EXHIBIT 10.1

(Multicurrency -- Cross Border)


                                   ISDA(R)
                International Swap Dealers Association, Inc.

                               MASTER AGREEMENT

                        dated as of 26 May, 2004


                                    The Bank of New York (as "Note Trustee")
Northern Rock plc ("Party A")  and  Granite Mortgages 04-2 plc ("Party B")
.............................       ..........................................

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

Accordingly, the parties agree as follows: --

1.   Interpretation

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

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

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

2.   Obligations

(a) General Conditions.

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

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

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

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

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

     (i)  in the same currency; and

     (ii) in respect of the same Transaction,

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

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

(d) Deduction or Withholding for Tax.

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

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

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

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

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

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

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

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     (ii) Liability. If: --

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

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

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

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

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

3.   Representations

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

(a)  Basic Representations.

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

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

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

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

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


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

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

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

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

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

4.   Agreements

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

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

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

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

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

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

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

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

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

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


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

5.   Events of Default and Termination Events

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

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

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

     (iii) Credit Support Default.

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

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

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

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

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

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


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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

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6.   Early Termination

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

(b) Right to Terminate Following Termination Event.

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

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

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

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

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

     (iv) Right to Terminate. If:--

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

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

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


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

(c) Effect of Designation.

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

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

(d) Calculations.

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

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

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

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

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

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

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

                                      9

<PAGE>

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

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

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

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

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

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

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

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

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

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


                                    10

<PAGE>


7.   Transfer

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

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

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

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

8.   Contractual Currency

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

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

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

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

                                      11

<PAGE>


9.   Miscellaneous

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

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

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

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

(e) Counterparts and Confirmations.

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

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

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

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

10.  Offices; Multibranch Parties

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

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

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

11.  Expenses

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


                                      12
<PAGE>


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

12.  Notices

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

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

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

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

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

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

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

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

13.  Governing Law and Jurisdiction

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

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

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

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

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

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


                                      13
<PAGE>


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

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

14.  Definitions

As used in this Agreement:--

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

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

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

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

"Applicable Rate" means:--

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

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

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

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

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

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

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

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

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

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

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

                                      14

<PAGE>


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

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

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

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

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

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

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

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

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

                                      15


<PAGE>


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

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

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

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

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

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

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

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

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

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

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

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

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


                                      16


<PAGE>


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

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

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

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

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

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

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

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

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

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

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

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

                                      17


<PAGE>


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

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


NORTHERN ROCK PLC ("Party A")      GRANITE MORTGAGES 04-2 plc ("Party B")
------------------------------      --------------------------------
       (Name of Party)                       (Name of Party)



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


     The Bank of New York,
    being the Note Trustee
------------------------------
       (Name of Party)



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


                                      18

<PAGE>



                                                             (Basis Rate Swap)

                                   SCHEDULE
                                    to the
                               Master Agreement

                           dated as of 26 May, 2004

between

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

(2)      GRANITE MORTGAGES 04-2 plc ("Party B"); and

(3)      THE BANK OF NEW YORK (as Note Trustee and which has agreed to become
         a party to this Agreement solely for the purpose of taking the
         benefit of Parts 5(c) and (h) and undertaking the obligations in Part
         5(n) of the Schedule to this Agreement).

Part 1.  Termination Provisions

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

         Section 5(a)(v), none

         Section 5(a)(vi), none

         Section 5(a)(vii), none

         Section 5(b)(iv), none

         and in relation to Party B for the purpose of:-

         Section 5(a)(v), none

         Section 5(a)(vi), none

         Section 5(a)(vii), none

         Section 5(b)(iv), none

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

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

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



                                      1
<PAGE>

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

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

         (i)    Market Quotation will apply.

         (ii)   The Second Method will apply.

(g)      "Termination Currency" means Sterling.

(h)      Additional Termination Event will apply. The events which constitute
         Additional Termination Events are set forth in Part 2(c) and Part
         5(f), Part 5(k)(iii), Part 5(l)(v) and Part 5(m)(iv) of this
         Schedule.

Part 2.  Tax Representations

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

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

(b)      Payee Representations. For the purposes of Section 3(f) of the
         Agreement, Party A makes the representation specified below (the
         "Additional Tax Representation").

         (i)    it is a party to each Transaction solely for the purposes of a
                trade (or part of a trade) carried on by it in the United
                Kingdom through a branch or agency; or

         (ii)   it is resident in the United Kingdom or in a jurisdiction with
                which the United Kingdom has a double tax treaty which makes
                provision, whether for relief or otherwise, in relation to
                interest.

(c)      Additional Termination Event. The Additional Tax Representation
         proves to have been incorrect or misleading in any material respect
         with respect to one or more Transactions (each an "Affected
         Transaction" for the purposes of this Additional Termination Event)



                                      2
<PAGE>

         when made or repeated or deemed to have been made or repeated. The
         Affected Party shall be Party A only.

Part 3.   Agreement to Deliver Documents

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

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

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

                               None

(b)      Other documents to be delivered are:-

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

          Party A and           Appropriate evidence of its   On signing of        Yes
          Party B               signatory's Authority         this Agreement

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

          Party A               Legal opinion of counsel to   On signing of         No
                                Party B                       this Agreement
</TABLE>


Part 4.  Miscellaneous

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

         Address for notices or communications to Party A:-

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

         Attention:        Senior Manager, Treasury Settlement

         Facsimile No.:    0191 279 4694



                                      3
<PAGE>

         Address for notices or communications to Party B:-

         Address:          Granite Mortgages 04-2 plc
                           Fifth Floor
                           100 Wood Street
                           London
                           EC2V 7EX

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

         Attention:        Keith M. Currie

         Facsimile No.:    0191 279 4694

         With a copy to the Note Trustee:-

         Address:          The Bank of New York
                           One Canada Square
                           48th Floor
                           London
                           E14 5AL

         Attention:        Corporate Trust (Global Structured Finance)

         Facsimile No.:    020 7364 6555

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

         Party A appoints as its Process Agent:  None.

         Party B appoints as its Process Agent:  None.

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

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

         Party A is not a Multibranch Party.

         Party B is not a Multibranch Party.

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

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

         In respect of Party A:              None.



                                      4
<PAGE>

         In respect of Party B:              None.

(g)      Credit Support Provider.

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

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

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

(i)      Netting of Payments. Sub-paragraph (ii) of Section 2(c) of this
         Agreement will not apply to Transactions entered into under this
         Agreement unless otherwise specified in a Confirmation.

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

Part 5.  Other Provisions

(a)      Definitions and Interpretation

         Capitalised terms used in this Agreement shall, except where the
         context otherwise requires and save where otherwise defined in this
         Agreement, bear the meanings given to them in the Master Definitions
         Schedule as amended and restated by (and appearing in Appendix 1 to)
         the Master Definitions Schedule Eighth Amendment Deed executed by,
         among others, the Note Trustee on 26 May, 2004 and the Issuer Master
         Definitions Schedule signed for the purposes of identification by
         Sidley Austin Brown & Wood and Allen & Overy on 26 May, 2004 (as the
         same have been and may be amended, varied or supplemented from time
         to time with the consent of the parties hereto). The Issuer Master
         Definitions Schedule specified above shall prevail to the extent that
         it conflicts with the Master Definitions Schedule.

(b)      No Set-Off

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

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

(c)      Security Interest

         Notwithstanding Section 7, Party A hereby agrees and consents to the
         assignment by way of security by Party B of its interests under this
         Agreement (without prejudice to, and after giving effect to, any
         contractual netting provision contained in this Agreement) to the
         Note Trustee (or any successor thereto) pursuant to and in accordance
         with the



                                      5
<PAGE>

         Current Issuer Deed of Charge and acknowledges notice of such
         assignment. Each of the parties hereby confirms and agrees that the
         Note Trustee shall not be liable for any of the obligations of Party
         B hereunder.

(d)      Disapplication of certain Events of Default

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

         Section 5(a)(vii)(8) will not apply to Party B to the extent that it
         applies to Section 5(a)(vii)(2),(5),(6),(7) and (9).

(e)      Disapplication of certain Termination Events

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

(f)      Additional Event of Default and Additional Termination Event

         The following shall constitute an additional Event of Default:

         "Note Enforcement Notice. The Note Trustee serves a Note Enforcement
         Notice on Party B (in which case Party B shall be the Defaulting
         Party)".

         The following shall constitute an Additional Termination Event:

         "Redemption and Prepayment of Current Issuer Notes. The Current
         Issuer serves a notice pursuant to Condition 5(F) of the terms and
         conditions of the Current Issuer Notes (in which case Party B shall
         be the sole Affected Party and all Transactions shall be Affected
         Transactions)."

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

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

(h)      Security, Enforcement and Limited Recourse

         (i)    Party A agrees with Party B and the Note Trustee to be bound
                by the terms of the Current Issuer Deed of Charge and the
                Current Issuer Cash Management Agreement and, in particular,
                confirms that: (i) save as otherwise expressly set out in the
                Current Issuer Cash Management Agreement or, as applicable,
                the Current



                                      6
<PAGE>

                Issuer Deed of Charge, no sum shall be payable by or on behalf
                of Party B to it except in accordance with the Current Issuer
                Priority of Payments as set out in the Current Issuer Cash
                Management Agreement or, as applicable, the Current Issuer
                Deed of Charge (as the same may be amended from time to time);
                and (ii) it will not take any steps for the winding up,
                dissolution or reorganisation or for the appointment of a
                receiver, administrator, administrative receiver, trustee,
                liquidator, sequestrator or similar officer of Party B or of
                any or all of its revenues and assets nor participate in any
                ex parte proceedings nor seek to enforce any judgment against
                Party B except as provided in the Current Issuer Deed of Charge.

         (ii)   In relation to all sums due and payable by Party B to Party A,
                Party A agrees that it shall have recourse only to sums
                available to Party B for the purpose of making payments to
                Party A in accordance with the relevant Current Issuer
                Priority of Payments, the Current Issuer Cash Management
                Agreement and/or, as applicable the Current Issuer Deed of
                Charge.

(i)      Reserved

(j)      Authorised Person

         For the purposes of Section 3 of this Agreement, Party A represents
         to Party B (which representation will be deemed to be repeated by
         Party A on each date on which a Transaction is entered into and
         throughout the course of any Transaction) that it is an authorised
         person for the purposes of the Financial Services and Markets Act
         2000.

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

         (i)    Initial S&P Note Downgrade Event

                Party A will, on a reasonable efforts basis within 30 days of
                the occurrence of an Initial S&P Note Downgrade Event, at its
                own cost attempt to transfer all of its rights and obligations
                with respect to this Agreement to a replacement third party
                whose short-term, unsecured and unsubordinated debt
                obligations are rated at least as high as "A-1" (or its
                equivalent) by S&P or such other rating as is commensurate
                with the rating assigned to the Notes by S&P from time to
                time.

                In the event that Party A is unable to make such transfer
                within such 30 day period, then it will continue, on a
                reasonable efforts basis, to attempt to make such transfer and
                pending such transfer, Party A will, on a reasonable efforts
                basis and at its own cost either:

                (A)  put in place an appropriate mark-to-market collateral
                     agreement, (which may be based on the credit support
                     documentation published by ISDA, or otherwise, and
                     relates to collateral in the form of cash or securities
                     or both) in support of its obligations under this
                     Agreement provided that (x) Party A shall be deemed to
                     have satisfied the requirements of S&P if the



                                      7
<PAGE>

                     Collateral Amount is determined on a basis which is no
                     more onerous than the S&P Criteria (as defined below) and
                     (y) the Collateral Amount shall not be required to exceed
                     such amount as would be required (in accordance with the
                     S&P Criteria) to restore the rating of the Notes to the
                     level they would have been at immediately prior to such
                     downgrading; or

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

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

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

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

         (ii)   Subsequent S&P Note Downgrade Event

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

                (B)  if, at the time a Subsequent S&P Note Downgrade Event
                     occurs, Party A has provided collateral pursuant to a
                     mark-to-market collateral arrangement put in place
                     pursuant to sub-paragraph (i)(A) above following an
                     Initial S&P Note Downgrade Event, it will continue to
                     post collateral notwithstanding the occurrence of a
                     Subsequent S&P Note Downgrade Event until such time as
                     the action in sub-paragraph (ii)(A) above has been taken.

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



                                      8
<PAGE>

         (iii)  Additional Termination Events

                If Party A does not take any of the measures described in
                sub-paragraphs (i) or (ii) above such failure shall not be or
                give rise to an Event of Default but shall constitute an
                Additional Termination Event with respect to Party A and shall
                be deemed to have occurred on the 30th day following the
                Initial S&P Note Downgrade Event or Subsequent S&P Note
                Downgrade Event, as applicable, with Party A as the sole
                Affected Party and all Transactions shall be Affected
                Transactions.

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

                Each Additional Termination Event described in this
                sub-paragraph (iii) shall, on its occurrence, constitute a
                "Downgrade Termination Event".

         (iv)   S&P Definitions

                For the purposes of this Part 5(k):

                "Collateral Amount" means the amount of collateral agreed to
                be provided in the form of cash and/or securities;

                "S&P Criteria" means the criteria published on 17 December
                2003 which enable entities rated lower than a specified level
                to participate in structured finance transactions which,
                through collateralisation, are rated at a higher level;

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

                (a)  the short-term, unsecured and unsubordinated debt
                     obligations of Party A (or its successor) cease to be
                     rated at least as high as "A-1 "(or its equivalent) by
                     S&P; and

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

                a "Subsequent S&P Note Downgrade Event" will occur where:

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



                                      9
<PAGE>

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

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

         (i)    Initial Moody's Note Downgrade Event

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

                (A)  transfer all of its rights and obligations with respect
                     to this Agreement to either (x) a replacement third party
                     with the Required Ratings (as defined below) domiciled in
                     the same legal jurisdiction as Party A or Party B or (y)
                     a replacement third party in relation to whom Moody's has
                     confirmed that there would be no Initial Moody's Note
                     Downgrade Event; or

                (B)  procure another person to become co-obligor in respect of
                     the obligations of Party A under this Agreement. Such
                     co-obligor may be either (x) a person with the Required
                     Ratings domiciled in the same legal jurisdiction as Party
                     A or Party B, or (y) a person in relation to whom Moody's
                     has confirmed that there would be no Initial Moody's Note
                     Downgrade Event; or

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

         (ii)   Initial Moody's Note Downgrade Event - Collateral Requirements

                Pending compliance with any of sub-paragraphs (i)(A), (i)(B)
                or (i)(C) above, Party A will, at its own cost within 30 days
                of the occurrence of such downgrade, put in place a
                mark-to-market collateral agreement in a form and substance
                acceptable to Moody's (which may be based on the credit
                support documentation published by ISDA, or otherwise, and
                relates to collateral in the form of cash or securities or
                both) in support of its obligations under this Agreement which
                complies with Moody's Criteria (or such other amount as may be
                agreed with Moody's).

                If any of sub-paragraphs (i)(A), (i)(B) or (i)(C) above are
                satisfied at any time, all collateral (or the equivalent
                thereof, as appropriate) transferred by Party A pursuant to
                this sub-paragraph (ii) will be retransferred to Party A and
                Party A will not be required to transfer any additional
                collateral.

         (iii)  Subsequent Moody's Note Downgrade Event

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



                                      10
<PAGE>

                (A)  transfer all of its rights and obligations with respect
                     to this Agreement to either (x) a replacement third party
                     with the Required Ratings domiciled in the same legal
                     jurisdiction as Party A or Party B, or (y) a replacement
                     third party in relation to whom Moody's has confirmed
                     that there would be no Subsequent Moody's Note Downgrade
                     Event; or

                (B)  procure another person to become co-obligor in respect of
                     the obligations of Party A under this Agreement. Such
                     co-obligor may be either (x) a person with the Required
                     Ratings domiciled in the same legal jurisdiction as Party
                     A or Party B, or (y) a person in relation to whom Moody's
                     has confirmed that there would be no Subsequent Moody's
                     Note Downgrade Event; or

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

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

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

                Pending compliance with sub-paragraphs (iii)(A), (iii)(B) or
                (iii)(C) above, Party A will, within 10 days of the occurrence
                of a Subsequent Moody's Note Downgrade Event, at its own cost
                put in place a mark-to-market collateral agreement in a form
                and substance acceptable to Moody's (which may be based on the
                credit support documentation published by ISDA, or otherwise,
                and relates to collateral in the form of cash or securities or
                both) in support of its obligations under this Agreement which
                complies with Moody's Criteria (or such other amount as may be
                agreed with Moody's).

                If any of sub-paragraphs (iii)(A), (iii)(B) or (iii)(C) above
                are satisfied at any time, all collateral (or the equivalent
                thereof, as appropriate) transferred by Party A pursuant to
                this sub-paragraph (iv) will be retransferred to Party A and
                Party A will not be required to transfer any additional
                collateral.

         (v)    Additional Termination Events and Events of Default

                If Party A does not take the measures described in
                sub-paragraph (i) above such failure shall not be or give rise
                to an Event of Default but shall constitute an Additional
                Termination Event with respect to Party A and shall be deemed
                to have occurred on the 30th day following an Initial Moody's
                Note Downgrade Event with Party A as the sole Affected Party
                and all Transactions shall be Affected Transactions.

                If Party A does not take the measures described in
                sub-paragraph (iv) above such failure shall give rise to an
                Event of Default with respect to Party A and shall be deemed
                to have occurred on the 10th day following a Subsequent
                Moody's Note



                                      11
<PAGE>

                Downgrade Event (or, if Party A has put in place a collateral
                agreement in accordance with the requirements of sub-paragraph
                (ii)) above, such Event of Default shall be deemed to have
                occurred on the 10th day following such Subsequent Moody's
                Note Downgrade Event) with Party A as the sole Defaulting
                Party. Further, it shall constitute an Additional Termination
                Event with respect to Party A if, even after satisfying the
                requirements of sub-paragraph (iv) above, Party A has failed,
                having applied best efforts, to comply with any of
                sub-paragraphs (iii)(A), (iii)(B) or (iii)(C) above and such
                Additional Termination Event shall be deemed to have occurred
                on the 30th day following such Subsequent Moody's Note
                Downgrade Event with Party A as the sole Affected Party and
                all Transactions shall be Affected Transactions.

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

                Each Additional Termination Event described in this
                sub-paragraph (v) shall, on its occurrence, constitute a
                "Downgrade Termination Event".

         (vi)   Moody's Definitions

                For the purposes of this Part 5(l):

                "Collateral Amount" means the amount of collateral agreed to
                be provided in the form of cash and/or securities;

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

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

                (b)  the short-term, unsecured and unsubordinated debt
                     obligations of Party A (or its successor) and, if
                     relevant, any Credit Support Provider of Party A, cease
                     to be rated at least as high as "Prime-1" (or its
                     equivalent) by Moody's;

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

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



                                      12
<PAGE>

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

                "Moody's Criteria" means that the Collateral Amount shall not
                exceed an amount equal to 102 per cent. of the mark-to-market
                value (updated weekly) of the outstanding Transactions as
                determined by Party A in good faith from time to time provided
                that:

                (a)  if the long-term, unsecured and unsubordinated debt
                     obligations of Party A (or its successor) cease to be
                     rated at least as high as "A2" (or its equivalent) by
                     Moody's or the short-term, unsecured and unsubordinated
                     debt obligations of Party A (or its successor) cease to
                     be rated at least as high as "Prime-1" (or its
                     equivalent) by Moody's then the applicable Collateral
                     Amount shall equal the sum of:

                     (i)    an amount equal to 102 per cent. of the
                            mark-to-market value (updated weekly) of the
                            outstanding Transactions determined by Party A in
                            good faith from time to time (for the avoidance of
                            doubt, taking into account, inter alia, expected
                            future prepayment rates); and

                     (ii)   the sum of:

                            (A)  the aggregate of the amounts determined in
                                 respect of each class of Notes, equal to the
                                 principal amount outstanding of that class of
                                 Notes multiplied by the weighted average life
                                 of that class of Notes as at the date of the
                                 determination (expressed in days), divided by
                                 365 (such aggregate, the "Buffer Notional")
                                 multiplied by the product of 0.20 per cent.
                                 and the Fixed Rate Ratio; and

                            (B)  the Buffer Notional multiplied by the product
                                 of 0.10 per cent. and the sum of the Variable
                                 Rate Ratio and the Flexible Ratio;

                (b)  if the long-term, unsecured and unsubordinated debt
                     obligations of Party A (or its successor) cease to be
                     rated as high as "A3" (or its equivalent) by Moody's or
                     the short term, unsecured and unsubordinated debt
                     obligations of Party A (or its successor) cease to be
                     rated as high as "Prime-2" (or its equivalent) by Moody's
                     then the applicable Collateral Amount shall equal the sum
                     of:

                     (i)    an amount equal to 102 per cent. of the
                            mark-to-market value (updated weekly) of the
                            outstanding Transactions determined by Party A in
                            good faith from time to time (for the avoidance of
                            doubt, taking into account, inter alia, expected
                            future prepayment



                                      13
<PAGE>

                            rates and assuming that the Issuer will not
                            exercise its option to redeem the Notes on the
                            Step-up Date); and

                     (ii)   the sum of:

                            (A)  the Buffer Notional multiplied by the product
                                 of 0.40 per cent. and the Fixed Rate Ratio;
                                 and

                            (B)  the Buffer Notional multiplied by the product
                                 of 0.20 per cent. and the sum of the Variable
                                 Rate Ratio and the Flexible Ratio.

                In relation to sub-paragraphs (ii) and (iii) above Party A
                will, upon receipt of reasonable notice from Moody's,
                demonstrate to Moody's the calculation by it of the
                mark-to-market value of the outstanding Transactions. In
                relation to sub-paragrpah (iv) above Party A will, at its own
                cost, upon receipt of reasonable notice from Moody's, arrange
                an audit by the Auditor of the methodology used by Party A in
                the calculation of the mark-to-market value of the outstanding
                Transactions.

                Party A will calculate the weighted average life of the Notes
                using the assumptions referred to in the Offering Circular
                under the headings "Maturity and Prepayment Considerations"
                (as amended herein), provided that (x) such assumptions shall
                reflect the then current expectations of the Issuer and/or be
                based upon such circumstances as Party A may, in good faith,
                determine applicable; and (y) in relation to the calculation
                of the Buffer Notional under part (b) of the definition of the
                Moody's Criteria, it shall be assumed that the Issuer will not
                exercise its option to redeem the Notes on the Step-up Date.

                "Required Ratings" means, in respect of the relevant entity,
                its short-term, unsecured and unsubordinated debt obligations
                are rated at least as high as "Prime-1" by Moody's and its
                long-term, unsecured and unsubordinated debt obligations are
                rated at least as high as "A1", or such other ratings as may
                be agreed with Moody's from time to time.

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

         (i)    Initial Fitch Note Downgrade Event

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

                (A)  attempt to transfer all of its rights and obligations
                     with respect to this Agreement to a replacement third
                     party whose short-term, unsecured and unsubordinated debt
                     ratings are rated at least as high as "F1" (or its
                     equivalent) by Fitch or such other rating as is
                     commensurate with the rating assigned to the Notes by
                     Fitch from time to time; or



                                      14
<PAGE>

                (B)  put in place an appropriate mark-to-market collateral
                     agreement (which may be based on the credit support
                     documentation published by ISDA, or otherwise, and
                     relates to collateral in the form of cash or securities
                     or both) in support of its obligations under this
                     Agreement which complies with the Fitch Criteria (or such
                     other amount as may be agreed with Fitch); or

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

                (D)  take such other action as Party A may agree with Fitch as
                     will result in the rating of the Notes then outstanding
                     being maintained.

         (ii)   Subsequent Fitch Note Downgrade Event

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

                (A)  attempt to transfer all of its rights and obligations
                     with respect to this Agreement to a replacement third
                     party whose short-term, unsecured and unsubordinated debt
                     ratings are rated at least as high as "F1" (or its
                     equivalent) by Fitch or such other rating as is
                     commensurate with the rating assigned to the Notes by
                     Fitch from time to time; or

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

                (C)  take such other action as Party A may agree with Fitch as
                     will result in the rating of the Notes then outstanding
                     being maintained.

         (iii)  Subsequent Fitch Note Downgrade Event - Collateral
                Requirements

                Pending compliance with sub-paragraphs (ii)(A), (ii)(B) or
                (ii)(C) above, Party A will at its own cost put in place an
                appropriate mark-to-market collateral agreement (which may be
                based on the credit support documentation published by ISDA,
                or otherwise, and relates to collateral in the form of cash or
                securities or both) in support of its obligations under this
                Agreement which complies with the Fitch Criteria (or such
                other amount as may be agreed with Fitch).

                If any of sub-paragraphs (ii)(A), (ii)(B) or (ii)(C) above are
                satisfied at any time, all collateral (or the equivalent
                thereof, as appropriate) transferred by Party A



                                      15
<PAGE>

                pursuant to this sub-paragraph (iii) will be retransferred to
                Party A and Party A will not be required to transfer any
                additional collateral.

         (iv)   Additional Termination Events

                If Party A does not take any of the measures described in
                sub-paragraphs (i) or (ii) above such failure shall not be or
                give rise to an Event of Default but shall constitute an
                Additional Termination Event with respect to Party A and shall
                be deemed to have occurred on the 30th day following such
                Initial Fitch Note Downgrade Event or Subsequent Fitch Note
                Downgrade Event, as applicable, with Party A as the sole
                Affected Party and all Transactions shall be Affected
                Transactions.

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

                Each Additional Termination Event described in this
                sub-paragraph (iv) shall, on its occurrence, constitute a
                "Downgrade Termination Event".

         (v)    Fitch Definitions

                For the purposes of this Part 5(m):

                "Collateral Amount" means the amount of collateral agreed to
                be provided in the form of cash and/or securities;

                an "Initial Fitch Note Downgrade Event" will occur where:

                (a)  the short-term, unsecured and unsubordinated debt
                     obligations of Party A (or its successor or assignee)
                     cease to be rated at least as high as "F1" (or its
                     equivalent) by Fitch; and

                (b)  as a result of such downgrade the then current rating of
                     the Notes may in the reasonable opinion of Fitch be
                     downgraded or placed on credit watch for possible
                     downgrade;

                a "Subsequent Fitch Note Downgrade Event" will occur where:

                (a)  the short-term, unsecured and unsubordinated debt
                     obligations of Party A (or its successor) or any Credit
                     Support Provider of Party A cease to be rated at least as
                     high as "F2" (or its equivalent) by Fitch; and



                                      16
<PAGE>

                (b)  as a result the then current rating of the Notes may in
                     the reasonable opinion of Fitch be downgraded or placed
                     on credit watch for possible downgrade;

                "Fitch Criteria" means the Collateral Amount shall equal the
                sum of:

                (i)    the product of 100 per cent. multiplied by the
                       mark-to-market value of the outstanding Transactions
                       determined by Party A in good faith from time to time;
                       and

                (ii)   the sum of:

                       (A)  the current aggregate notional amount of the
                            outstanding Transactions multiplied by the product
                            of 2.50 per cent. and the Fixed Rate Ratio; and

                       (B)  the current aggregate notional amount of the
                            outstanding Transactions multiplied by the product
                            of 1.25 per cent. and the sum of the Variable Rate
                            Ratio and the Flexible Ratio.

(n)      Collateral Requirements - Party B and the Note Trustee

         Each of Party B and the Note Trustee shall use their best endeavours
         to co-operate with Party A in putting in place such credit support
         documentation, including agreeing to such arrangements in such
         documentation as may satisfy S&P, Moody's and Fitch with respect to
         the operation and management of the collateral (subject always to
         provisos (x) and (y) in Part 5(k)(i)(A) and to Parts 5(l)(ii) and
         5(l)(iv) above) and entering into such documents as may reasonably be
         requested by Party A in connection with the provision of such
         collateral.

(o)      Additional Representation

         Section 3 is amended by the addition at the end thereof of the
         following additional representations:

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

         (ii)   The following additional representation shall be given by
                Party A only:

                "(h) Pari Passu. Its obligations under this Agreement rank
                pari passu with all of its other unsecured, unsubordinated
                obligations except those obligations preferred by operation of
                law."



                                      17
<PAGE>

(p)      Recording of Conversations

         Each party to this Agreement acknowledges and agrees to the tape
         recording of conversations between the parties to this Agreement
         whether by one or other or both of the parties.

(q)      Relationship between the parties

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

         "15. Relationship between the parties

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

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

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

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

(r)      Tax

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

         "(d)    Deduction or Withholding for Tax

         (i)    Requirement to Withhold

                All payments under this Agreement will be made without any
                deduction or withholding for or on account of any Tax unless
                such deduction or withholding is required (including, for the
                avoidance of doubt, if such deduction or withholding



                                      18
<PAGE>

                is required in order for the payer to obtain relief from Tax)
                by any applicable law, as modified by the practice of any
                relevant governmental revenue authority, then in effect. If a
                party ("X") is so required to deduct or withhold, then that
                party (the "Deducting Party"):

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

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

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

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

         (ii)   Liability

         If:

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

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

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

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




                                      19
<PAGE>

         promptly pay to the relevant government revenue authority the amount
         of such liability (including any related liability for interest and
         penalties).

         (iii)  Tax Credit etc.

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

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

                (2)  The "cash benefit" shall, in the case of credit,
                     allowance or set-off, be the additional amount of Tax
                     which would have been payable by Party B in the
                     jurisdiction referred to in (1) above but for the
                     obtaining by it of the said Tax credit, allowance or
                     set-off and, in the case of a repayment, shall be the
                     amount of the repayment together, in either case, with
                     any related interest or similar payment obtained by Party
                     B; and

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

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

                     ""Indemnifiable Tax" means any Tax."

(s)      Change of Account

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

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



                                      20
<PAGE>

(t)      Condition Precedent

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

(u)      Representations

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

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

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

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

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

         Subject to compliance with Clause 15.3(k) (Basis Rate Swap Agreement)
         of the Current Issuer Deed of Charge, upon the occurrence of an Event
         of Default or an Additional Termination Event with respect to Party
         A, Party B will be entitled (but not obliged in the event that it
         does not designate an Early Termination Date) to proceed in
         accordance with Section 6 of the Agreement subject to the following:

         (i)    For the purposes of Clause 6(d)(i), Party B's obligation with
                respect to the extent of information to be provided with its
                calculations is limited to information Party B has already
                received in writing and provided Party B is able to release
                this information without breaching the provisions of any law
                applicable to, or any contractual restriction binding upon,
                Party B.

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

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

                (b)  the words "provided that the documentation relating
                     thereto is either the same as this Agreement and the
                     existing confirmations hereto (and the long-term
                     unsecured and unsubordinated debt obligations of the
                     Reference Market-maker are rated not less than "AA-" by
                     S&P, "A1" by Moody's and "AA-" by Fitch, and the
                     short-term unsecured and unsubordinated debt obligations
                     of the Reference Market-maker are rated not less than
                     "P-



                                      21
<PAGE>

                     1" by Moody's, (or, if such Reference Market-maker is not
                     rated by a Rating Agency, at such equivalent rating (by
                     another Rating Agency) that is acceptable to such Rating
                     Agency) or the Rating Agencies have confirmed in writing
                     such proposed documentation will not adversely impact the
                     ratings of the Notes" shall be added after "agree" in the
                     sixteenth line; and

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

                     "If, on the last date set for delivery of quotations,
                     exactly two quotations are provided, the Market Quotation
                     will be either (a) the lower of the two quotations where
                     there would be a sum payable by Party A to Party B, or
                     (b) the higher of the two quotations where there would be
                     a sum payable by Party B to Party A. If only one
                     quotation is provided on such date, Party B may, in its
                     discretion, accept such quotation as the Market Quotation
                     and if Party B does not accept such quotation (or if no
                     quotation has been provided), it will be deemed that the
                     Market Quotation in respect of the Terminated Transaction
                     cannot be determined."

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

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

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

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

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

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



                                      22
<PAGE>



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

To:         Granite Mortgages 04-2 plc
            Fifth Floor
            100 Wood Street
            London
            EC2V 7EX

Attention:  Securitisation Team, Risk Operations

To:         The Bank of New York
            48th Floor
            One Canada Square
            London
            E14 5AL

Attention:  Global Structured Finance (Corporate Trust)

                                                                  26 May, 2004


Dear Sirs,

Confirmation - Issuer Basis Rate Swap

The purpose of this letter is to confirm the terms and conditions of the swap
transaction entered into between us on the Trade Date specified below (the
"Swap Transaction"). This letter constitutes a "Confirmation" as referred to
in the 1992 ISDA Master Agreement (Multicurrency-Cross Border) entered into
between us and both of you on the date hereof as amended and supplemented from
time to time (the "Agreement").

The definitions and provisions contained in the 2000 ISDA Definitions as
published by the International Swaps & Derivatives Association, Inc. (the
"Definitions") are incorporated into this Confirmation. In the event of any
inconsistency between the Definitions and this Confirmation, this Confirmation
shall prevail. Any terms not otherwise defined herein or in the Definitions
shall have the meanings given to them in the Master Definitions Schedule as
amended and restated by (and appearing in Appendix 1 to) the Master
Definitions Schedule Eighth Amendment Deed executed by, among others, the Note
Trustee on 26 May, 2004 and the Issuer Master Definitions Schedule signed for
the purposes of identification by Sidley Austin Brown & Wood and Allen & Overy
on 26 May, 2004 (as the same have been and may be amended, varied or



                                      1
<PAGE>

supplemented from time to time with the consent of the parties hereto). The
Issuer Master Definitions Schedule specified above shall prevail to the extent
that it conflicts with the Master Definitions Schedule. The following
expressions shall have the following meanings:

The term "Transaction" as used herein shall, for the purposes of the
Definitions, have the same meaning as "Swap Transaction".

Aggregate Issuer Amount means, in respect of a Payment Date, the aggregate of
the Issuer Amounts calculated in respect of the Swap Determination Periods
which end in the Interest Period relating to such Payment Date.

Aggregate Swap Provider Amount means, in respect of a Payment Date, the
aggregate of the Swap Provider Amounts calculated in respect of the Swap
Determination Periods which end in the Interest Period relating to such
Payment Date.

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

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

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

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

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

Blended Spread means, in respect of a Swap Determination Period, a percentage
equal to the sum of (i) the Fixed Rate Spread for such Swap Determination
Period multiplied by



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<PAGE>

the Fixed Rate Ratio for such Swap Determination Period; (ii) the Variable
Rate Spread for such Swap Determination Period multiplied by the Variable Rate
Ratio for such Swap Determination Period and (iii) the Flexible Spread for
such Swap Determination Period multiplied by the Flexible Ratio for such Swap
Determination Period.

Current Issuer means Granite Mortgages 04-2 plc.

Exchange Rate means:    For the Series 1 Notes:
                        GBP1.00: USD 1.763
                        For the Series 2 Notes:
                        GBP1.00: EUR 1.47

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

Fixed Rate Ratio means, in respect of a Swap Determination Period, the Average
Fixed Rate Mortgage Loan Balance divided by the Average Mortgage Loan Balance.

Fixed Rate Spread means 0,00% per annum or such other percentage amount as
Party A may notify to Party B and the Note Trustee in writing from time to
time in accordance with paragraph 6 of this Confirmation.

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

Flexible Ratio means, in respect of a Swap Determination Period, the Average
Flexible Mortgage Loan Balance divided by the Average Mortgage Loan Balance.

Flexible Spread means 1.55% per annum or such other percentage amount as Party
A may notify to Party B and the Note Trustee in writing from time to time in
accordance with paragraph 6 of this Confirmation.



                                      3
<PAGE>

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

Funding means Granite Finance Funding Limited.

Interest Period means in relation to the Current Issuer Notes a period from
(and including) a Payment Date (or in respect of the first Interest Period,
the Closing Date) to (but excluding) the next following (or first) Payment
Date.

Issuer Amount means, in respect of a Swap Determination Period, an amount in
Sterling equal to the amount produced by applying the Blended Rate for the
Swap Determination Period to the Notional Amount, such amount to be calculated
by the Calculation Agent on the basis of the actual number of days in such
Swap Determination Period, divided by 365.

Monthly Calculation Date means the twentieth day of each calendar month or, if
such day is not a Business Day, the next succeeding Business Day.

Monthly Calculation Period means, in respect of any Swap Provider Amount
and/or any Issuer Amount, the period from (and including) the Closing Date to
(but excluding) the next following Monthly Calculation Date and thereafter
from (and including) one Monthly Calculation Date to (but excluding) the next
Monthly Calculation Date.

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

Notes means the Current Issuer Notes.

Notional Amount means, in respect of any Swap Determination Period, an amount
in Sterling equal to (a) the aggregate Principal Amount Outstanding of the
Notes (converted to GBP at the applicable Exchange Rate in the case of Notes
denominated in USD or in EUR) on the Payment Date occurring in the Swap
Determination Period (or, if none, on the Payment Date immediately preceding
such Swap Determination Period), or, in respect of the Swap Determination
Periods ending in the first Interest Period, the aggregate Principal Amount
Outstanding of the Notes on the Closing Date (converted into GBP at the
applicable Exchange Rate in the case of Notes denominated in USD or EUR) minus
(b) the balance of the Principal Deficiency Ledger on such Payment Date as
determined after taking account of any changes made on such date to the
balance of the Principal Deficiency Ledger (converted to GDP at the applicable
Exchange Rate in the case of the Principal Deficiency Ledger entries in USD or
in EUR) minus (c) the aggregate outstanding principal balance on such Payment
Date of any Fixed Rate Mortgage Loans which have become Re-Fixed Mortgage
Loans since such Payment Date.



                                      4
<PAGE>

Payment Date means the twentieth day of March, June, September and December in
each year or, if such day is not a Business Day, the next succeeding Business
Day, beginning in June 2004.

Principal Deficiency Ledger means the Issuer Principal Deficiency Ledger of
such name maintained for the Current Issuer by the Cash Manager pursuant to
the Current Issuer Cash Management Agreement.

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

Swap Determination Date means the first Business Day of any calendar month.

Swap Determination Period means the period from (and including) the Closing
Date to (but excluding) the first Swap Determination Date and thereafter from
(and including) one Swap Determination Date to (but excluding) the next Swap
Determination Date.

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

Three Month LIBOR means, in respect of an Interest Period, the London
Interbank Offered Rate for three-month Sterling deposits for such Interest
Period (as determined by the Agent Bank in accordance with Condition 4 of the
Current Issuer Notes and notified to the parties on the Payment Date on which
the relevant Interest Period began); provided however that for the first
Interest Period such rate shall be interpolated as set forth in Condition 4.

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

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

Variable Rate Spread means 1.75% per annum or such other percentage amount as
Party A may notify to Party B and the Note Trustee in writing from time to
time in accordance with paragraph 6 of this Confirmation.



                                      5
<PAGE>

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

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

1.   This Confirmation supplements, forms part of, and is subject to, the
     Agreement. All provisions contained in the Agreement govern this
     Confirmation except as expressly modified below.

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

     Party A:                 Northern Rock plc

     Party B:                 Granite Mortgages 04-2 plc

     Trade Date:              18 May, 2004

     Effective Date:          26 May, 2004

     Termination Date:        The earlier of (i) the Payment Date falling in
                              June 2044, and (ii) the date on which the
                              outstanding principal balance of the Notes is
                              reduced to zero.

     Business Day centers
     for all Payments:        London

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



                                      6
<PAGE>

                              Notwithstanding any other provision of this
                              Confirmation, if on any date (i) additional
                              Mortgage Loans are added to the Mortgage
                              Portfolio or (ii) Funding draws down a new
                              intercompany loan (any such date, a "New Loan
                              Date"), then the Calculation Agent may make any
                              adjustments it deems appropriate to the Average
                              Fixed Rate Mortgage Loan Balance, the Average
                              Flexible Mortgage Loan Balance, the Average
                              Variable Rate Mortgage Loan Balance and the
                              Weighted Average Fixed Rate for the Swap
                              Determination Period in which such New Loan Date
                              occurs in order to reflect the addition of such
                              Mortgage Loans.

     Payments:                If in relation to any Payment Date:

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

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

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

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

3.   In relation to Part 5(f) of the Agreement, in the case of a redemption in
     full of the Notes pursuant to Condition 5(F) of the terms and conditions
     of the Notes, "Market Quotation" in respect of the Terminated
     Transactions shall be determined based on the anticipated rate of
     reduction in the Notional Amount had such redemption not occurred.



                                      7
<PAGE>

4.   Account Details:

     Payments to Party A:       Bank:               Northern Rock plc
                                Account Name:       Northern Rock Group
                                                    Treasury
                                Sort Code:          30-00-59
                                Reference:          Granite Mortgages 04-2 plc

     Payments to Party B:       Bank:               Citibank N.A.
                                Account Name:       Granite Mortgages 04-2 plc
                                Account Number:     10850675
                                Sort Code:          18-50-08
                                Reference:          Northern Rock plc

5.   Notice Details:

     Party A:                   Northern Rock plc

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

     Facsimile Number:          0191-279-4694

     Attention:                 Treasury Settlements Manager

     Party B:                   Granite Mortgages 04-2 plc

     Address:                   Fifth Floor
                                100 Wood Street
                                London
                                EC2V 7EX

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

     Facsimile Number:          0191-279-4694

     Attention:                 Keith M. Currie

     With a copy to the
     Note Trustee:              The Bank of New York



                                      8
<PAGE>

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

     Facsimile Number:          0207 964 6262

     Attention:                 Global Structured Finance
                                (Corporate Trust)

6.   Miscellaneous

     Notwithstanding any other provision of this Confirmation, if on any date
     Funding draws down a new intercompany loan, then to reflect prevailing
     market conditions, provided the Rating Agencies have confirmed that the
     then current ratings by the Rating Agencies of the existing Notes of any
     Issuer, Party A may, by notice in writing to Party B and to the Note
     Trustee on such date, make any adjustments it deems appropriate to the
     Fixed Rate Spread, the Floating Rate Spread and the Variable Rate Spread
     (or any of them) for the Swap Determination Period in which such date
     occurs and for all Swap Determination Periods occurring after such date.



                                      9
<PAGE>

Yours faithfully,

NORTHERN ROCK PLC

By:





Name:

Title:







Confirmed as of the date first written:

GRANITE MORTGAGES 04-2 PLC

By:





Name:

Title:



THE BANK OF NEW YORK
  as Note Trustee

By:





Name:

Title:



                                      10