the Security Trustee may, at its
         absolute discretion, invest such moneys to the extent that it is
         permitted to do so under the FSMA 2000 in any Authorised Investments
         and the Security Trustee may at any time vary or transfer any of such
         Authorised Investments for or into other such Authorised Investments as
         the Security Trustee at its absolute discretion may determine; and such
         investments with the resulting income thereof may be accumulated until
         the accumulations, together with any other funds for the time being
         under the control of the Security Trustee and applicable for the
         purpose, shall amount to a sum equal to at least one-tenth of the
         Principal Amount Outstanding of all the Second Issuer Notes then
         outstanding and such accumulations and funds shall then be applied in
         accordance with Clause 6 (Payments out of the Second Issuer Accounts
         upon Enforcement).

9.       RECEIVER

9.1      APPOINTMENT

(a)      Subject to paragraph (b) below, at any time following the occurrence of
         a Second Issuer Note Event of Default, the Security Trustee may, at its
         absolute discretion, appoint, by writing or by deed, such person or
         persons (including an officer or officers of the Security Trustee) as
         the Security Trustee thinks fit, to be Receiver of the Second Issuer
         Charged Property or any part thereof and, in the case of an appointment
         of more than one person, to act together or independently of the other
         or others.

(b)      The Security Trustee may not appoint an administrative receiver,
         receiver, manager or receiver and manager pursuant to paragraph (a)
         above solely as a result of the obtaining of a moratorium (or anything
         done with a view to obtaining a moratorium) under the Insolvency Act
         2000 except with leave of the court.

9.2      REMOVAL AND REPLACEMENT

         Except as otherwise required by statute, the Security Trustee may by
         writing or by deed remove any Receiver and appoint another in its place
         or to act with any Receiver and the Security Trustee may apply to the
         Court for an order removing an administrative receiver.

9.3      EXTENT OF APPOINTMENT

         The exclusion of any part of the Second Issuer Charged Property from
         the appointment of any Receiver shall not preclude the Security Trustee
         from subsequently extending its appointment (or that of any Receiver
         replacing it) to that part of the Second Issuer Charged Property or
         appointing another Receiver over any other part of the Second Issuer
         Charged Property.

9.4      AGENT OF THE SECOND ISSUER

         Any Receiver shall, so far as the law permits, be the agent of the
         Second Issuer and the Second Issuer alone shall be responsible for such
         Receiver's contracts, engagements, acts, omissions, misconduct,
         negligence or default and for liabilities incurred by him and in no
         circumstances whatsoever shall the Security Trustee be in any way
         responsible for or incur any liability in connection with such
         Receiver's contracts, engagements, acts, omissions, misconduct,
         negligence or default, and if a liquidator of the Second Issuer shall
         be appointed, such Receiver shall act as principal and not as agent for
         the Security Trustee. Notwithstanding the generality of the foregoing,
         such Receiver shall in the exercise of his powers, authorities and
         discretions conform to the regulations (if any) from time to time made
         and given in writing by the Security Trustee.


<PAGE>
                                       20


9.5      REMUNERATION

         The remuneration of any Receiver shall be fixed by the Security Trustee
         and may be or include a commission calculated by reference to the gross
         amount of all moneys received or otherwise and may include remuneration
         in connection with claims, actions or proceedings made or brought
         against such Receiver by the Second Issuer or any other person or the
         performance or discharge of any obligation imposed upon him by statute
         or otherwise, but subject to Clause 6 (Payments out of the Second
         Issuer Accounts upon Enforcement), such remuneration shall be payable
         hereunder by the Second Issuer. The amount of such remuneration shall
         be paid in accordance with the terms and conditions and in the manner
         agreed from time to time between such Receiver and the Security
         Trustee.

9.6      POWERS

         Any Receiver of the Second Issuer, in addition to any powers conferred
         on a Receiver by statute or common law, shall have the following
         powers:

         (a)      to take possession of, get in and collect the Second Issuer
                  Charged Property (or such part thereof in respect of which it
                  may be appointed) or any part thereof including income whether
                  accrued before or after the date of his appointment;

         (b)      to carry on, manage, concur in or authorise the management of,
                  or appoint a manager of, the whole or any part of the business
                  of the Second Issuer;

         (c)      to sell, exchange, license, surrender, release, disclaim,
                  abandon, return or otherwise dispose of or in any way
                  whatsoever deal with the whole or any part of the Second
                  Issuer Charged Property or any interest in the Second Issuer
                  Charged Property or any part thereof for such consideration
                  (if any) and upon such terms (including by deferred payment or
                  payment by instalments) as it may think fit and to concur in
                  any such transaction;

         (d)      to sell or concur in selling the whole or any part of the
                  Second Issuer's business whether as a going concern or
                  otherwise;

         (e)      to appoint, engage, dismiss or vary the terms of employment of
                  any employees, officers, managers, agents and advisers of the
                  Second Issuer upon such terms as to remuneration and otherwise
                  and for such periods as he may determine;

         (f)      to insure, protect, maintain, repair, alter, improve, replace,
                  exploit, add to and develop or concur in so doing, the Second
                  Issuer Charged Property or any part thereof in any manner and
                  for any purpose whatsoever;

         (g)      in connection with the exercise or the proposed exercise of
                  any of its powers or in order to obtain payment of its
                  remuneration (whether or not it is already payable), to borrow
                  or raise money from any person without security or on the
                  security of any of the Second Issuer Charged Property and
                  generally in such manner and on such terms as it may think
                  fit;

         (h)      to bring, defend, submit to arbitration, negotiate,
                  compromise, abandon and settle any claims, disputes and
                  proceedings concerning the Second Issuer Charged Property or
                  any part thereof;


<PAGE>
                                       21


         (i)      to transfer all or any of the Second Issuer Charged Property
                  and/or any of the liabilities of the Second Issuer to any
                  other company or body corporate, whether or not formed or
                  acquired for the purpose and to form a subsidiary or
                  subsidiaries of the Second Issuer;

         (j)      to call up or require the directors of the Second Issuer to
                  call up all or any portion of the uncalled capital for the
                  time being of the Second Issuer and to enforce payment of any
                  call by action (in the name of the Second Issuer or the
                  Receiver as may be thought fit);

         (k)      to redeem, discharge or compromise any Encumbrance from time
                  to time having priority to or ranking pari passu with this
                  Deed;

         (l)      to effect or maintain indemnity insurance and other insurance
                  (including without limitation the Insurance Policies) and
                  obtain bonds and performance guarantees;

         (m)      in connection with the exercise of any of its powers, to
                  execute or do, or cause or authorise to be executed or done,
                  on behalf of or in the name of the Second Issuer or otherwise,
                  as it may think fit, all documents, receipts, registrations,
                  acts or things which it may consider appropriate;

         (n)      to exercise any powers, discretions, voting, conversion or
                  other rights or entitlements in relation to any of the Second
                  Issuer Charged Property or incidental to the ownership of or
                  rights in or to any of the Second Issuer Charged Property and
                  to complete or effect any transaction entered into by the
                  Second Issuer and complete, disclaim, abandon or modify all or
                  any of the outstanding contracts or arrangements of the Second
                  Issuer relating to or affecting the Second Issuer Charged
                  Property;

         (o)      to exercise all powers as are described in Schedule 1 to the
                  Insolvency Act 2000, whether or not the Receiver is an
                  "administrative receiver" as defined in that Act;

         (p)      to delegate its powers by way of power of attorney or in any
                  other manner to any person any right, power or discretion
                  exercisable by it under this Deed on the terms (including the
                  power to sub-delegate) and subject to any regulations which
                  such Receiver may think fit and such Receiver shall not be
                  liable or responsible in any way to the Second Issuer or the
                  Security Trustee for any loss or liability arising from any
                  act, default, omission or misconduct on the part of any such
                  delegate or sub-delegate;

         (q)      generally to carry out, or cause or authorise to be carried
                  out, any transaction, scheme or arrangement whatsoever,
                  whether similar or not to any of the foregoing, in relation to
                  the Second Issuer Charged Property which it may consider
                  expedient as effectually as if he were solely and absolutely
                  entitled to the Second Issuer Charged Property;

         (r)      in addition:

                  (i)      to do all other acts and things which it may consider
                           desirable or necessary for realising any Second
                           Issuer Charged Property or incidental or conducive to
                           any of the rights, powers or discretions conferred on
                           a Receiver under or by virtue of this Deed; and

                  (ii)     to exercise in relation to any Second Issuer Charged
                           Property all the powers, authorities and things which
                           it would be capable of exercising if he were the
                           absolute beneficial owner of the same,


<PAGE>
                                       22


                  and may use the name of the Second Issuer for any of the
                  above purposes; and

         (s)      to pay and discharge out of the profits and income of the
                  relevant Second Issuer Charged Property and the moneys to be
                  made by it in carrying on the business of the Second Issuer
                  the expenses incurred in and about the carrying on and
                  management of the business or in the exercise of any of the
                  powers conferred by this Clause 9.6 or otherwise in respect of
                  such Second Issuer Charged Property and all outgoings which it
                  shall think fit to pay and to apply the residue of the said
                  profits, income or moneys in the manner provided by Clause 6
                  (Payments out of the Second Issuer Accounts upon Enforcement)
                  hereof.

         The Security Trustee may pay over to a Receiver any moneys constituting
         part of the Second Issuer Charged Property to the intent that the same
         may be applied for the purposes referred to in Clause 6 (Payments out
         of the Second Issuer Accounts upon Enforcement) by such Receiver and
         the Security Trustee may from time to time determine what funds such
         Receiver shall be at liberty to keep in hand with a view to the
         performance of his duties as such Receiver.

10.      PROTECTION OF THIRD PARTIES

10.1     ENQUIRY

         No purchaser from, or other person dealing with, the Security Trustee
         or a Receiver shall be concerned to enquire whether any of the powers
         exercised or purported to be exercised has arisen or become
         exercisable, whether the Second Issuer Secured Obligations remain
         outstanding or have become payable, whether such Receiver is authorised
         to act or as to the propriety or validity of the exercise or purported
         exercise of any power; and the title of such a purchaser and the
         position of such a person shall not be impeachable by reference to any
         of those matters and the protections contained in Sections 104 to 107
         of the 1925 Act shall apply to any person purchasing from or dealing
         with a Receiver or the Security Trustee.

10.2     RECEIPTS

         Upon any dealing or transaction under this Deed, the receipt of the
         Security Trustee or a Receiver, as the case may be, shall be an
         absolute and a conclusive discharge to a purchaser and shall relieve
         him of any obligation to see to the application of any moneys paid to
         or by the direction of the Security Trustee or such Receiver.

11.      PROTECTION OF SECURITY TRUSTEE AND RECEIVER

11.1     LIABILITY

         Neither the Security Trustee nor any Receiver shall be liable to the
         Second Issuer in the absence of breach of the terms of this Deed by
         them, or wilful default, fraud, negligence or wilful misconduct on
         their part or that of their officers, employees or agents in respect of
         any loss or damage which arises out of the exercise or the attempted or
         purported exercise of or failure to exercise any of their respective
         powers.

11.2     POSSESSION

         Without prejudice to the generality of Clause 11.3 (Mortgagee in
         Possession), entry into possession of the Second Issuer Charged
         Property or any part thereof shall not render the Security Trustee or
         the Receiver of that company liable to account as mortgagee in



<PAGE>
                                       23


         possession. If and whenever the Security Trustee or the Receiver enters
         into possession of the Second Issuer Charged Property, it shall be
         entitled at any time to go out of such possession.

11.3     MORTGAGEE IN POSSESSION

         Neither the Security Trustee nor the Second Issuer Secured Creditors
         shall, by reason of any assignment or other security made under this
         Deed, be or be deemed to be a mortgagee in possession nor shall they
         take any action (other than, in the case of the Second Issuer Secured
         Creditors, with the Security Trustee's prior written consent) which
         would be likely to lead to the Second Issuer Secured Creditors or the
         Security Trustee becoming a mortgagee in possession in respect of any
         property referred to in this Deed. The Security Trustee, in its
         absolute discretion, may at any time, serve a written notice on the
         Second Issuer Secured Creditors requiring the Second Issuer Secured
         Creditors from the date such notice is served to obtain the Security
         Trustee's prior written consent before taking any action which would be
         likely to lead to the Second Issuer Secured Creditors or the Security
         Trustee becoming a mortgagee in possession in respect of any property
         referred to in this Deed.

12.      EXPENSES AND INDEMNITY

12.1     EXPENSES

         The Second Issuer covenants with and undertakes to the Security Trustee
         to reimburse or pay to the Security Trustee or any Receiver of the
         Second Issuer (on the basis of a full indemnity) the amount of all
         costs (including legal costs), charges and expenses (including
         insurance premiums) properly incurred or sustained by the Security
         Trustee or any Receiver (including, for the avoidance of doubt, any
         such costs, charges and expenses arising from any act or omission of,
         or proceedings involving, any third person) in connection with:

         (a)      the exercise or the attempted exercise, or the consideration
                  of the exercise by or on behalf of the Security Trustee or any
                  Receiver of any of the powers of the Security Trustee or such
                  Receiver, and the enforcement, preservation or attempted
                  preservation of this Deed (or any of the charges contained in
                  or granted pursuant to it) or any of the Second Issuer Charged
                  Property or any other action taken by or on behalf of the
                  Security Trustee or such Receiver with a view to or in
                  connection with the recovery by the Security Trustee or such
                  Receiver of the Second Issuer Secured Obligations from the
                  Second Issuer or any other person; or

         (b)      the carrying out of any other act or matter which the Security
                  Trustee or any Receiver may reasonably consider to be
                  necessary for the preservation, improvement or benefit of the
                  Second Issuer Charged Property.

12.2     INDEMNITY

         The Second Issuer agrees to indemnify the Security Trustee and any
         Receiver, on an after-Tax basis, from and against all losses, actions,
         claims, costs (including legal costs on a full indemnity basis),
         expenses (including insurance premiums), demands and liabilities
         whether in contract, tort, delict or otherwise now or hereafter
         properly sustained or incurred by the Security Trustee or such Receiver
         and their respective officers and employees or by any person for whose
         liability, act or omission the Security Trustee or such Receiver may be
         answerable, in connection with anything done or omitted to be done
         under or pursuant to this Deed or any other Transaction Document to
         which such entity is a party, or in the exercise or purported exercise
         of the powers herein contained, or occasioned by any breach by the
         Second Issuer of any of its covenants or other obligations to the
         Security Trustee, or in



<PAGE>
                                       24


         consequence of any payment in respect of the Second Issuer Secured
         Obligations (whether made by the Second Issuer or a third person) being
         declared void or impeached for any reason whatsoever save where the
         same arises as the result of the fraud, negligence or wilful default of
         the Security Trustee or such Receiver or their respective officers or
         employees or breach by the Security Trustee or such Receiver or their
         respective officers or employees of the terms of this Deed.

12.3     TAXES

         All sums payable by the Second Issuer under this Deed are deemed to be
         exclusive of any amount in respect of VAT. If, pursuant to any
         provision of this Deed, the Security Trustee or any Receiver of the
         Second Issuer makes any taxable or deemed taxable supply to the Second
         Issuer, then the Second Issuer shall pay to the Security Trustee or
         such Receiver (as the case may be) (in addition to the consideration
         for the supply) an amount equal to the VAT charged in respect of such
         taxable or deemed taxable supply against production of a valid VAT
         invoice.

         If the Security Trustee or any Receiver shall make any payment for a
         taxable or deemed taxable supply to it pursuant to or in connection
         with this Deed and any such payment shall bear VAT which is
         Irrecoverable VAT the Second Issuer shall indemnify the Security
         Trustee or such Receiver (as the case may be) on demand for an amount
         equal to such Irrecoverable VAT so far as it has not been taken into
         account in computing the amount of any payment made by the Second
         Issuer to the Security Trustee or such Receiver under any other
         indemnity contained in this Deed.

12.4     INTEREST

         All sums payable by the Second Issuer under Clauses 24.3 (Disputes),
         24.4 (Expenses) and 24.5 (Indemnity) shall be payable on demand and:

         (a)      in the case of payments actually made by the Security Trustee
                  prior to the demand, shall carry interest at the rate per
                  annum which is 1 per cent. per annum higher than the base rate
                  of the Agent Bank for the time being from the first Business
                  Day following the date of the same being demanded to the date
                  of actual payment (provided that such demand shall be made on
                  a Business Day, otherwise interest shall be payable from the
                  second Business Day following the date of the demand to the
                  date of actual payment); and

         (b)      in all other cases, shall carry interest at such rate from the
                  date 14 days after the date of the same being demanded or
                  (where the demand specifies that payment by the Security
                  Trustee will be made on an earlier date provided such earlier
                  date is a business day) from such earlier date (not being
                  earlier than the Business Day following the date of such
                  demand) to the date of actual payment.

         Any amounts payable pursuant to Clauses 24.1 (Remuneration) and 24.2
         (Additional Remuneration) shall carry interest at the aforesaid rate
         from the due date thereof to the date of actual payment.

12.5     STAMP DUTIES

         The Second Issuer shall, to the extent permitted by applicable United
         Kingdom law, pay all stamp duties and other duties or Taxes of a
         similar nature, including for the avoidance of


<PAGE>
                                       25


         doubt any duty levied under the Stamp Act 1891 as amended and
         supplemented, (if any) payable on or arising out of or in consequence
         of:

         (a)      the creation of the security constituted by or pursuant to
                  this Deed; and

         (b)      the execution and delivery of this Deed and documents executed
                  pursuant hereto and the other Second Issuer Transaction
                  Documents (except where such obligation to pay such stamp
                  duties and other duties on Taxes of a similar nature is
                  expressed to be the obligation of any other party to the
                  Second Issuer Transaction Documents).

13.      PROTECTION OF SECURITY

         The Second Issuer further covenants with and undertakes to the Security
         Trustee from time to time (and, for the purposes mentioned in paragraph
         (a) below, notwithstanding that the a Second Issuer Note Acceleration
         Notice may not have been served) upon demand to execute, at the Second
         Issuer's own cost, any document or do any act or thing (other than any
         amendment hereto) which the Security Trustee may specify:

         (a)      with a view to registering or perfecting any charge or other
                  security created or intended to be created by or pursuant to
                  this Deed (including the perfecting of the conversion of any
                  floating charge to a fixed charge pursuant to Clause 14.1
                  (Notice) or 14.2 (Automatic Crystallisation)) subject to
                  having first obtained all necessary consents (if any); or

         (b)      with a view to facilitating the exercise or the proposed
                  exercise of any of their powers or the realisation of any of
                  the Second Issuer Charged Property; or

         (c)      with a view to protecting the encumbrances created by or
                  pursuant to this Deed,

         provided that the Second Issuer shall not be obliged to execute any
         further documentation or take any other action or steps to the extent
         that it would breach a restriction in any such agreement to which it is
         party relating to assignment, transferring, charging or sharing of
         possession/rights of such benefit.

14.      CRYSTALLISATION

14.1     NOTICE

         In addition and without prejudice to any other event resulting in a
         crystallisation of the floating charge created by this Deed or any
         other right the Security Trustee may have, the Security Trustee may, at
         any time, if:

         (a)      a Potential Second Issuer Note Event of Default is subsisting
                  and has not been waived; or

         (b)      it believes that the Second Issuer Charged Property or any
                  part thereof is in danger of being seized or sold under any
                  form of distress or execution levied or threatened or is
                  otherwise in jeopardy or imperilled; or

         (c)      any circumstance shall occur which, in the reasonable opinion
                  of the Security Trustee, prejudices, imperils, threatens or is
                  likely to do any of the foregoing in respect of the security
                  created by this Deed or the Second Issuer takes or threatens
                  to


<PAGE>
                                       26


                  take any action that would be prejudicial to, or would be
                  inconsistent with, the security created hereby,

         by notice in writing to the Second Issuer declare that the floating
         charge hereby created shall be converted into a first specific fixed
         charge as to all of the undertakings, property and assets or such of
         them as may be specified in the notice, and by way of further
         assurance, the Second Issuer, at its own expense, shall execute all
         documents in such form as the Security Trustee shall require and shall
         deliver to the Security Trustee all conveyances, deeds, certificates
         and documents which may be necessary to perfect such first specific
         fixed charge.

14.2     AUTOMATIC CRYSTALLISATION

         Subject as set out below, in addition and without prejudice to any
         other event resulting in a crystallisation of the floating charge
         created by this Deed, the floating charge contained herein shall
         automatically be converted into a fixed charge over all property,
         assets or undertaking of the Second Issuer subject to the floating
         charge, if and when:

         (a)      a Second Issuer Note Event of Default occurs; or

         (b)      the Second Issuer ceases to carry on all or a substantial part
                  of its business or ceases to be a going concern or thereafter
                  to do any of the foregoing; or

         (c)      the Second Issuer stops making payments to its creditors or
                  gives notice to creditors that it intends to stop payment; or

         (d)      the holder of any other Encumbrance in relation to the Second
                  Issuer, whether ranking in priority to or pari passu with or
                  after the charges contained in this Deed, appoints a Receiver;
                  or

         (e)      any floating charge granted by the Second Issuer to any other
                  person (whether permitted by the Second Issuer Transaction
                  Documents or not) crystallises for any reason whatsoever.

         The floating charge created by Clause 3.4 of this Deed may not be
         converted into a fixed charge solely as a result of the obtaining of a
         moratorium (or anything done with a view to obtaining a moratorium)
         under the Insolvency Act 2000 except with leave of the court.

14.3     FAILURE OF PETITION FOR ADMINISTRATION OR WINDING-UP

         If any petition for the administration or winding-up of the Second
         Issuer is dismissed or withdrawn or a resolution for winding-up the
         Second Issuer is not passed by the necessary majority, then without
         prejudice to any rights exercisable otherwise than in consequence of
         the presentation of such petition or resolution and subject to anything
         done in the meantime in pursuance of the powers given by this Deed and
         subject to the provisions contained in this Deed as to costs charges
         and expenses incurred and payments made, possession of the Second
         Issuer Charged Property will be restored to the Second Issuer, and the
         Second Issuer and all persons concerned will be remitted to their
         original rights provided that the Security Trustee is satisfied that
         its security position at that time is not materially different to that
         as at the date of this Deed.


<PAGE>
                                       27


15.      POWER OF ATTORNEY, ETC.

15.1     EXECUTION OF POWER OF ATTORNEY

         Immediately upon execution of this Deed, the Second Issuer shall
         execute and deliver to the Security Trustee a power of attorney in or
         substantially in the form set out in Schedule 1. For the avoidance of
         doubt, the Security Trustee confirms that it may only exercise the
         powers conferred under such power of attorney in the circumstances set
         out in paragraph 1 of Schedule 1.

15.2     SECOND ISSUER CHARGED PROPERTY ON TRUST

         To the extent that it is permitted to do so under the Transaction
         Documents, for the purpose of giving effect to this Deed, the Second
         Issuer hereby declares that, after service of a Second Issuer Note
         Acceleration Notice, it will hold all of the Second Issuer Charged
         Property (subject to the right of redemption) upon trust to convey,
         assign or otherwise deal with such Second Issuer Charged Property in
         such manner and to such person as the Security Trustee shall direct,
         and declares that it shall be lawful for the Security Trustee to
         appoint a new trustee or trustees of the Second Issuer Charged Property
         in place of the Second Issuer.

16.      OTHER SECURITY, ETC.

16.1     NO MERGER

         The Security Interests contained in or created pursuant to this Deed
         are in addition to, and shall neither be merged in, nor in any way
         exclude or prejudice any other Encumbrance, right of recourse, set-off
         or other right whatsoever which the Security Trustee or any Second
         Issuer Secured Creditor may now or at any time hereafter hold or have
         (or would apart from this Deed or any charge contained or created
         pursuant to this Deed hold or have) as regards the Second Issuer or any
         other person in respect of the Second Issuer Secured Obligations, and
         neither the Security Trustee (subject to the provisions of Clause 20.4
         (Mandatory Enforcement) nor any Second Issuer Secured Creditor shall be
         under any obligation to take any steps to call in or to enforce any
         security for the Second Issuer Secured Obligations, and shall not be
         liable to the Second Issuer for any loss arising from any omission on
         the part of the Security Trustee or any Second Issuer Secured Creditor
         to take any such steps or for the manner in which the Security Trustee
         or any Second Issuer Secured Creditor shall enforce or refrain from
         enforcing any such security.

16.2     CONSOLIDATION

         Section 93 of the 1925 Act shall not apply in relation to any of the
         charges contained in this Deed.

16.3     RULING OFF

         If the Security Trustee receives notice of any Encumbrance affecting
         the whole or any part of the Second Issuer Charged Property or any
         Security Interests created under this Deed in contravention of the
         provisions hereof:

         (a)      the Security Trustee may open a new account in respect of the
                  Second Issuer and, if it does not, it shall nevertheless be
                  deemed to have done so at the time it received such notice;
                  and


<PAGE>
                                       28


         (b)      all payments made by the Second Issuer to the Security Trustee
                  after the Security Trustee receives such notice shall be
                  credited or deemed to have been credited to the new account,
                  and in no circumstances whatsoever shall operate to reduce the
                  Second Issuer Secured Obligations as at the time the Security
                  Trustee received such notice.

16.4     CHANGE OF NAME, ETC.

         This Deed shall remain valid and enforceable notwithstanding any change
         in the name, composition or constitution of the Security Trustee or the
         Second Issuer or any amalgamation or consolidation by the Security
         Trustee or the Second Issuer with any other corporation (whether, in
         the case of the Second Issuer, permitted by the Second Issuer
         Transaction Documents or not).

17.      AVOIDANCE OF PAYMENTS

17.1     NO RELEASE

         No assurance, security or payment which may be avoided or adjusted
         under the law, including under any enactment relating to bankruptcy or
         insolvency and no release, settlement or discharge given or made by the
         Security Trustee or any Second Issuer Secured Creditor on the faith of
         any such assurance, security or payment, shall prejudice or affect the
         right of the Security Trustee or any Second Issuer Secured Creditor to
         recover the Second Issuer Secured Obligations from the Second Issuer
         (including any monies which it may be compelled to pay or refund under
         the provisions of the Insolvency Act 1986 and any costs payable by it
         pursuant to or otherwise incurred in connection therewith) or to
         enforce the Security Interests created under or pursuant to this Deed
         to the full extent of the Second Issuer Secured Obligations.

17.2     RETENTION OF CHARGES

         If the Security Trustee shall have reasonable grounds for believing
         that the Second Issuer may be insolvent or deemed to be insolvent
         pursuant to the provisions of the Insolvency Act 1986 (and production
         of a solvency certificate of a duly authorised officer of the Second
         Issuer shall be prima facie evidence of the solvency of the Second
         Issuer) at the date of any payment made by the Second Issuer to the
         Security Trustee and that as a result, such payment may be capable of
         being avoided or clawed back, the Security Trustee shall be at liberty
         to retain the Security Interests contained in or created pursuant to
         this Deed until the expiry of a period of one month plus such statutory
         period within which any assurance, security, guarantee or payment can
         be avoided or invalidated after the payment and discharge in full of
         all Second Issuer Secured Obligations notwithstanding any release,
         settlement, discharge or arrangement which may be given or made by the
         Security Trustee on, or as a consequence of, such payment or discharge
         of liability provided that, if at any time within such period, a
         petition shall be presented to a competent court for an order for the
         winding up or the making of an administration order in respect of the
         Second Issuer or the Second Issuer shall commence to be wound up or to
         go into administration or any analogous proceedings shall be commenced
         by or against the Second Issuer, as the case may be, the Security
         Trustee shall be at liberty to continue to retain such security for
         such further period as the Security Trustee may determine and such
         security shall be deemed to continue to have been held as security for
         the payment and discharge to the Security Trustee of all Second Issuer
         Secured Obligations.




<PAGE>
                                       29


18.      SET OFF

         The Security Trustee may at any time following the service of a Second
         Issuer Note Acceleration Notice (without notice and notwithstanding any
         settlement of account or other matter whatsoever) combine or
         consolidate all or any existing accounts of the Second Issuer whether
         in its own name or jointly with others and held by it or any Second
         Issuer Secured Creditor and may set off or transfer all or any part of
         any credit balance or any sum standing to the credit of any such
         account (whether or not the same is due to the Second Issuer from the
         Security Trustee or relevant Second Issuer Secured Creditor and whether
         or not the credit balance and the account in debit or the Second Issuer
         Secured Obligations are expressed in the same currency in which case
         the Security Trustee is hereby authorised to effect any necessary
         conversions at its prevailing rates of exchange) in or towards
         satisfaction of any of the Second Issuer Secured Obligations and may in
         its absolute discretion estimate the amount of any liability of the
         Second Issuer which is contingent or unascertained and thereafter set
         off such estimated amount and no amount shall be payable by the
         Security Trustee to the Second Issuer unless and until all Second
         Issuer Secured Obligations have been ascertained and fully repaid or
         discharged.

19.      EXECUTION OF DOCUMENTS

         Any document required to be executed as a deed by the Security Trustee
         under or in connection with this Deed shall be validly executed if
         executed as a deed by a duly authorised attorney of the Security
         Trustee.

20.      EXERCISE OF CERTAIN RIGHTS

20.1     NO ENFORCEMENT BY SECOND ISSUER SECURED CREDITORS

         Each of the Second Issuer Secured Creditors (other than the
         Noteholders, the Note Trustee acting on behalf of the Second Issuer
         Noteholders and the Security Trustee) hereby agrees with the Second
         Issuer and the Security Trustee that:

         (a)      only the Security Trustee may enforce the security created in
                  favour of the Security Trustee by this Deed in accordance with
                  the provisions hereof; and

         (b)      it shall not take any steps for the purpose of recovering any
                  of the Second Issuer Secured Obligations (including, without
                  limitation, by exercise any rights of set off) or enforcing
                  any rights arising out of the Second Issuer Transaction
                  Documents against the Second Issuer or procuring the winding
                  up, administration or liquidation of the Second Issuer in
                  respect of any of its liabilities whatsoever,

         unless a Second Issuer Note Acceleration Notice shall have been served
         or the Note Trustee, having become bound to serve a Second Issuer Note
         Acceleration Notice, and/or having become bound to take any steps or
         proceedings to enforce the said security pursuant to this Deed, fails
         to do so within 30 days of becoming so bound and that failure is
         continuing (in which case each of such Second Issuer Secured Creditors
         shall be entitled to take any such steps and proceedings as it shall
         deem necessary other than the presentation of a petition for the
         winding up of, or for an administration order in respect of, the Second
         Issuer).

20.2     KNOWLEDGE OF SECURITY TRUSTEE OF A SECOND ISSUER NOTE EVENT OF DEFAULT

         The Security Trustee will not be deemed to have knowledge of the
         occurrence of a Second Issuer Note Event of Default unless the Security
         Trustee has received written notice from a


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                                       30


         Second Issuer Secured Creditor stating that a Second Issuer Note Event
         of Default has occurred and describing that Second Issuer Note Event of
         Default.

20.3     DISCRETIONARY ENFORCEMENT

         Subject to the provisions of this Deed, the Security Trustee may at any
         time, at its discretion and without notice, take such proceedings
         and/or other action as it may think fit against, or in relation to, the
         Second Issuer or any other person to enforce their respective
         obligations under any of the Second Issuer Transaction Documents.
         Subject to the provisions of this Deed, at any time after the security
         created by this Deed has become enforceable, the Security Trustee may,
         at its discretion and without notice, take such steps as it may think
         fit to enforce such security.

20.4     MANDATORY ENFORCEMENT

         The Security Trustee shall not be bound to take any steps or to
         institute any proceedings or to take any other action under or in
         connection with any of the Second Issuer Transaction Documents
         (including, without limitation, enforcing the security constituted by
         or pursuant to this Deed) unless (subject to the provisions of
         Condition 10 of the Second Issuer Notes) the Security Trustee:

         (a)      shall have been directed or requested to do so by an
                  Extraordinary Resolution of the Class A Noteholders, the Class
                  B Noteholders or the Class C Noteholders or in writing by the
                  holders of at least 25 per cent. in aggregate Principal Amount
                  Outstanding of the Class A Second Issuer Notes, the Class B
                  Second Issuer Notes or the Class C Second Issuer Notes then
                  outstanding or by any other Second Issuer Secured Creditor
                  PROVIDED THAT:

                  (i)      the Security Trustee shall not, and shall not be
                           bound to, act at the direction or request of the
                           Class B Noteholders as aforesaid unless either so to
                           do would not, in the sole opinion of the Security
                           Trustee, be materially prejudicial to the interests
                           of the Class A Noteholders or such action is
                           sanctioned by an Extraordinary Resolution of the
                           Class A Noteholders;

                  (ii)     the Security Trustee shall not, and shall not be
                           bound to, act at the direction or request of the
                           Class C Noteholders as aforesaid unless either so to
                           do would not, in the sole opinion of the Security
                           Trustee, be materially prejudicial to the interests
                           of the Class A Noteholders and/or the Class B
                           Noteholders or such action is sanctioned by an
                           Extraordinary Resolution of the Class A Noteholders
                           and/or the Class B Noteholders, as the case may be;

                  (iii)    the Security Trustee shall not, and shall not be
                           bound to, act at the direction or request of any
                           other Second Issuer Secured Creditor as aforesaid
                           unless so to do would not, in the sole opinion of the
                           Security Trustee, be materially prejudicial to the
                           interests of the Class A Noteholders and the Class B
                           Noteholders and the Class C Noteholders or such
                           action is sanctioned by Extraordinary Resolutions of
                           the Class A Noteholders and the Class B Noteholders
                           and the Class C Noteholders and each of the Second
                           Issuer Secured Creditors who ranks higher than the
                           relevant Second Issuer Secured Creditor in the order
                           or priority of payments in Clause 6 (Payments out of
                           the Second Issuer Accounts upon Enforcement) consents
                           to such action; and

<PAGE>
                                       31



         (b)      shall have been indemnified and/or secured to its satisfaction
                  against all liabilities, actions, proceedings, claims and
                  demands to which it may thereby render itself liable and all
                  costs, charges, damages and expenses which it may incur by so
                  doing and the terms of such indemnity may include the
                  provision of a fighting fund, non-recourse loan or other
                  similar arrangement.

20.5     DISPOSAL OF SECOND ISSUER CHARGED PROPERTY

         Notwithstanding Clause 8 (The Security Trustee's Powers), if the Second
         Issuer Security has become enforceable otherwise than by reason of a
         default in payment of any amount due on the Class A Notes (or, once the
         Class A Notes have been redeemed in full, the Class B Notes or, once
         the Class A Notes and the Class B Notes have been redeemed in full, the
         Class C Notes), the Security Trustee will not be entitled to dispose of
         any of the Second Issuer Charged Property unless either a sufficient
         amount would be realised to allow discharge in full of all amounts
         owing to the Class A Noteholders and, once all of the Class A
         Noteholders have been repaid, the Class B Noteholders and, once all of
         the Class A Noteholders and the Class B Noteholders have been repaid,
         the Class C Noteholders or the Security Trustee is of the sole opinion,
         which shall be binding on the Second Issuer Secured Creditors, reached
         after considering at any time and from time to time the advice of any
         financial adviser (or such other professional advisers reasonably
         selected by the Security Trustee for the purpose of giving such
         advice), that the cash flow prospectively receivable by the Second
         Issuer will not (or that there is a significant risk that it will not)
         be sufficient, having regard to any other relevant actual, contingent
         or prospective liabilities of the Second Issuer, to discharge in full
         in due course all amounts owing to the Class A Noteholders (or once all
         of the Class A Noteholders have been repaid, the Class B Noteholders,
         or once all of the Class A Noteholders and the Class B Noteholders have
         been repaid, the Class C Noteholders). The fees and expenses of the
         aforementioned financial adviser or other professional adviser selected
         by the Security Trustee shall be paid by the Second Issuer.

21.      COVENANTS AND WARRANTIES

21.1     NOTICE OF ASSIGNMENT

         Immediately upon the execution of this Deed, the Second Issuer shall
         deliver one or more notices of assignment substantially in the form set
         out in Schedule 2 to each of the persons named in such notices and
         shall use all reasonable endeavours to procure the delivery to the
         Security Trustee on the date hereof of receipts from the addressees of
         such notices substantially in the form attached to the notice.

21.2     WARRANTY

         The Second Issuer warrants to the Security Trustee that it has taken
         all necessary steps to enable it to charge or assign as security the
         Second Issuer Charged Property in accordance with Clause 3 (Security
         and Declaration of Trust), and that it has taken no action or steps to
         prejudice its right, title and interest in and to the Second Issuer
         Charged Property.

21.3     NEGATIVE COVENANTS

         So long as any of the Second Issuer Secured Obligations remain
         outstanding, the Second Issuer shall not, save to the extent permitted
         by or provided for in the Transaction Documents or with the prior
         written consent of the Security Trustee:


<PAGE>
                                       32


         (a)      create or permit to subsist any mortgage, pledge, lien, charge
                  or other security interest whatsoever (unless arising by
                  operation of law) upon the whole or any part of its assets
                  (including any uncalled capital) or its undertaking, present
                  or future;

         (b)      (i)      carry on any business other than as described in the
                           Prospectus dated [6th March], 2003 relating to the
                           issue of the Second Issuer Notes and the related
                           activities described therein; or

                  (ii)     have any subsidiaries or any subsidiary undertakings
                           (as defined in the Companies Act 1985) or any
                           employees or premises;

         (c)      transfer, sell, lend, part with or otherwise dispose of, or
                  deal with, or grant any option or present or future right to
                  acquire any of its assets or undertaking or any interest,
                  estate, right, title or benefit therein or thereto or agree or
                  attempts or purport to do so;

         (d)      pay any dividend or make any other distribution to its
                  shareholder or issue any further shares;

         (e)      incur any indebtedness in respect of borrowed money whatsoever
                  or give any guarantee or indemnity in respect of any
                  indebtedness or of any obligation of any person;

         (f)      consolidate or merge with any other person or convey or
                  transfer its properties or assets substantially as an entirety
                  to any other person;

         (g)      permit any of the Second Issuer Transaction Documents to which
                  it is a party to become invalid or ineffective, or the
                  priority of the Security Interests created thereby to be
                  reduced, or consent to any variation of, or exercise any
                  powers of consent or waiver pursuant to the terms of any of
                  the Second Issuer Transaction Documents to which it is a
                  party, or permit any party to any of the Transaction Documents
                  to which it is a party or any other person whose obligations
                  form part of the Second Issuer Charged Property to be released
                  from its respective obligations;

         (h)      have an interest in any bank account other than the Second
                  Issuer Accounts, unless such account or interest therein is
                  charged to the Security Trustee on terms acceptable to it;

         (i)      offer to surrender to any company any amounts which are
                  available for surrender by way of group relief within Chapter
                  IV of Part X of the Income and Corporation Taxes Act 1988
                  except for full payment at the current applicable rate of
                  corporation tax applied to the surrendered amount and payable
                  at the date when corporation tax is due to be paid by the
                  claimant or would be due in the absence of the surrender;

         (j)      allow or permit the group election in force between the Second
                  Issuer and Funding 1 under Section 247 of the Income and
                  Corporation Taxes Act 1988 to cease, unless required to do so
                  by law;

         (k)      do any act or thing the effect of which would be to make the
                  Second Issuer resident in any jurisdiction other than the
                  United Kingdom;

         (l)      permit any person other than the Second Issuer and the
                  Security Trustee to have any equitable interest in any of its
                  assets or undertakings or any interest, estate, right, title
                  or benefit therein;

<PAGE>
                                       33


         (m)      purchase or otherwise acquire any Note or Notes (including the
                  Second Issuer Notes); or

         (n)      engage in any activities in the United States (directly or
                  through agents) or derive any income from United States
                  sources as determined under United States income tax
                  principles or hold any property if doing so would cause it to
                  be engaged or deemed to be engaged in a trade or business
                  within the United States as determined under United States tax
                  principles.

21.4     POSITIVE COVENANTS

         The Second Issuer covenants and undertakes with the Security Trustee
         for the benefit of the Second Issuer Secured Creditors as follows:

         (a)      at all times to carry on and conduct its affairs in a proper
                  and efficient manner and in accordance with its constitutive
                  documents and all laws and regulations applicable to it;

         (b)      give to the Security Trustee within a reasonable time after
                  request such information and evidence as it shall reasonably
                  require and in such form as it shall reasonably require,
                  including without prejudice to the generality of the foregoing
                  the procurement by the Second Issuer of all such certificates
                  called for by the Security Trustee pursuant to this Deed or
                  any other Transaction Document for the purpose of the
                  discharge or exercise of the duties, trusts, powers,
                  authorities and discretions vested in it under these presents
                  or any other Transaction Document to which the Security
                  Trustee is a party or by operation of law;

         (c)      to cause to be prepared and certified by its auditors in
                  respect of each Financial Year accounts in such form as will
                  comply with relevant legal and accounting requirements
                  applicable to it for the time being;

         (d)      at all times to keep or procure the keeping of proper books of
                  account and records and allow the Security Trustee and any
                  person or persons appointed by the Security Trustee to whom
                  the Second Issuer shall have no reasonable objection free
                  access to such books of account and records at all times
                  during normal business hours upon reasonable notice in writing
                  provided that such inspection shall only be for the purposes
                  of carrying out its duties under this Deed and any information
                  so obtained shall only be used and passed on to any other
                  person for the purpose of the Security Trustee carrying out
                  its duties under this Deed;

         (e)      to send to the Security Trustee a copy of every balance sheet,
                  profit and loss account, source and application of funds
                  statement (if any), report, or other notice, statement,
                  circular or document issued or given to any holder of
                  securities (including Noteholders and shareholders in their
                  capacity as such) or creditors of the Second Issuer as soon as
                  reasonably practicable after issue of the same;

         (f)      to give notice in writing to the Security Trustee of the
                  occurrence of any Second Issuer Note Event of Default,
                  Potential Second Issuer Note Event of Default and/or service
                  of a Second Issuer Note Acceleration Notice (which has not
                  been served by the Security Trustee) (such notice to be
                  effective by the delivery of a copy of the Second Issuer Note
                  Acceleration Notice to Security Trustee) immediately upon
                  becoming aware thereof and without waiting for the Security
                  Trustee to take any further action;


<PAGE>
                                       34


         (g)      give to the Security Trustee (i) within fourteen days after
                  demand by the Security Trustee therefor and (ii) (without the
                  necessity for any such demand) promptly after the publication
                  of its audited accounts in respect of each Financial Year and
                  in any event not later than the date required by statute to
                  file or publish (whichever is earlier) such audited accounts
                  after the end of each such Financial Year a certificate signed
                  by two directors of the Second Issuer to the effect that as at
                  a date not more than seven days before delivering such
                  certificate (the "certification date") there did not exist and
                  had not existed since the certification date of the previous
                  certificate (or in the case of the first such certificate the
                  date hereof) any Second Issuer Note Event of Default (or if
                  such then exists or existed, specifying the same) and that
                  during the period from and including the certification date of
                  the last such certificate (or in the case of the first such
                  certificate the date hereof) to and including the
                  certification date of such certificate the Second Issuer has
                  complied, to the best of such directors' knowledge and belief,
                  with all its obligations contained in this Deed and each of
                  the other Second Issuer Transaction Documents to which it is a
                  party or (if such is not the case) specifying the respects in
                  which it has not so complied;

         (h)      at all times to execute all such further documents and do all
                  such further acts and things as may in the reasonable opinion
                  of the Security Trustee be necessary at any time or times to
                  give effect to the terms and conditions of this Deed and the
                  other Second Issuer Transaction Documents;

         (i)      at all times to comply with the obligations and provisions
                  binding upon it under and pursuant to this Deed and the other
                  Second Issuer Transaction Documents;

         (j)      duly and promptly to pay and discharge all Taxes imposed upon
                  it or its assets unless such Taxes are, in the sole opinion of
                  the Security Trustee, being contested in good faith by the
                  Second Issuer; and

         (k)      so far as permitted by law to enter into and maintain in full
                  force and effect a group income election under Section 247 of
                  the Income and Corporation Taxes Act 1988 in relation to any
                  such payments as are referred to in Section 247(4) of that Act
                  and which are made under the Second Issuer Intercompany Loan
                  Agreement by Funding 1 to the Second Issuer and ensure that no
                  steps will be taken (whether by act, omission or otherwise)
                  which would reasonably be expected to lead to the revocation
                  or invalidation of the aforementioned election; and
                  immediately to notify the Security Trustee if it becomes aware
                  that the aforementioned election ceases to be in full force
                  and effect or if circumstances arise, of which it is aware,
                  which may result in that election ceasing to be in full force
                  and effect.

21.5     FORMS 395

         The Second Issuer shall make a filing or shall procure that a filing is
         made with the Registrar of Companies of a duly completed Form 395
         together with an executed original of this Deed within the applicable
         time limit.

22.      SUPPLEMENTS TO THE TRUSTEE ACTS

22.1     POWERS OF SECURITY TRUSTEE

         Section 1 of the Trustee Act 2000 shall not apply to the duties of the
         Security Trustee in relation to the trusts constituted by this Deed.
         Where there are any inconsistencies between the Trustee Act 1925, the
         Trustee Act 2000 and the provisions of


<PAGE>
                                       35


         this Deed, the provisions of this Deed shall, to the extent allowed by
         law, prevail and, in the case of any such inconsistency with the
         Trustee Act 2000, the provisions of this Deed shall constitute a
         restriction or exclusion for the purposes of that Act.

         By way of supplement it is expressly declared as follows:

         (a)      the Security Trustee may in relation to this Deed or any of
                  the other Second Issuer Transaction Documents act on the
                  opinion or advice of, or a certificate or any information
                  obtained from, any lawyer, banker, valuer, surveyor,
                  securities company, broker, auctioneer, accountant or other
                  expert or adviser in the United Kingdom or elsewhere
                  (including, without limitation, any certificate or
                  confirmation from the Rating Agencies), whether obtained by
                  the Security Trustee or any Receiver and shall not be
                  responsible for any loss occasioned by so acting;

         (b)      any such opinion, advice, certificate or information may be
                  sent or obtained by letter, telegram, telex, facsimile
                  reproduction or in any other form and the Security Trustee
                  shall not be liable for acting in good faith on any opinion,
                  advice, certificate or information purporting to be so
                  conveyed although the same shall contain some error or shall
                  not be authentic provided that such error or lack of
                  authenticity is not manifest;

         (c)      the Security Trustee shall (save as expressly otherwise
                  provided in this Deed or any of the other Second Issuer
                  Transaction Documents) as regards all rights, powers,
                  authorities and discretions vested in it by this Deed or any
                  of the other Transaction Documents, or by operation of law,
                  have absolute and uncontrolled discretion as to, and save as
                  otherwise provided in this Deed shall not be liable for any
                  loss, liability, costs, expenses or inconvenience arising as a
                  result of, the exercise or non-exercise thereof;

         (d)      the Security Trustee shall be at liberty to place this Deed
                  and all deeds and other documents relating to this Deed with
                  any bank or banking company, or lawyer or firm of lawyers
                  believed by it to be of good repute, in any part of the world,
                  and the Security Trustee shall not be responsible for or be
                  required to insure against any loss incurred in connection
                  with any such deposit and the Second Issuer shall pay all sums
                  required to be paid on account of or in respect of any such
                  deposit;

         (e)      the Security Trustee may, in the conduct of its trust
                  business, instead of acting personally, employ and pay, on
                  such terms as it in its absolute discretion deems fit, an
                  agent to transact or conduct, or concur in transacting or
                  conducting, any business and to do or concur in doing all acts
                  required to be done by the Security Trustee (including the
                  receipt and payment of money). The Security Trustee (except
                  where such agent is an affiliate or associated company of, or
                  otherwise connected with, the Security Trustee) shall not be
                  responsible for any misconduct or default on the part of any
                  person appointed by it in good faith hereunder or be bound to
                  supervise the proceedings or acts of any such persons;

         (f)      where it is necessary or desirable for any purpose in
                  connection with this Deed to convert any sum from one currency
                  to another it shall (unless otherwise provided by this Deed or
                  required by law) be converted at such rate or rates in
                  accordance with such method and as at such date for the
                  determination of such rate of exchange, as may be specified by
                  the Security Trustee in its absolute discretion but having
                  regard to current rates of exchange if available and the
                  Security Trustee shall not be liable for any loss occasioned
                  by the said conversion under this paragraph (f);


<PAGE>
                                       36


         (g)      subject to Clause 23.6 (Consent of Security Trustee), any
                  consent given by the Security Trustee for the purposes of this
                  Deed or any of the other Transaction Documents may be given on
                  such terms and subject to such conditions (if any) as the
                  Security Trustee in its absolute discretion thinks fit and,
                  notwithstanding anything to the contrary contained in this
                  Deed or any of the other Second Issuer Transaction Documents,
                  may be given retrospectively;

         (h)      the Security Trustee shall be entitled to rely (without
                  investigation or further inquiry) upon a certificate,
                  reasonably believed by it to be genuine, of the Second Issuer
                  or any other person in respect of every matter and
                  circumstance for which a certificate is expressly provided for
                  under this Deed or the other Second Issuer Transaction
                  Documents and to call for and rely upon a certificate of the
                  Second Issuer or any other person reasonably believed by it to
                  be genuine as to any other fact or matter prima facie within
                  the knowledge of the Second Issuer or such person as
                  sufficient evidence thereof and the Security Trustee shall not
                  be bound in any such case to call for further evidence or be
                  responsible for any loss, liability, costs, damages, expenses
                  or inconvenience that may be caused by it failing to do so;

         (i)      the Security Trustee shall be entitled to rely (without
                  investigation or further inquiry) upon instructions or
                  directions given to it by the Note Trustee as being given on
                  behalf of the relevant class of Second Issuer Noteholders and
                  the Security Trustee shall not be bound in any such case to
                  inquire as to the compliance with the Second Issuer Trust Deed
                  or be responsible for any loss, liability, costs, damages,
                  expenses or inconvenience that may be caused by it failing to
                  do so;

         (j)      the Security Trustee shall not be responsible for acting upon
                  any resolution purporting to have been passed at any meeting
                  of the Class A Noteholders or the Class B Noteholders or the
                  Class C Noteholders in respect whereof minutes have been made
                  and purporting to have been signed by the chairman thereof,
                  even though it may subsequently be found that there was some
                  defect in the constitution of the meeting or the passing of
                  the resolution or that for any reason the resolution was not
                  valid or binding upon the Class A Noteholders or the Class B
                  Noteholders or the Class C Noteholders;

          (k)     the Security Trustee may call for and shall be at liberty to
                  accept and place full reliance on as sufficient evidence of
                  the facts stated therein a certificate or letter of
                  confirmation certified as true and accurate and signed on
                  behalf of DTC, Euroclear, Clearstream, Luxembourg or any
                  depository or common depository for them or such person as the
                  Security Trustee considers appropriate, or any form of record
                  made by any of them to the effect that any particular time or
                  through any particular period any particular person is, was or
                  will be shown in its records as entitled to a particular
                  number of Second Issuer Notes;

         (l)      the Security Trustee shall, in connection with the exercise by
                  it of any of its trusts, duties, rights, powers, authorities
                  and discretions under this Deed and the other Second Issuer
                  Transaction Documents:

                  (i)      where it is required to have regard to the interests
                           of the Second Issuer Noteholders of any class, it
                           shall have regard to the interests of such Second
                           Issuer Noteholders as a class and, in particular but
                           without prejudice to the generality of the foregoing,
                           shall not have regard to, or be in any way liable
                           for, the consequences of any exercise thereof for
                           individual Second Issuer Noteholders resulting from
                           their being for any purpose domiciled or resident



<PAGE>
                                       37


                           in, or otherwise connected with, or subject to the
                           jurisdiction of, any particular territory or any
                           political sub-division thereof and the Security
                           Trustee shall not be entitled to require, nor shall
                           any Second Issuer Noteholder be entitled to claim,
                           from the Second Issuer, the Security Trustee or any
                           other person any indemnification or payment in
                           respect of any tax consequence of any such exercise
                           upon individual Second Issuer Noteholders; and

                  (ii)     be entitled to assume that such exercise will not be
                           materially prejudicial to the interests of the Class
                           A Noteholders if each of the Rating Agencies has
                           confirmed that the then current rating by it of the
                           Class A Notes would not be adversely affected by such
                           exercise, that such exercise will not be materially
                           prejudicial to the interests of the Class B
                           Noteholders if each of the Rating Agencies has
                           confirmed that the then current rating by it of the
                           Class B Notes would not be adversely affected by such
                           exercise and that such exercise will not be
                           materially prejudicial to the interests of the Class
                           C Noteholders if each of the Rating Agencies has
                           confirmed that the then current rating by it of the
                           Class C Notes will not be adversely affected by such
                           exercise;

         (m)      the Security Trustee shall have no responsibility for the
                  maintenance of any rating of the Second Issuer Notes by the
                  Rating Agencies or any other person;

         (n)      the Security Trustee shall not be liable for any error of
                  judgment made in good faith by any officer or employee of the
                  Security Trustee assigned by the Security Trustee to
                  administer its corporate trust matters unless it shall be
                  proved that the Security Trustee was negligent in ascertaining
                  the pertinent facts;

         (o)      no provision of this Deed or any other Document shall require
                  the Security Trustee to do anything which may be illegal or
                  contrary to applicable law or regulation or expend or risk its
                  own funds or otherwise incur any financial liability in the
                  performance of any of its duties or in the exercise of any of
                  its rights or powers or otherwise in connection with this Deed
                  or any other Second Issuer Transaction Document (including,
                  without limitation, forming any opinion or employing any
                  legal, financial or other adviser), if it shall believe that
                  repayment of such funds or adequate indemnity against such
                  risk or liability is not assured to it;

         (p)      the Security Trustee shall not (unless and to the extent
                  ordered to do so by a court of competent jurisdiction) be
                  required to disclose to any Second Issuer Secured Creditor any
                  information made available to the Security Trustee by the
                  Second Issuer in connection with the trusts of this Deed or
                  the Second Issuer Transaction Documents and no Second Issuer
                  Secured Creditor shall be entitled to take any action to
                  obtain from the Security Trustee any such information; and

         (q)      the Security Trustee may appoint and pay any person to act as
                  a custodian or nominee on any terms in relation to such assets
                  of the trust as the Security Trustee may determine, including
                  for the purpose of depositing with a custodian this Deed or
                  any documents relating to the trusts created hereunder. The
                  Security Trustee shall not be responsible for any misconduct
                  or default on the part of any person appointed by it in good
                  faith hereunder or be bound to supervise the proceedings or
                  acts of any such persons.


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                                       38


22.2     REPRESENTATIONS AND WARRANTIES, ETC.

         The Security Trustee shall not be responsible for any recitals or
         statements or warranties or representations of any party (other than
         the Security Trustee) contained herein or in any other Transaction
         Document or any other document entered into in connection therewith and
         may assume the accuracy and correctness thereof and shall not be
         responsible for the execution, legality, effectiveness, adequacy,
         genuineness, validity or enforceability or admissibility in evidence of
         any such agreement or other document or any trust or security thereby
         constituted or evidenced. The Security Trustee may accept without
         enquiry, requisition or objection such title as the Second Issuer may
         have to the Second Issuer Charged Property or any part thereof from
         time to time and shall not be required to investigate or make any
         enquiry into the title of the Second Issuer to the Second Issuer
         Charged Property or any part thereof from time to time whether or not
         any default or failure is or was known to the Security Trustee or might
         be, or might have been, discovered upon examination, inquiry or
         investigation and whether or not capable of remedy. Notwithstanding the
         generality of the foregoing, each Second Issuer Secured Creditor shall
         be solely responsible for making its own independent appraisal of and
         investigation into the financial condition, creditworthiness,
         condition, affairs, status and nature of the Second Issuer, and the
         Security Trustee shall not at any time have any responsibility for the
         same and each Second Issuer Secured Creditor shall not rely on the
         Security Trustee in respect thereof.

22.3     PERFECTION

         The Security Trustee shall not be bound to give notice to any person of
         the execution of this Deed nor shall it be liable for any failure,
         omission or defect in perfecting the security intended to be
         constituted hereby including, without prejudice to the generality of
         the foregoing:

         (a)      failure to obtain any licence, consent or other authority for
                  the execution of the same;

         (b)      failure to register the same in accordance with the provisions
                  of any of the documents of title of the Second Issuer to any
                  of the Second Issuer Charged Property; and

         (c)      failure to effect or procure registration of or otherwise
                  protect any of the Second Issuer Transaction Documents by
                  registering the same under any registration laws in any
                  territory, or by registering any notice, caution or other
                  entry prescribed by or pursuant to the provisions of the said
                  laws.

22.4     ENFORCEABILITY, ETC.

         The Security Trustee shall not be responsible for the genuineness,
         validity, suitability or effectiveness of any of the Second Issuer
         Transaction Documents or any other documents entered into in connection
         therewith or any other document or any obligations or rights created or
         purported to be created thereby or pursuant thereto or any security or
         the priority thereof constituted or purported to be constituted by or
         pursuant to this Deed or any of the Second Issuer Transaction
         Documents, nor shall it be responsible or liable to any person because
         of any invalidity of any provision of such documents or the
         unenforceability thereof, whether arising from statute, law or decision
         of any court and (without prejudice to the generality of the foregoing)
         the Security Trustee shall not have any responsibility for or have any
         duty to make any investigation in respect of or in any way be liable
         whatsoever for:

         (a)      the nature, status, creditworthiness or solvency of the Second
                  Issuer or Funding 1 or any other person or entity who has at
                  any time provided any security or support



<PAGE>
                                       39


                  whether by guarantee, charge or otherwise in respect of any
                  advance made to the Second Issuer;

         (b)      the title, ownership, value, sufficiency, enforceability or
                  existence of any Second Issuer Charged Property or any
                  security (howsoever described) relating thereto;

         (c)      the execution, legality, validity, adequacy, admissibility in
                  evidence, sufficiency or enforceability of this Deed or any
                  other Second Issuer Transaction Document comprised within the
                  Second Issuer Charged Property or any other document entered
                  into in connection therewith;

         (d)      the registration, filing, protection or perfection of any
                  security relating to this Deed or the other Transaction
                  Documents relating to the Second Issuer Charged Property or
                  the priority of the security thereby created whether in
                  respect of any initial advance or any subsequent advance or
                  any other sums or liabilities;

         (e)      the scope or accuracy of any representations, warranties or
                  statements made by or on behalf of the Second Issuer or any
                  other person or entity who has at any time provided any Second
                  Issuer Transaction Document comprised within the Second Issuer
                  Charged Property or in any document entered into in connection
                  therewith;

         (f)      the performance or observance by the Second Issuer or any
                  other person with any provisions of this Deed or any other
                  Second Issuer Transaction Document comprised within the Second
                  Issuer Charged Property or in any document entered into in
                  connection therewith or the fulfilment or satisfaction of any
                  conditions contained therein or relating thereto or as to the
                  existence or occurrence at any time of any default, event of
                  default or similar event contained therein or any waiver or
                  consent which has at any time been granted in relation to any
                  of the foregoing;

         (g)      the existence, accuracy or sufficiency of any legal or other
                  opinions, searches, reports, certificates, valuations or
                  investigations delivered or obtained or required to be
                  delivered or obtained at any time in connection with the
                  Second Issuer Charged Property;

         (h)      the title of the Second Issuer to any of the Second Issuer
                  Charged Property;

         (i)      the failure to effect or procure registration of or to give
                  notice to any person in relation to or otherwise protect the
                  security created or purported to be created by or pursuant to
                  this Deed or other documents entered into in connection
                  herewith;

         (j)      the failure to call for delivery of documents of title to or
                  require any transfers, assignments, legal mortgages, charges
                  or other further assurances in relation to any of the assets
                  the subject matter of any of this Deed or any other document;
                  or

         (k)      any other matter or thing relating to or in any way connected
                  with this Deed or the Second Issuer Charged Property or any
                  document entered into in connection therewith whether or not
                  similar to the foregoing.

22.5     NO SUPERVISION

         The Security Trustee shall be under no obligation to monitor or
         supervise the respective functions of the Second Issuer Account Bank
         under the Second Issuer Bank Account Agreement or the Second Issuer
         Cash Manager under the Second Issuer Cash Management



<PAGE>
                                       40


         Agreement or of any other person under or pursuant to any of the other
         Transaction Documents.

22.6     NO LIABILITY

         The Security Trustee shall not be liable or responsible for any loss,
         cost, damage, expense or inconvenience which may result from anything
         done or omitted to be done by it under this Deed or any of the other
         Transaction Documents.

22.7     CONCLUSIVE AND BINDING DETERMINATIONS

         The Security Trustee as between itself and the Second Issuer Secured
         Creditors shall have full power to determine all questions and doubts
         arising in relation to any of the provisions of this Deed and the other
         Second Issuer Transaction Documents and every such determination,
         whether made upon a question actually raised or implied in the acts or
         proceedings of the Security Trustee, shall be conclusive and shall bind
         the Security Trustee and the Second Issuer Secured Creditors.

22.8     USE OF PROCEEDS

         The Security Trustee shall not be responsible for the receipt or
         application by the Second Issuer of the proceeds of the issue of the
         Second Issuer Notes.

22.9     MATERIAL PREJUDICE

         The Security Trustee may determine whether or not any event, matter or
         thing is, in its opinion, materially prejudicial to the interests of
         the Second Issuer Secured Creditors and if the Security Trustee shall
         certify that any such event, matter or thing is, in its opinion,
         materially prejudicial, such certificate shall be conclusive and
         binding upon the Second Issuer Secured Creditors.

22.10    NO INDEMNITY

         None of the provisions of this Deed shall, in any case in which the
         Security Trustee has failed to show the degree of care and diligence
         required of it as security trustee of this Deed, having regard to the
         provisions of this Deed and any of the other Second Issuer Transaction
         Documents to which the Security Trustee is a party conferring on the
         Security Trustee any powers, authorities or discretions, relieve or
         indemnify the Security Trustee against any liabilities which by virtue
         of any rule of law would otherwise attach to it in respect of any
         negligence, default, breach of duty or breach of trust of which it may
         be guilty in relation to its duties under this Deed.

23.      SUPPLEMENTAL PROVISIONS REGARDING THE SECURITY TRUSTEE

23.1     ASSUMPTION OF NO DEFAULT

         Except as herein otherwise expressly provided, the Security Trustee
         shall be and is hereby authorised to assume without enquiry, and it is
         hereby declared to be the intention of the Security Trustee that it
         shall assume without enquiry, that the Second Issuer and each of the
         other parties thereto is duly performing and observing all the
         covenants and provisions contained in this Deed and the other
         Transaction Documents to be performed and observed on their parts and
         that no event has occurred which constitutes a Second Issuer Note Event
         of Default or a Potential Second Issuer Note Event of Default or which
         would cause a right or



<PAGE>
                                       41


         remedy to become exercisable, whether by Funding 1, the Second Issuer
         or the Security Trustee, under or in respect of any of the Transaction
         Documents.

23.2     DELEGATION

         The Security Trustee may, in the execution of all or any of the trusts,
         powers, authorities and discretions vested in it by this Deed or any of
         the other Second Issuer Transaction Documents, act by responsible
         officers or a responsible officer for the time being of the Security
         Trustee. The Security Trustee may also, whenever it thinks expedient in
         the interests of the Second Issuer Secured Creditors, whether by power
         of attorney or otherwise, delegate to any person or persons all or any
         of the trusts, rights, powers, duties, authorities and discretions
         vested in it by this Deed or any of the other Second Issuer Transaction
         Documents. Any such delegation may be made upon such terms and
         conditions and subject to such regulations (including power to
         sub-delegate) as the Security Trustee may think fit in the interests of
         the Second Issuer Secured Creditors or any of them and, provided that
         the Security Trustee shall have exercised reasonable care in the
         selection of such delegate and, where a power to sub-delegate has been
         given, has obliged the delegate to exercise reasonable care in the
         selection of any sub-delegate, the Security Trustee shall not be bound
         to supervise the proceedings of, or be responsible for any loss
         incurred by any misconduct or default on the part of, such delegate or
         sub-delegate. The Security Trustee shall give prompt notice to the
         Second Issuer of the appointment of any delegate as aforesaid and shall
         procure that any delegate shall also give prompt notice of the
         appointment of any sub-delegate to the Second Issuer.

23.3     COMMERCIAL TRANSACTIONS

         The Security Trustee shall not, and no director, officer or employee of
         any corporation being a trustee hereof shall, by reason of the
         fiduciary position of the Security Trustee, be in any way precluded
         from making any contracts or entering into any transactions in the
         ordinary course of business with the Second Issuer, Funding 1 or
         Holdings or any other subsidiary of Holdings or any other party to the
         Second Issuer Transaction Documents or any other party to any of the
         Second Issuer Transaction Documents or from accepting the trusteeship
         of any stock, shares, debenture stock, debentures or securities of any
         such person. Without prejudice to the generality of the foregoing, it
         is expressly declared that such contracts and transactions include any
         contract or transaction in relation to the placing, underwriting,
         purchasing, subscribing for or dealing with or lending money upon or
         making payments in respect of any stock, shares, debenture stock,
         debentures or other securities of the Second Issuer, Funding 1 or
         Holdings or any other subsidiary of Holdings or any other party to the
         Second Issuer Transaction Documents or any contract of banking or
         insurance with the Second Issuer, Funding 1 or Holdings or any other
         subsidiary of Holdings or any other party to the Transaction Documents.
         Neither the Security Trustee nor any such director or officer of the
         Security Trustee shall be accountable to any of the Second Issuer
         Secured Creditors or the Second Issuer, Funding 1 or Holdings for any
         profit, fees, commissions, interest, discounts or share of brokerage
         earned, arising or resulting from any such contracts or transactions.
         The Security Trustee and any such director, officer or employee shall
         be at liberty to retain the same for its or his own benefit.

23.4     ADDITIONAL POWERS

         The powers conferred by this Deed upon the Security Trustee shall be in
         addition to any powers which may from time to time be vested in it by
         general law.


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                                       42


23.5     DUTIES AND RESPONSIBILITIES OF SECURITY TRUSTEE

         The Security Trustee has no duties or responsibilities except those
         expressly set out in this Deed or in the Transaction Documents.

23.6     CONSENT OF SECURITY TRUSTEE

         If a request in writing is made to the Security Trustee by the Second
         Issuer or any other person to give its consent to any event, matter or
         thing, then:

         (a)      if the Second Issuer Transaction Document specifies that the
                  Security Trustee is required to give its consent to that
                  event, matter or thing if certain specified conditions are
                  satisfied in relation to that event, matter or thing, then the
                  Security Trustee shall give its consent to that event, matter
                  or thing upon being satisfied acting reasonably that those
                  specified conditions have been satisfied; and

         (b)      in any other case, the Security Trustee may give its consent
                  if to do so would not, in its opinion, be materially
                  prejudicial to the interests of the Second Issuer Secured
                  Creditors.

23.7     INTERESTS OF SECOND ISSUER SECURED CREDITORS

         Where the Security Trustee is required to have regard to the interests
         of any Second Issuer Secured Creditor (other than the Second Issuer
         Noteholders), the Security Trustee may consult with such Second Issuer
         Secured Creditor and may rely on the opinion of such Second Issuer
         Secured Creditor as to whether any act, matter or thing is or is not in
         the interests of, or materially prejudicial to the interests of, such
         Second Issuer Secured Creditor.

23.8     MODIFICATION TO TRANSACTION DOCUMENTS

(a)      Without prejudice to Clause 23.6 (Consent of Security Trustee), the
         Security Trustee may from time to time and at any time without any
         consent or sanction of the Second Issuer Secured Creditors concur with
         any person in making or sanctioning any modification:

         (i)      to any of the Transaction Documents which in the opinion of
                  the Security Trustee it may be expedient to make, provided
                  that the Security Trustee is of the opinion, acting
                  reasonably, that such modification will not be materially
                  prejudicial to the interests of the Second Issuer Secured
                  Creditors or, if it is not of that opinion in relation to any
                  Second Issuer Secured Creditor, such Second Issuer Secured
                  Creditor has given its written consent to such modification;
                  or

         (ii)     to any of the Transaction Documents which in the Security
                  Trustee's opinion is made to correct a manifest error or is of
                  a formal, minor or technical nature.

(b)      Without prejudice to Clause 23.6 (Consent of Security Trustee) and
         subject to paragraph (c) below, the Security Trustee shall be required
         to give its consent to any modifications to the Mortgage Sale
         Agreement, the Servicing Agreement, the Cash Management Agreement, the
         Funding 1 Deed of Charge, the Funding 1 Liquidity Facility Agreement,
         the Funding 1 Swap Agreement, the Intercompany Loan Terms and
         Conditions, the Bank Account Agreement and the Master Definitions and
         Construction Schedule that are requested by Funding 1 or the Cash
         Manager, provided that (i) the Funding 1 Liquidity Facility Provider,
         the Funding 1 Swap Provider and each of the Second Issuer Swap
         Providers provide written confirmation to the Security Trustee
         consenting to such modification of any and all of those documents
         listed



<PAGE>
                                       43


         under this paragraph (b) to which they are, respectively, a party (such
         consent not to be unreasonably withheld) and in any event such consent
         shall be deemed to be given by each of the Funding 1 Liquidity Facility
         Provider, the Funding 1 Swap Provider and each Second Issuer Swap
         Provider (as the case may be) if no written response is received by the
         Security Trustee from each party, respectively, by the tenth Business
         Day after the Security Trustee's request for such consent and (ii)
         Funding 1 or the Cash Manager, as the case may be, has certified to the
         Security Trustee in writing that such modifications are required in
         order to accommodate:

         (i)      the entry by Funding 1 into New Intercompany Loan Agreements
                  and/or the addition of other relevant creditors to the
                  Transaction Documents;

         (ii)     the issue of new types of notes by New Issuers;

         (iii)    the inclusion of Funding 2 as a beneficiary of the Mortgages
                  Trust;

         (iv)     the issue of new notes by Funding 2;

         (v)      the assignment of New Loan Types to the Mortgages Trustee;

         (vi)     changes to be made to the Reserve Fund Required Amount and/or
                  the manner in which the Reserve Fund is funded;

         (vii)    changes to be made to the definitions of Asset Trigger Event
                  and Non-Asset Trigger Event; and

         (viii)   the addition of an Additional Funding 1 Liquidity Facility
                  pursuant to the terms of the Funding 1 Deed of Charge.

(c)      The Security Trustee shall only be required to give its consent to the
         modifications set out in paragraph (b) above if the Security Trustee is
         satisfied that:

         (i)      in respect of the matters set out in paragraphs (b)(i) to
                  (b)(iv) inclusive, the relevant conditions precedent to, as
                  applicable, the addition of New Issuers (as set out in Clause
                  2.2 of the Intercompany Loan Terms and Conditions), the
                  inclusion of Funding 2 as a beneficiary of the Mortgages Trust
                  (as set out in Clause 13 of the Mortgages Trust Deed) and the
                  assignment of New Loans to the Mortgages Trustee (as set out
                  in Clause 4 of the Mortgage Sale Agreement), have been
                  satisfied; and

         (ii)     in respect of the matters set out in paragraphs (b)(i) to
                  (b)(vii) inclusive, the Security Trustee has received written
                  confirmation from each of the Rating Agencies that the
                  relevant modifications will not adversely affect the then
                  current ratings of the Notes.

(d)      Each Second Issuer Secured Creditor hereby acknowledges that the
         Security Trustee is required to make the modifications set out in
         paragraph (b) above (subject to paragraph (c)), and each Second Issuer
         Secured Creditor further acknowledges that such modifications may
         adversely affect the manner in which the Mortgages Trustee allocates
         monies to Funding 1 and/or the manner in which Funding 1 pays monies to
         the Second Issuer and/or the amount of monies available to the Second
         Issuer to meet the Second Issuer Secured Obligations. Each Second
         Issuer Secured Creditor agrees that such modifications shall be binding
         on it and unless the Security Trustee otherwise agrees, notice thereof
         shall be given by the Second


<PAGE>
                                       44


         Issuer Cash Manager to the Second Issuer Secured Creditors as soon as
         practicable after the modifications have been made.

(e)      Each of the Second Issuer Secured Creditors agrees from time to time to
         do and perform such other and further acts and execute and deliver any
         and all such other documents and instruments as may be required by law
         or requested by the other party at the other party's expense to
         establish, maintain and protect the rights and remedies of the other
         party and carry out and effect the intent and purpose of this Clause
         23.8.

23.9     AUTHORISATION OR WAIVER OF BREACH

         The Security Trustee may, without the consent of the Second Issuer
         Secured Creditors and without prejudice to its right in respect of any
         further or other breach, from time to time and at any time, but only if
         and in so far as in its opinion acting reasonably the interests of the
         Second Issuer Secured Creditors will not be materially prejudiced
         thereby authorise or waive, on such terms and conditions (if any) as
         shall seem expedient to it, any proposed or actual breach of any of the
         covenants or provisions contained in or arising pursuant to any of the
         Transaction Documents. Any such authorisation or waiver shall be
         binding on the Second Issuer Secured Creditors and, unless the Security
         Trustee otherwise agrees, notice thereof shall be given by the Second
         Issuer Cash Manager to the Second Issuer Secured Creditors as soon as
         practicable thereafter.

23.10    INCORPORATION BY REFERENCE

         The provisions of Schedule 4 to the Second Issuer Trust Deed shall be
         deemed to be incorporated in this Deed but as if references therein to
         the Note Trustee were to the Security Trustee.

24.      REMUNERATION AND INDEMNIFICATION OF THE SECURITY TRUSTEE

24.1     REMUNERATION

(a)      The Second Issuer shall (subject as hereinafter provided) pay to the
         Security Trustee annually a fee of such amount and payable on such
         dates as shall from time to time be agreed in writing by the Second
         Issuer and the Security Trustee, provided that if and for so long as
         the Note Trustee and the Security Trustee are the same person, no such
         fee shall be payable under this Deed. All such remuneration shall be
         payable in accordance with the Second Issuer Pre-Enforcement Revenue
         Priority of Payments or, as the case may be, the Second Issuer
         Post-Enforcement Priority of Payments. Such remuneration shall accrue
         from day to day and shall be payable up to and including the date when
         all of the Second Issuer Secured Obligations have been paid or
         discharged and the Security Trustee has released, reassigned and/or
         discharged the Second Issuer Charged Property as provided in Clause 4.1
         (Prior to Payment or Discharge of Second Issuer Secured Obligations).

(b)      The Second Issuer shall in addition pay to the Security Trustee an
         amount equal to the amount of any VAT chargeable in respect of its
         remuneration hereunder subject to the Security Trustee issuing to the
         Second Issuer a proper VAT invoice in respect thereof.

24.2     ADDITIONAL REMUNERATION

         In the event of a Second Issuer Note Event of Default or Potential
         Second Issuer Note Event of Default occurring or in the event of the
         Security Trustee finding it expedient or necessary or being required to
         undertake any duties which the Security Trustee and the Second Issuer




<PAGE>
                                       45


         agree to be of an exceptional nature or otherwise outside the scope of
         the normal duties of the Security Trustee under this Deed, the Second
         Issuer shall pay to the Security Trustee such additional remuneration
         as shall be agreed between the Security Trustee and the Second Issuer.

24.3     DISPUTES

         In the event of the Security Trustee and the Second Issuer failing to
         agree upon the amount of any remuneration from time to time pursuant to
         Clause 24.1 (Remuneration) or to agree in a case to which Clause 24.2
         (Additional Remuneration) above applies, upon whether such duties are
         of an exceptional nature or otherwise outside the scope of the normal
         duties of the Security Trustee hereunder or upon the amount of such
         additional remuneration, such matters shall be determined by an
         investment bank (acting as an expert and not as an arbitrator) selected
         by the Security Trustee and approved by the Second Issuer or, failing
         such approval, nominated by the President for the time being of the Law
         Society of England and Wales, the expenses being involved in such
         nomination and the fees of such investment bank being payable by the
         Second Issuer, and the decision of any such investment bank shall be
         final and binding on the Second Issuer and the Security Trustee.

24.4     EXPENSES

         In addition to remuneration hereunder, the Second Issuer shall on
         written request, pay (on the basis of a full indemnity) all other
         costs, charges and expenses which the Security Trustee may properly
         incur in relation to the negotiation, preparation and execution of, the
         exercise of its powers and the performance of its duties under, and in
         any other manner in relation to, this Deed, the Second Issuer Security
         and any of the other Second Issuer Transaction Documents to which the
         Security Trustee is a party including but not limited to travelling and
         legal expenses and any stamp, issue, registration, documentary and
         other Taxes or duties paid or payable by the Security Trustee in
         connection with any action taken or contemplated by or on behalf of the
         Security Trustee for enforcing, or resolving any doubt concerning, or
         for any other purpose in relation to, this Deed or any of the other
         Transaction Documents.

24.5     INDEMNITY

         Without prejudice to the right of indemnity by law given to trustees,
         the Second Issuer shall indemnify the Security Trustee, on an after Tax
         basis, in respect of all proceedings (including claims and liabilities
         in respect of taxes other than on its own overall net income), claims
         and demands and all costs, charges, expenses (including, without
         prejudice to the generality of the foregoing, legal and travelling
         expenses), and liabilities to which it (or any person appointed by it
         to whom any trust, power, authority or discretion may be delegated by
         it in the execution or purported execution of the trusts, powers,
         authorities or discretions vested in it by or pursuant to this Deed and
         any of the other Second Issuer Transaction Documents to which the
         Security Trustee is a party) may be or become liable or which may be
         properly incurred by it (or any such person as aforesaid) in the
         execution or purported execution of any of its trusts, powers,
         authorities and discretions hereunder or its functions under any such
         appointment or in respect of any other matter or thing done or omitted
         in any way relating to this Deed and any of the other Second Issuer
         Transaction Documents to which the Security Trustee is a party, or any
         such appointment and the Security Trustee shall be entitled to be
         indemnified out of the Second Issuer Charged Property in respect
         thereof save where the same arises as the result of the fraud,
         negligence or wilful default of the Security Trustee or its officers or
         employees. The Security Trustee shall not be entitled to be indemnified
         twice in respect of the same matter pursuant to this Clause and the
         indemnity contained in Clause 12.2 (Indemnity) of this Deed.


<PAGE>
                                       46


24.6     SURVIVAL

         Unless otherwise specifically stated in any discharge of this Deed, the
         provisions of this Clause 24 shall continue in full force and effect
         notwithstanding such discharge.

25.      APPOINTMENT OF NEW SECURITY TRUSTEE AND REMOVAL OF SECURITY TRUSTEE

25.1     POWER OF SECOND ISSUER

(a)      The power of appointing a new Security Trustee and removing the
         Security Trustee or any new Security Trustee shall be vested in the
         Second Issuer, provided that such appointment or removal must be
         approved by (i) an Extraordinary Resolution of the Class A Noteholders,
         the Class B Noteholders and the Class C Noteholders and (ii) in writing
         by each Second Issuer Secured Creditor (such approval not to be
         reasonably withheld or delayed). Any appointment of a new Security
         Trustee and any retirement or removal of an existing Security Trustee
         hereof shall as soon as practicable thereafter be notified by the
         Second Issuer to the Second Issuer Secured Creditors.

(b)      Any new Security Trustee must (i) meet the requirements of section
         26(a)(1) of the US Investment Company Act of 1940; (ii) not be an
         affiliate (as defined in Rule 405 of the US Securities Act of 1933, as
         amended) of the Second Issuer or of any person involved in the
         organisation or operation of the Second Issuer; (iii) not offer or
         provide credit or credit enhancement to the Second Issuer; and (iv)
         execute an agreement or instrument concerning the Second Issuer Notes
         containing provisions to the effect set forth in section 26(a)(3) of
         the US Investment Company Act of 1940.

25.2     POWER OF SECURITY TRUSTEE

         Notwithstanding the provisions of Clause 25.1 (Power of Second Issuer),
         the Security Trustee may (as attorney for the Second Issuer) upon
         giving prior written notice to the Second Issuer but without the
         consent of the Second Issuer or the Second Issuer Secured Creditors
         appoint any person established or resident in any jurisdiction (whether
         a trust corporation or not) to act either as a separate security
         trustee or as a co-trustee jointly with the Security Trustee:

         (a)      if the Security Trustee considers such appointment to be in
                  the interests of the Second Issuer Secured Creditors (or any
                  of them);

         (b)      for the purposes of conforming to any legal requirement,
                  restrictions or conditions in any jurisdiction in which any
                  particular act or acts are to be performed or any Second
                  Issuer Charged Property is or is to be located; or

         (c)      for the purposes of obtaining a judgment in any jurisdiction
                  or the enforcement in any jurisdiction of either a judgment
                  already obtained or any of the provisions of this Deed or any
                  of the other Transaction Documents to which the Security
                  Trustee is a party or obligations arising pursuant thereto or
                  any of the security constituted by or pursuant to this Deed.

         The Second Issuer hereby irrevocably appoints the Security Trustee to
         be its attorney in its name and on its behalf to execute any such
         instrument of appointment. Such a person shall (subject always to the
         provisions of this Deed or any of the other Transaction Documents to
         which the Security Trustee is a party) have such trusts, powers,
         authorities and discretions (not exceeding those conferred on the
         Security Trustee by this Deed or any of the other


<PAGE>
                                       47


         Transaction Documents to which the Security Trustee is a party) and
         such duties and obligations as shall be conferred or imposed on it by
         the instrument of appointment. The Security Trustee shall have power in
         like manner to remove any such person. Such proper remuneration as the
         Security Trustee may pay to any such person, together with any
         attributable costs, charges and expenses incurred by it in performing
         its function as such separate trustee or co-trustee, shall for the
         purposes of this Deed be treated as costs, charges and expenses
         incurred by the Security Trustee.

25.3     MULTIPLE TRUSTEES

         Whenever there shall be more than two security trustees hereof, the
         majority of such security trustees shall be competent to execute and
         exercise all the trusts, powers, authorities and discretions vested by
         this Deed and any of the other Transaction Documents in the Security
         Trustee generally.

26.      RETIREMENT OF SECURITY TRUSTEE

         Any security trustee for the time being of this Deed may retire at any
         time upon giving not less than three calendar months' prior notice in
         writing to the Second Issuer without assigning any reason therefor and
         without being responsible for any costs resulting from such retirement.
         Provided, however, that the retirement or removal of any security
         trustee shall not become effective unless there remains at least one
         security trustee hereof in office upon such retirement or removal. The
         Second Issuer covenants that, in the event of a security trustee (being
         a sole security trustee) giving notice under this Clause or being
         removed as referred to in Clause 25.1 (Power of Second Issuer), it
         shall use its best endeavours to procure a new security trustee of this
         Deed to be appointed as soon as reasonably practicable thereafter. If
         within 60 days of having given notice of its intention to retire, the
         Second Issuer has failed to appoint a replacement Security Trustee, the
         outgoing Security Trustee will be entitled to appoint its successor
         (provided that such successor is acceptable to the Rating Agencies and
         will agree to the terms of this Deed) and that the Rating Agencies
         confirm in writing that the current ratings of the Notes shall not be
         either downgraded, reviewed or withdrawn as a result of such
         appointment).

27.      TRUST INDENTURE ACT PREVAILS

         If any provision of this Deed limits, qualifies or conflicts with
         another provision which is required to be included in this Deed by, and
         is not subject to a contractual waiver under, the U.S. Trust Indenture
         Act of 1939, as amended, the required provision of that act shall
         prevail.

28.      NOTICES AND DEMANDS

28.1     SERVICE OF NOTICES

         Any notices to be given pursuant to this Deed to any of the parties
         hereto shall be in writing and shall be sufficiently served if sent to
         the addresses given in Clause 28.2 (Addresses) by prepaid first class
         post, by hand or facsimile transmission and shall be deemed to be given
         (in the case of facsimile transmission) when despatched, (where
         delivered by hand) on the day of delivery if delivered before 17.00
         hours on a Business Day or on the next Business Day if delivered
         thereafter or on a day which is not a Business Day or (in the case of
         first class post) when it would be received in the ordinary course of
         the post.


<PAGE>
                                       48


28.2     ADDRESSES

         The addresses referred to in this Clause 28.2 are as follows:

         (a)      in the case of the Second Issuer, to Permanent Financing (No.
                  2) PLC at Blackwell House, Guildhall Yard, London EC2V 5AE
                  (facsimile number +44 (0) 20 7556 0975) for the attention of
                  the Directors with a copy to Halifax plc at the address and
                  facsimile number set out in paragraph (d) below;

         (b)      in the case of the Security Trustee and the Note Trustee, to
                  U.S. Bank National Association, 1 Federal Street, 3rd Floor,
                  Boston, Massachusetts, 02110 (facsimile number + 1 (617) 603
                  6638) for the attention of Corporate Trust Services;

         (c)      in the case of the Principal Paying Agent, the Agent Bank, the
                  Registrar and the Transfer Agent, to Citibank, N.A., London
                  Branch, 5 Carmelite Street, London EC4Y 0PA (facsimile number
                  +44 (0) 20 7508 3878) for the attention of Agency and Trust;

         (d)      in the case of the Second Issuer Cash Manager, to Halifax plc
                  at Trinity Road, Halifax, West Yorkshire HX1 2RG (facsimile
                  number +44 (0) 1422 391 777) for the attention of Mortgage
                  Securitisation Manager with a copy to HBOS Treasury Services
                  plc, 33 Old Broad Street, London EC2N 1HZ (facsimile number
                  +44 (0) 20 7574 8784) for the attention of the Head of Capital
                  Markets and Securitisation;

         (e)      in the case of the Second Issuer Account Bank, to Bank of
                  Scotland plc, Leeds Business Centre, 116 Wellington Street,
                  Leeds, LS1 4LT (facsimile number +44 (0) 1132 155804) for the
                  attention of the Associate Director with copies to: Bank of
                  Scotland plc, c/o Halifax plc, Bradford Business Centre, 28
                  Bank Street, Bradford BD1 1PT (facsimile number +44 (0) 1274
                  725290 for the attention of the Associate Director; Halifax
                  plc, Trinity Road, Halifax, West Yorkshire HX1 2RG (facsimile
                  number +44 (0) 1422 391777) for the attention of Mortgage
                  Securitisation Manager; and HBOS Treasury Services plc, 33 Old
                  Broad Street, London EC2N 1HZ (facsimile number +44 (0) 20)
                  7574 8784) for the attention of Head of Capital Markets and
                  Securitisation;

         (f)      in the case of the US Paying Agent, to Citibank, N.A., New
                  York Branch, 14th Floor, Zone 3, 111 Wall Street, New York,
                  New York 10043 for the attention of Agency and Trust
                  (facsimile number +1 (212) 657 3862);

         (g)      in the case of the Series 1 Second Issuer Swap Providers, to
                  CDC IXIS Capital Markets, o (facsimile number o) for the
                  attention of o;

         (h)      in the case of the Series 2 Second Issuer Swap Providers, to
                  JPMorgan Chase Bank, 125 London Wall, London EC2Y 5AJ,
                  (facsimile number +44 (0) 20 7777 4758) for the attention of
                  Head of Legal Department - FX and Derivatives Group;

         (i)      in the case of the Series 3 Second Issuer Swap Providers, to
                  CDC IXIS Capital Markets, o (facsimile number o) for the
                  attention of o;

         (j)      in the case of the Series 4 Second Issuer Swap Providers, to
                  Banque AIG, 46, rue de Bassano (facsimile number +33 149 52
                  3600) for the attention of Swaps Administration, with a copy
                  to AIG Financial Products Corp., 50 Danbury Road,


<PAGE>
                                       49


                  Wilton, CT 06897-4444, USA (facsimile no +1 203 222 4780) for
                  the attention of Chief Financial Officer (with a copy to
                  General Counsel);

         (k)      in the case of the Corporate Services Provider, to Structured
                  Finance Management Limited, Blackwell House, Guildhall Yard,
                  London EC2V 5AE (facsimile number +44 (0) 20 7556 0975) for
                  the attention of the Directors;

         (l)      in the case of Fitch Ratings, to Fitch Ratings Limited, Eldon
                  House, 2 Eldon Street, London EC2M 7UA (facsimile number +44
                  (0) 20 7417 6262) for the attention of European Structured
                  Finance;

         (m)      in the case of Moody's, to Moody's Investor Services, 2
                  Minster Court, Mincing Lane, London EC3R 7XB (facsimile number
                  +44 (0) 20 7772 5400) for the attention of Asset Backed
                  Finance; and

         (n)      in the case of S&P, to Standard & Poor's, Garden House, 18
                  Finsbury Circus, London EC2M 7BP (facsimile number +44 (0) 20
                  7826 3598) for the attention of the Structured Finance
                  Surveillance Group,

         or to such other address or facsimile number or for the attention of
         such other person or entity as may from time to time be notified by any
         party to the others by written notice in accordance with the provisions
         of this Clause 28.

29.      FURTHER PROVISIONS

29.1     EVIDENCE OF INDEBTEDNESS

         In any action, proceedings or claim relating to this Deed or the
         charges contained in this Deed, a statement as to any amount due to any
         Second Issuer Secured Creditor or of the Second Issuer Secured
         Obligations or any part thereof or a statement of any amounts which
         have been notified to the Security Trustee as being amounts due to any
         Second Issuer Secured Creditor which is certified as being correct by
         an officer of the Security Trustee or an officer of the relevant Second
         Issuer Secured Creditor shall, save in the case of manifest error, be
         conclusive evidence that such amount is in fact due and payable.

29.2     RIGHTS CUMULATIVE, WAIVERS

         The respective rights of the Security Trustee, the Second Issuer
         Secured Creditors and any Receiver are cumulative, and may be exercised
         as often as they consider appropriate and are in addition to their
         respective rights under the general law. The respective rights of the
         Security Trustee, the Second Issuer Secured Creditors and any Receiver
         in relation to this Deed (whether arising under this Deed or under the
         general law) shall not be capable of being waived or varied otherwise
         than by express waiver or variation in writing; and, in particular, any
         failure to exercise or any delay in exercising any such rights shall
         not operate as a variation or waiver of that or any other such right;
         any defective or partial exercise of such rights shall not preclude any
         other or further exercise of that or any other such right; and no act
         or course of conduct or negotiation on their part or on their behalf
         shall in any way preclude them from exercising any such right or
         constitute a suspension or any variation of any such right.

<PAGE>
                                       50


29.3     INVALIDITY OF ANY PROVISION

         If any of the provisions of this Deed become invalid, illegal or
         unenforceable in any respect under any law, the validity, legality and
         enforceability of the remaining provisions shall not in any way be
         affected or impaired.

29.4     SEVERABILITY

         Any provision of this Deed which is prohibited or unenforceable in any
         jurisdiction shall, as to such jurisdiction, be ineffective to the
         extent of such prohibition or unenforceability without invalidating the
         remaining provisions hereof, and any such prohibition or
         unenforceability in any jurisdiction shall not invalidate or render
         unenforceable such provision in any other jurisdiction. To the extent
         permitted by applicable law, the Second Issuer hereby waives any
         provision of law but only to the extent permitted by law which renders
         any provision of this Deed prohibited or unenforceable in any respect.

29.5     COUNTERPARTS

         This Deed may be executed in any number of counterparts each of which,
         when executed and delivered, shall constitute an original, but all the
         counterparts shall together constitute but one and the same instrument
         provided, however, that this Deed shall have no force or effect until
         it is executed by the last party to execute the same and shall be
         deemed to have been executed and delivered in the place where such last
         party executed this Deed.

29.6     NEW INTERCOMPANY LOAN AGREEMENTS

         If Funding 1 enters into a New Intercompany Loan Agreement, then the
         parties hereto shall execute such documents and take such action as may
         be necessary or required by the Security Trustee for the purpose of
         including the New Issuer, any New Funding 1 Swap Provider, any New
         Start-Up Loan Provider or any other person who has executed an
         Accession Undertaking or any New Term Advance in the Transaction
         Documents.

29.7     VARIATION

         No variation of any provision(s) of this Deed shall be effective unless
         it is in writing and signed by (or by a person duly authorised by) each
         of the parties hereto.

29.8     EXCLUSION OF THIRD PARTY RIGHTS

         The parties to this Deed do not intend that any term of this Deed
         should be enforced, by virtue of the Contracts (Rights of Third
         Parties) Act 1999, by any person who is not a party to this Deed.

30.      CHOICE OF LAW

30.1     GOVERNING LAW

         This Deed is governed by, and shall be construed in accordance with
         English law.

30.2     SUBMISSION TO JURISDICTION

         Each party to this Deed hereby irrevocably submits to the non-exclusive
         jurisdiction of the English courts in any action or proceeding arising
         out of or relating to this Deed, and hereby


<PAGE>
                                       51


         irrevocably agrees that all claims in respect of such action or
         proceeding may be heard and determined by such courts. Each party to
         this Deed hereby irrevocably waives, to the fullest extent it may
         possibly do so, any defence or claim that the English courts are an
         inconvenient forum for the maintenance or hearing of such action or
         proceeding.

30.3     AGENT FOR PROCESS

         The US Paying Agent shall at all times maintain an agent for service of
         process of any other documents in proceedings in England or any
         proceedings in connection with this Deed. Such agent shall be the
         Principal Paying Agent having its office at 5 Carmelite Street, London
         EC4Y 0PA (and by execution of this Deed, the Principal Paying Agent
         hereby accepts such appointment). Any writ judgment or other notice of
         legal process shall be sufficiently served on the Second Issuer if
         delivered to such agent at its address for the time being. The US
         Paying Agent undertakes not to revoke the authority of the above agent
         and if, for any reason, the Security Trustee requests the US Paying
         Agent to do so, it shall promptly appoint another such agent with an
         address in England and advise the Note Trustee, the Second Issuer Swap
         Providers, the Corporate Services Provider and the Security Trustee
         thereof. If following such a request the US Paying Agent fails to
         appoint another agent the Security Trustee shall be entitled to appoint
         one on their behalf.

         The US Paying Agent agrees that failure by a process agent to notify
         the US Paying Agent of the process will not invalidate the proceedings
         concerned.

IN WITNESS WHEREOF the parties hereto have caused this Deed to be duly executed
and delivered as a deed the day and year first before written.

THE SECOND ISSUER

EXECUTED as a DEED                                   )
by PERMANENT FINANCING (NO. 2) PLC                   )
acting by [director])
and [director/secretary]                             )



The Security Trustee

EXECUTED as a DEED by
U.S. BANK NATIONAL ASSOCIATION                       )
in its capacity as Security Trustee                  )
acting by its authorised signatory                   )


Authorised Signatory:


The Note Trustee

<PAGE>
                                       52



EXECUTED as a DEED by
U.S. BANK NATIONAL ASSOCIATION                       )
in its capacity as Note Trustee                      )
acting by its authorised signatory                   )

Authorised Signatory:



AGENT BANK, PRINCIPAL PAYING AGENT, REGISTRAR AND TRANSFER AGENT

EXECUTED as a DEED on behalf of
CITIBANK, N.A., a company incorporated in            )
the United States of America,                        )
in its capacities as Agent Bank, Principal           )
Paying Agent, Registrar and Transfer Agent,          )
by                                                   )

being a person who, in accordance with the laws
of that territory, is acting under the authority
of the company




Second Issuer Cash Manager

EXECUTED as a DEED by                                  )
HALIFAX plc                                            )
in its capacity as Second Issuer Cash Manager          )
acting by its attorney                                 )
in the presence of                                     )

Witness's Signature:

Name:

Address:


<PAGE>
                                       53


Second Issuer Account Bank

EXECUTED as a DEED by                                  )
THE GOVERNOR AND COMPANY OF                            )
THE BANK OF SCOTLAND                                   )
in its capacity as Account Bank                        )
acting by two directors/a director                     )

and the secretary                                      )

Director

Director/Secretary



U.S. Paying Agent

EXECUTED as a DEED by
CITIBANK, N.A., NEW YORK BRANCH                      )
a company incorporated in                            )
the United States of America,                        )
in its capacity as U.S. Paying Agent                 )

by                                                   )

being a person who, in accordance with the laws
of that territory, is acting under the authority
of the company

Series 1 Second Issuer Swap Provider

EXECUTED as a DEED by
CDC IXIS CAPITAL MARKETS                                  )
in its capacity as Series 1 Second Issuer                 )
Currency Swap Provider                                    )
acting by its attorney                                    )
in the presence of:                                       )


Witness's Signature:

Name:

Address:


<PAGE>
                                       54


Series 2 Second Issuer Swap Provider

EXECUTED as a DEED by
JPMORGAN CHASE BANK in its capacity                       )
as Series 2 Second Issuer                                 )
Swap Provider                                             )
acting by its attorney                                    )
in the presence of:                                       )


Witness's Signature:

Name:

Address:



Series 3 Second Issuer Swap Provider

EXECUTED as a DEED by
CDC IXIS CAPITAL MARKETS in its capacity                  )
as Series 3 Second Issuer Swap Provider                   )
acting by its attorney                                    )
in the presence of:                                       )


Witness's Signature:

Name:

Address:


Series 4 Second Issuer Swap Provider

EXECUTED as a DEED by
BANQUE AIG                                             )
in its capacity as                                     )
Series 4 Second Issuer Swap Provider                   )
acting by its attorney                                 )
in the presence of:                                    )


Witness's Signature:

Name:

Address:



<PAGE>
                                       55

Corporate Services Provider

EXECUTED as a DEED by                                )
STRUCTURED FINANCE                                   )
MANAGEMENT LIMITED                                   )
in its capacity as                                   )
Corporate Services Provider                          )
acting by two directors/                             )
a director and the secretary                         )





<PAGE>
                                       56



                                   SCHEDULE 1

                                Power of Attorney

THIS POWER OF ATTORNEY is made on [6th March], 2003 by PERMANENT FINANCING (NO.
2) PLC (registered number 4623188) whose registered office is Blackwell House,
Guildhall Yard, London EC2V 5AE (the "Principal").

WHEREAS

(1)      By virtue of a deed of charge (the "Second Issuer Deed of Charge")
         dated [6th March], 2003 between, inter alia, the Principal, the
         Security Trustee, the Note Trustee, the Agent Bank, the Principal
         Paying Agent, the Registrar, the Transfer Agent, the Second Issuer Cash
         Manager, the Second Issuer Account Bank, the Corporate Services
         Provider and the Second Issuer Swap Providers (each as referred to
         therein) provision was made for the execution by the Principal of this
         Power of Attorney.

(2)      Words and phrases in this Power of Attorney shall (save where expressed
         to the contrary) have the same meanings respectively as the words and
         phrases in the Second Issuer Deed of Charge.

NOW THIS POWER OF ATTORNEY WITNESSETH

1.       The Principal hereby irrevocably and by way of security for the
         performance of the covenants, conditions, obligations and undertakings
         on the part of the Principal contained in the Second Issuer Deed of
         Charge appoints U.S. Bank National Association and any other person or
         persons for the time being the security trustee or security trustees of
         and under the Second Issuer Deed of Charge (the "Attorney") and any
         receiver (including any administrative receiver) and any manager (the
         "Receiver") and/or administrator (the "Administrator") appointed from
         time to time by the Attorney or on its behalf its true and lawful
         attorney for and in the Principal's name or otherwise jointly and
         severally to do any act matter or thing which the Attorney, Receiver or
         Administrator considers in each case bona fide necessary for the
         protection or preservation of the Attorney's interests and rights in
         and to the Second Issuer Charged Property or which ought to be done
         under the covenants, undertakings and provisions contained in the
         Second Issuer Deed of Charge on or at any time after the service of a
         Second Issuer Note Acceleration Notice or in any other circumstances
         where the Attorney has become entitled to take the steps referred to in
         Clauses 8.4 to 8.10 (inclusive) of the Second Issuer Deed of Charge
         including (without limitation) any or all of the following:

         (a)      to do every act or thing which the Attorney, Receiver or
                  Administrator may deem to be necessary, proper or expedient
                  for fully and effectually vesting, transferring or assigning
                  the Second Issuer Security and/or the Second Issuer Charged
                  Property or any part thereof and/or the Principal's estate,
                  right, title, benefit and/or interest therein or thereto in or
                  to the Attorney and its successors in title or other person or
                  persons entitled to the benefit thereof in the same manner and
                  as fully and effectually in all respects as the Principal
                  could have done; and

         (b)      the power by writing under its hand by an officer of the
                  Attorney (including every Receiver appointed under the Second
                  Issuer Deed of Charge) from time to time to appoint a
                  substitute attorney (each a "Substitute") who shall have power
                  to act on behalf of the Principal as if that Substitute shall
                  have been originally appointed



<PAGE>
                                       57


                  Attorney by this Power of Attorney and/or to revoke any such
                  appointment at any time without assigning any reason therefor.

2.       In favour of the Attorney, any Receiver and/or Administrator and/or
         Substitute, or a person dealing with any of them and the successors and
         assigns of such a person, all acts done and documents executed or
         signed by the Attorney, a Receiver, an Administrator or a Substitute in
         the purported exercise of any power conferred by this Power of Attorney
         shall for all purposes be valid and binding on the Principal and its
         successors and assigns.

3.       The Principal irrevocably and unconditionally undertakes to indemnify
         the Attorney and each Receiver and/or Administrator and/or Substitute
         appointed from time to time by the Attorney and their respective
         estates against all actions, proceedings, claims, costs, expenses and
         liabilities of every description arising from the exercise, or the
         purported exercise, of any of the powers conferred by this Power of
         Attorney, save where the same arises as the result of the fraud,
         negligence or wilful default of the relevant Indemnified Party or its
         officers or employees.

4.       The provisions of Clause 3 shall continue in force after the revocation
         or termination, howsoever arising, of this Power of Attorney.

5.       The laws of England shall apply to this Power of Attorney and the
         interpretation thereof and to all acts of the Attorney and each
         Receiver and/or Administrator and/or Substitute carried out or
         purported to be carried out under the terms hereof.

6.       The Principal hereby agrees at all times hereafter to ratify and
         confirm whatsoever the said Attorney or its attorney or attorneys or
         any Receiver or Administrator or Substitute shall properly and lawfully
         do or cause to be done in and concerning the Security Trustee's Second
         Issuer Security and/or the Second Issuer Charged Property.

IN WITNESS whereof this Power of Attorney has been executed and delivered as a
deed by the Principal the day and year first before written.


EXECUTED as a DEED by                                )
PERMANENT FINANCING (NO. 2) PLC                      )
acting by [director]                                 )
and [director/secretary]                             )


<PAGE>
                                       58


                                   SCHEDULE 2

             FORM OF NOTICE OF ASSIGNMENT AND CONSENT TO ASSIGNMENT

                          FORM OF NOTICE OF ASSIGNMENT

From:    Permanent Financing (No. 2) PLC (the "Second Issuer")
         U.S. Bank National Association (the "Security Trustee")



To:      J.P. Morgan Securities Limited
         Lehman Brothers International (Europe)
         Credit Suisse First Boston (Europe) Limited
         Deutsche Bank AG London (together, the "Managers")

         and

         J.P. Morgan Securities Inc.
         Lehman Brothers Inc.
         Credit Suisse First Boston Corporation
         Deutsche Bank Securities Inc. (together, the "Underwriters")


                                                                       [o], 2003

Dear Sirs,

US$[1,000,000,000] SERIES 1 CLASS A ASSET BACKED FLOATING RATE NOTES DUE [MARCH
2004]

US$[34,000,000] SERIES 1 CLASS B ASSET BACKED FLOATING RATE NOTES DUE [JUNE
2042]

US$[34,000,000] SERIES 1 CLASS C ASSET BACKED FLOATING RATE NOTES DUE [JUNE
2042]

US$[1,750,000,000] SERIES 2 CLASS A ASSET BACKED FLOATING RATE NOTES DUE
[SEPTEMBER 2007]

US$[61,000,000] SERIES 2 CLASS B ASSET BACKED FLOATING RATE NOTES DUE [JUNE
2042]

US$[61,000,000] SERIES 2 CLASS C ASSET BACKED FLOATING RATE NOTES DUE [JUNE
2042]

E.[1,250,000,000] SERIES 3 CLASS A ASSET BACKED FLOATING RATE NOTES DUE
[DECEMBER 2032]

E.[43,500,000] SERIES 3 CLASS B ASSET BACKED FLOATING RATE NOTES DUE [JUNE 2042]

E.[43,500,000] SERIES 3 CLASS C ASSET BACKED FLOATING RATE NOTES DUE [JUNE 2042]

US$[1,750,000,000] SERIES 4 CLASS A ASSET BACKED FLOATING RATE NOTES DUE
[DECEMBER 2009]

E.[56,500,000] SERIES 4 CLASS B ASSET BACKED FLOATING RATE NOTES DUE [JUNE 2042]

E.[56,500,000] SERIES 4 CLASS C ASSET BACKED FLOATING RATE NOTES DUE [JUNE 2042]

L.[750,000,000] SERIES 5 CLASS A ASSET BACKED FLOATING RATE NOTES DUE [JUNE
2042]

L.[26,000,000] SERIES 5 CLASS B ASSET BACKED FLOATING RATE NOTES DUE [JUNE 2042]

L.[26,000,000] SERIES 5 CLASS C ASSET BACKED FLOATING RATE NOTES DUE [JUNE 2042]
(THE "NOTES")

We hereby give you notice that by a Second Issuer deed of charge dated [6th
March], 2003 and made between the Second Issuer, the Security Trustee and others
(the "Second Issuer Deed of Charge"), the Second Issuer assigned to the Security
Trustee, inter alia, all of its right, title, interest and benefit, present and
future, in, to and under the underwriting agreement and the subscription
agreement relating to the Notes both dated [27th February], 2003 and made
between, inter alios, the Second Issuer and the Underwriters or Managers (as
appropriate) named therein (together the "Agreements").

You are authorised and instructed henceforth to deal with the Security Trustee
in relation to the Agreement without further reference to us.


<PAGE>
                                       59


This notice is irrevocable. Please acknowledge receipt of this notice to the
Security Trustee by executing the attached Consent to Assignment.

Yours faithfully,


...........................................
For and on behalf of
PERMANENT FINANCING (NO. 2) PLC


...........................................
For and on behalf of
U.S. BANK NATIONAL ASSOCIATION



<PAGE>
                                       60



                              CONSENT TO ASSIGNMENT


From:    J.P. Morgan Securities Limited
         Lehman Brothers International (Europe)
         Credit Suisse First Boston (Europe) Limited
         Deutsche Bank AG London (together, the "Managers")

         and

         J.P. Morgan Securities Inc.
         Lehman Brothers Inc.
         Credit Suisse First Boston Corporation
         Deutsche Bank Securities Inc. (together, the "Underwriters")


To:      U.S. Bank National Association (the "Security Trustee")
         Permanent Financing No. 2 PLC (the "Second Issuer")

                                                                         o, 2003

Dear Sirs,

We hereby acknowledge receipt of the notice of assignment dated o, 2003 relating
to the Second Issuer Deed of Charge dated [6th March], 2003 between the Second
Issuer, the Security Trustee and others as adequate notice of the assignment
described therein.

We agree to deal only with Security Trustee in relation to the underwriting
agreement and the subscription agreement dated, in each case, [27th February],
2003 between the Second Issuer and the Underwriters or the Underwriters or
Managers (as appropriate) named therein (together the "Agreements") without any
reference to the Second Issuer.

We have not received from any other person any notice of assignment or charge of
or any interest in the Agreement.

Yours faithfully,




...........................................
For and on behalf of
o

[on behalf of all of the Managers]


...........................................
For and on behalf of
o

[on behalf of all of the Underwriters]