DATED 19 May 1998
                                -----------------






                           TU FINANCE (NO. 1) LIMITED
                         and certain of its Subsidiaries
                             (as Charging Companies)

                                     - and -

                      CHASE MANHATTAN INTERNATIONAL LIMITED
                               (as Security Agent)







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

                             GUARANTEE AND DEBENTURE

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









                              LOVELL WHITE DURRANT
                                     LONDON
                                   A7/DCH/AJAP


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                                      INDEX


1.   INTERPRETATION                                                    1

2.   COVENANT TO PAY                                                   5

3.   CHARGING CLAUSE                                                   6

4.   TITLE DOCUMENTS AND VOTING RIGHTS                                 9

5.   COLLECTION OF RECEIVABLES                                        11

6.   NEGATIVE PLEDGE AND OTHER RESTRICTIONS                           11

7.   FURTHER ASSURANCE                                                12

8.   CONTINUING SECURITY                                              12

9.   GENERAL COVENANTS                                                13

10.  COVENANTS REGARDING SECURITIES                                   13

11.  LEASES, POSSESSION OF LAND AND CONSOLIDATION OF MORTGAGES        14

12.  POWERS OF SALE, LEASING AND ACCEPTING SURRENDERS                 14

13.  OPENING OF NEW ACCOUNTS                                          15

14.  APPOINTMENT AND POWERS OF A RECEIVER                             15

15.  POWER OF ATTORNEY                                                18

16.  ADJUSTMENT OF ACCOUNT                                            18

17.  OTHER POWERS EXERCISABLE BY THE SECURITY AGENT                   19

18.  APPLICATION OF MONEY RECEIVED
              BY THE SECURITY AGENT OR A RECEIVER                     19

19.  COSTS AND INTEREST ON OVERDUE AMOUNTS                            20

20.  SET-OFF                                                          20

21.  SECURITY AGENT AS TRUSTEE,
              PERPETUITY PERIODS AND NO PARTNERSHIP                   21

22.  FORBEARANCE AND SEVERABILITY                                     21

23.  VARIATIONS AND CONSENTS                                          22

24.  AUTHORITY OF PRIMARY BORROWER                                    22

25.  SERVICE OF DEMANDS AND NOTICES                                   22


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26.  COUNTERPARTS                                                     23

27.  ASSIGNMENT                                                       23

28.  SECURITY AGENT                                                   23

29.  JOINT AND SEPARATE LIABILITY                                     23

30.  THE GIVING AND ACKNOWLEDGEMENT OF NOTICE OF ASSIGNMENT           23

31.  GOVERNING LAW                                                    23

THE FIRST SCHEDULE

Part A

The Charging Companies                                                24

Part B

The Security Agent                                                    24

THE SECOND SCHEDULE

Terms of Guarantee                                                    25

THE THIRD SCHEDULE

PART I

Form of Notice and Instructions to Receiving Banker                   29

PART II

Form of Acknowledgement
and Undertaking by Receiving Banker                                   31

PART III

Form of control agreement to be executed by among others
the US Depositary for the Offer and Bidco                             32


<PAGE>

THIS GUARANTEE AND DEBENTURE made the 19th day of May 1998

BETWEEN:

(1)  THE COMPANIES LISTED IN PART A OF THE FIRST SCHEDULE; and

(2)  CHASE MANHATTAN INTERNATIONAL LIMITED as agent and trustee on behalf of the
     Beneficiaries (as defined below).

WITNESSES as follows:

1.   INTERPRETATION

1.1  In this Debenture  words or expressions  defined in the Facility  Agreement
     shall,  unless  otherwise  defined  below,  bear the same  meaning  in this
     Debenture  and,  in  addition,  in this  Debenture,  so far as the  context
     admits, the following expressions shall have the following meanings:

     "Assets"                 all the present, future or contingent undertaking,
                              property,   assets,   rights  and  revenues  of  a
                              Charging Company  whatever,  and wherever situated
                              in the world,  present  and future,  and  includes
                              each or any of them;

     "Beneficiaries"          means  collectively  the  Arrangers,  the Facility
                              Agent,  the Issuing Bank,  the Security  Agent and
                              the Banks,  and (as regards  sums owing in respect
                              of  the  Hedging   Agreements)   their  respective
                              Affiliates;

     "Bidco"                  TU Acquisitions PLC (registered number 3455523);

     "Business Day"           a day on which  the banks  generally  are open for
                              business  in the  City of  London  and in New York
                              (excluding Saturdays and bank or public holidays);

     "Charging Companies"     the  companies  listed  in  Part  A of  the  First
                              Schedule and (where the context permits)  includes
                              each or any of them;

     "Companies"              means the  Charging  Companies  and to the  extent
                              that they become  "Borrowers"  under the  Facility
                              Agreement, the Target and any Subsidiary from time
                              to time of the Target;

     "Collection Account"     has the  meaning  attributed  to it by clause  5.1
                              (Collection of Receivables);

     "this Debenture"         this Guarantee and Debenture;

     "Derivative Securities"  include:

                              (a)       allotments,  rights,  money or  property
                                        arising  from the  Securities  by way of
                                        conversion, exchange, redemption, bonus,
                                        preference, option or otherwise;

<PAGE>

                              (b)       dividends,  distributions,  interest and
                                        other income from the Securities; and

                              (c)       stock,  shares and securities offered in
                                        addition  to  or  substitution  for  the
                                        Securities;

     "Document"               any transfer, renunciation,  proxy, mandate, legal
                              or other  charge,  mortgage,  assignment,  deed or
                              other document in relation to the Securities;

     "Facility Agreement"     means the facilities  agreement dated 2 March 1998
                              made  between TU Finance  (No. 1) Limited  (1), TU
                              Finance  (No. 2) Limited and TU  Acquisitions  PLC
                              (2),   Chase   Manhattan  plc,   Lehman   Brothers
                              International    and   Merrill    Lynch    Capital
                              Corporation  (as Joint Lead  Arrangers)  (3),  The
                              Chase Manhattan Bank,  Lehman Commercial Paper Inc
                              and  Merrill   Lynch   Capital   Corporation   (as
                              Underwriters)  (4), The Chase  Manhattan  Bank (as
                              Issuing Bank) (5), Chase  Manhattan  International
                              Limited   (as   Facility   Agent)  (6)  and  Chase
                              Manhattan   International   Limited  (as  Security
                              Agent) (7) as amended and restated by an agreement
                              dated 3 March  1998  and 21 April  1998 and  which
                              expression  shall include any further  amendments,
                              supplements,  accessions,  variations or additions
                              to such agreement, however fundamental (including,
                              without  limitation,  changes  to  the  facilities
                              provided or increases in their maximum amount);

     "Facility Agent"         shall  have the  meaning  attributed  to it in the
                              Facility Agreement;

     "Floating Charge Assets" insofar  only  as  concerns  the  floating  charge
                              created by clause 3.1(n) (Charging Clause), Assets
                              for the time being comprised  within such floating
                              charge;

     "Guarantor"              any Charging  Company insofar only as it covenants
                              under clause  2.1(b)  (Charging  Clause) to pay or
                              discharge  money due or owing from or  liabilities
                              of  other  Companies  to  the   Beneficiaries  and
                              "Guarantors"  and  "Guarantee"  shall be construed
                              accordingly;

     "Hedging Agreements"     the interest rate hedging agreements  contemplated
                              by clause 10.2(f) of the Facility  Agreement,  but
                              only if and insofar as such agreements are entered
                              into with a Beneficiary;

     "Holding Company"        shall have the meaning given to that expression in
                              Section  736  of  the  Companies  Act  1985  as if
                              extended   to   bodies    corporate    wheresoever
                              incorporated;

     "indebtedness"           includes any  obligation in any currency,  whether
                              incurred as  principal  debtor or surety,  for the
                              payment or repayment of money,  whether present or
                              future, actual or contingent;

<PAGE>

     "Land"                   includes  freehold and leasehold land and (outside
                              England and Wales) immovable  property and in each
                              case all  buildings  and  structures  upon and all
                              things  affixed  to  Land  (including   trade  and
                              tenant's fixtures);

     "Offer Rights"           means all  rights of Bidco  pursuant  to the Offer
                              and the terms of any of the Offer  Documents  (and
                              its form of  acceptance)  including  the  right to
                              have the Target's  Shares  transferred to the name
                              of or held to the order of Bidco (or its  nominee)
                              and all  rights of Bidco over any  agreement  with
                              the Receiving  Banker to the Offer and any brokers
                              which  may  purchase   Target  Shares  on  Bidco's
                              behalf;

     "Primary Borrower"       TU  Finance  (No.  1) Limited  (registered  number
                              3505836);

     "Principal"              any Company  insofar  only as it owes money or has
                              incurred  liabilities to a Beneficiary except as a
                              Guarantor;

     "Receivables"            in  relation  to a Charging  Company,  all sums of
                              money  receivable by such Charging  Company now or
                              in the future  consisting  of or payable  under or
                              derived  from  any of its  Assets  referred  to in
                              clause  3.1(d),  (f),  (g),  (h), (j), (k) and (l)
                              (Charging Clause);

     "Receiver"               means any receiver  and manager or  receivers  and
                              managers  appointed under clause 14.1 (Appointment
                              and Powers of  Receiver)  and  (where the  context
                              requires  or  permits)  includes  any  substituted
                              receiver and manager or receivers and managers;

     "Regulations"            the Uncertificated Securities Regulations 1995;

     "Receiving Banker"       the UK  Receiving  Agent,  as defined in the Offer
                              Documents;

     "Relevant System"        the meaning given to that term by the  Regulations
                              and  includes any other system or facility (in the
                              United  Kingdom or  elsewhere)  providing  for the
                              deposit of, and clearance of transactions  in, the
                              Securities;

     "Receiving Banker's      an  undertaking  from the Receiving  Banker in the
     Undertaking"             form or  substantially in the form set out in Part
                              II of the Third Schedule;

     "Secured Sums"           means all money and liabilities  covenanted and/or
                              guaranteed   to  be  paid  or  discharged  by  the
                              Charging  Companies to the Security  Agent and the
                              Beneficiaries under clause 2.1 (Covenant to Pay);

     "Securities"             means,  in relation to any Charging  Company,  all
                              stocks, shares,  debentures and loan stocks issued
                              by any company or person and all other investments
                              (whether or not  marketable)  now or in the future
                              owned  at  law  or  in  equity  by  such  

<PAGE>

                              Charging  Company,   including  all  interests  in
                              investment funds and all Derivative Securities and
                              including  all  Securities  owned by such Charging
                              Company in any other Charging Company,  all Target
                              Shares and all rights and  entitlements in respect
                              thereof  owned by Bidco  and all  shares  in Bidco
                              owned by a  Charging  Company  and  including  all
                              rights,  benefits  and sums  now or in the  future
                              accruing  to any  Charging  Company as a result of
                              any  Securities  being held in a  Relevant  System
                              (including such Charging  Company's rights against
                              the  operator  of,  or  any  participant  in,  the
                              Relevant System);

     "Security Agent"         Chase  Manhattan  International  Limited acting as
                              security  agent and trustee for the  Beneficiaries
                              and  includes  any  successor   appointed  by  the
                              Beneficiaries  pursuant  to  Clause  17.5  of  the
                              Facility Agreement;

     "Subsidiary"             shall have the meaning given to that expression in
                              Section  736  of  the  Companies  Act  1985  as if
                              extended   to   bodies    corporate    wheresoever
                              incorporated;

     "Target"                 means The Energy Group PLC (company no. 3257256);

     "Target Shares"          means the  issued  and to be issued  shares in the
                              capital  of the  Target  (including  the  Target's
                              American   Depositary   Shares  and  any  American
                              Depositary  Receipts   representing  the  Target's
                              American  Depositary Shares) which are the subject
                              of the Offer;

     "United Kingdom"         means the United Kingdom of Great Britain and
     and "UK"                 Northern Ireland;

     "writing"                includes  telex,  facsimile  transmission  and any
                              other mode of representing or reproducing words in
                              a  legible  and  non-transitory  form,  except  in
                              relation  to  any  certificate,  notice  or  other
                              document  which  is  expressly  required  by  this
                              Debenture  to  be  signed,  and  "written"  has  a
                              corresponding meaning.

1.2  Interpretation: In this Debenture, unless the context otherwise requires:

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

     (b)  words  denoting  the  masculine  gender  only shall also  include  the
          feminine gender;

     (c)  words denoting persons only shall include  corporations,  partnerships
          and unincorporated associations;

     (d)  references to clauses, paragraphs and Schedules are to be construed as
          references to clauses, paragraphs and Schedules of this Debenture;

<PAGE>

     (e)  references  to any  party  shall,  where  relevant,  be  deemed  to be
          references  to  or  to  include,  as  appropriate,   their  respective
          successors or permitted assigns;

     (f)  references in this  Debenture to this  Debenture or any other document
          include references to this Debenture or such other document as varied,
          supplemented, restated and/or replaced in any manner from time to time
          and/or  any  document  which  varies,  supplements,   restates  and/or
          replaces it;

     (g)  references to  "including"  shall not be construed  restrictively  but
          shall be construed  as meaning  "including,  without  prejudice to the
          generality of the foregoing";

     (h)  references  to  moneys,  obligations  and  liabilities  due,  owing or
          incurred under the Finance Documents shall include moneys, obligations
          and liabilities due, owing or incurred in respect of any extensions or
          increases in the amount of the facilities  provided for therein or the
          obligations and liabilities imposed thereunder;

     (i)  expressions  defined  in the  Companies  Act 1985  shall have the same
          meanings in this Debenture, except that the expression "company" shall
          include a body corporate established outside Great Britain;

     (j)  any  references  to any statute or any section of any statute shall be
          deemed  to  include   reference  to  any  statutory   modification  or
          re-enactment of it for the time being in force;

     (k)  the  limitation  on liability  conferred by Section 6(2) of the Law of
          Property  (Miscellaneous  Provisions)  Act 1994 shall not apply to the
          covenants for title implied on the part of each Charging Company.

1.3  Headings: Headings in this Debenture are inserted for convenience and shall
     not affect its interpretation.


2.   COVENANT TO PAY

2.1  Covenant to Pay: Each Charging Company hereby:

     (a)  covenants that it will on demand in writing made to it by the Security
          Agent or the  relevant  Beneficiary  pay or  discharge to the Security
          Agent all money and  liabilities  now or in the future  due,  owing or
          incurred  to each  Beneficiary  by such  Charging  Company  under  the
          Facility  Agreement,  the Hedging Agreements or this Debenture (at any
          time after such money and  liabilities  have become due for payment or
          discharge  in  accordance  with the  Facility  Agreement,  the Hedging
          Agreements or this Debenture);

     (b)  covenants and guarantees  that it will on demand in writing made to it
          by the Security Agent or the relevant  Beneficiary pay or discharge to
          the Security Agent all money and liabilities now or in the future due,
          owing or incurred to each Beneficiary by each other Company (except as
          a Guarantor for the Charging  Company giving this covenant)  under the
          Facility  Agreement,  the Hedging Agreements or this Debenture (at any
          time after such money and  liabilities  have become due for payment or
          discharge  in  accordance  with the  Facility  Agreement,  the Hedging
          Agreements or this Debenture);

     in either  case,  whether  on or after such  demand,  whether  actually  or
     contingently,  whether solely or jointly with any other person,  whether as
     principal or surety,  including all interest,  

<PAGE>

     commission,  fees,  charges,  costs and expenses which each Beneficiary may
     charge or incur in respect of any Company or its affairs in accordance with
     the Facility  Agreement,  the Hedging  Agreements or this  Debenture and so
     that  interest  shall be computed and  compounded  in  accordance  with the
     Facility  Agreement  (after as well as before any demand or judgment);  but
     the guarantee in clause 2.1(b) shall not extend to the repayment of amounts
     outstanding under the stand-alone revolving credit facility contemplated by
     clause 24.5 of the Facility Agreement.

2.2  Terms of Guarantee:  The guarantee  contained in clause 2.1(b) (Covenant to
     Pay) is given subject to, and with the benefit of, the  provisions  set out
     in the Second Schedule.

2.3  Guarantee  Binding:  Each  Charging  Company  agrees  to be  bound  by  the
     guarantee  contained in clause 2.1(b)  (Covenant to Pay), even if any other
     Charging Company which was intended to execute this Debenture may not do so
     or may not be effectually bound.

2.4  Demand by Security  Agent:  The making of one demand  under this  Debenture
     will not preclude the Security Agent making any further demands.

2.5  Third  Parties:  No demand  may be made  under  this  Debenture  unless the
     Facility Agent or the relevant Beneficiaries have become entitled to make a
     demand  under clause 12.2 of the  Facility  Agreement,  but any third party
     dealing  with the  Security  Agent or the  Receiver  appointed  under  this
     Debenture  shall not be  concerned  to see or enquire as to the validity of
     any demand under this Debenture.


3.   CHARGING CLAUSE

3.1  Charging  Clause:  Each Charging  Company with full title guarantee  hereby
     charges to the Security  Agent with the payment or discharge of all Secured
     Sums:

     (a)  Registered  property:  by way of  legal  mortgage,  all  freehold  and
          leasehold  Land in  England  and  Wales now  vested  in such  Charging
          Company and registered at H M Land Registry;

     (b)  Unregistered  property:  by way of legal mortgage,  all other freehold
          and  leasehold  Land in England and Wales now vested in such  Charging
          Company and not registered at H M Land Registry;

     (c)  Future  Land:  by way of first  fixed  charge,  all Land in the future
          becoming the property of such Charging Company;

     (d)  Interests in Land:  by way of fixed  charge,  all interests in Land or
          the  proceeds of sale of Land now or in the future  belonging  to such
          Charging  Company  which  have not  already  been  charged  under  the
          preceding  provisions  of this  clause 3.1  (Charging  Clause) and all
          licences now or in the future held by such  Charging  Company to enter
          upon,  use or exploit Land and the benefit of all options,  easements,
          agreements for lease and other agreements relating to the acquisition,
          use,  exploitation or disposal of Land to which such Charging  Company
          is or may in the future become entitled;

     (e)  Plant and machinery and  fixtures:  by way of fixed charge,  all plant
          and machinery of such Charging  Company now or in the future  attached
          to any Land  which,  or an  interest  in which,  is charged  under the
          preceding  provisions  of this  clause 3.1  (Charging  Clause) and all
          rights and  interests of such  Charging  Company under all 

<PAGE>

          present and future agreements for the purchase,  maintenance or use of
          plant and machinery so attached;

     (f)  Rental and income from Land:  by way of fixed  charge,  all rental and
          other  income  and all debts and  claims  now or in the  future due or
          owing to such Charging  Company under or in connection with any lease,
          agreement or licence relating to Land;

     (g)  Securities:  by way of fixed charge, all Securities  belonging to such
          Charging Company;

     (h)  Contracts  and policies of insurance  and  assurance:  by way of fixed
          charge,  all  contracts and policies of insurance and assurance now or
          in the future held by or otherwise  benefiting  such Charging  Company
          and all rights and  interests of such  Charging  Company in every such
          contract and policy  (including  the benefit of all claims arising and
          all money payable under such contracts and policies);

     (i)  Goodwill  and  uncalled  capital:  by way of  fixed  charge,  all  the
          goodwill  and  uncalled  capital  for the time being of such  Charging
          Company;

     (j)  Intellectual Property Rights: by way of fixed charge, all intellectual
          property  rights of such  Charging  Company  capable of being  validly
          charged by fixed charge;

     (k)  Book and other debts: by way of fixed charge, all book and other debts
          now or in the future owing to such Charging Company and all rights and
          claims of such Charging  Company  against third  parties,  present and
          future,  capable of being  satisfied  by the payment of money  (except
          rights and claims effectively  charged under the preceding  provisions
          of this clause 3.1) (Charging Clause);

     (l)  Negotiable instruments etc: by way of fixed charge, the benefit of all
          negotiable  instruments,   guarantees,  bonds,  debentures,  legal  or
          equitable  charges and all other security,  reservation of proprietary
          rights, rights of tracing,  unpaid vendor's liens and all other rights
          and remedies now or in the future  available to such Charging  Company
          as security for any  Receivable  or for the  performance  by any third
          party of any  obligation  now or in the future  owed to such  Charging
          Company;

     (m)  Loan Note Collateral Account and Collection  Account balances:  by way
          of fixed  charge,  all money at any time standing to the credit of the
          Loan Note  Collateral  Account or any Collection  Account  relating to
          such Charging Company,  including the proceeds of all its Receivables,
          which proceeds shall, for the avoidance of doubt, on payment into such
          Collection Account cease to be subject to the charges contained in the
          preceding provisions of this clause 3.1 (Charging Clause) but shall be
          subject to the fixed charge contained in this paragraph (m);

     (n)  Floating Charge Assets: by way of floating charge:

          (i)  all Assets now or in the future  owned by such  Charging  Company
               except to the  extent  that such  Assets  are for the time  being
               effectively   charged  by  any  fixed  charge  contained  in  the
               preceding  provisions  of this  clause 3.1  (Charging  Clause) or
               effectively  assigned  by  clause  3.2  (Assignment  of  Rights),
               including  any  Assets   comprised   within  a  charge  which  is
               reconverted  under  clause  3.7  (Decrystallisation  of  Floating
               Charge); and

<PAGE>

          (ii) without  exception  all  Assets  insofar as they are for the time
               being  situated  in  Scotland;  

      but in each case so that  such  Charging  Company  shall  not  create  any
      mortgage  or any  fixed or  floating  charge  or other  security  over any
      Floating Charge Asset (whether having priority over, or ranking pari passu
      with or subject to, this floating  charge) or take any other step referred
      to in clause 6.1 (Negative Pledge and other  Restrictions) with respect to
      any Floating Charge Asset and such Charging Company shall not, without the
      prior written consent of the Security Agent, sell, transfer,  part with or
      dispose of any Floating Charge Asset except by way of sale in the ordinary
      course of its business.

3.2  Assignment of Rights:  (a) Bidco hereby assigns and agrees to assign to the
     Security  Agent as  continuing  security  for the  payment,  discharge  and
     performance of the Secured Sums the Offer Rights  together with the benefit
     of all  powers  and  remedies  for  enforcing  the  same,  in favour of the
     Security  Agent;  (b) each Charging  Company  hereby  assigns and agrees to
     assign  to the  Security  Agent as  continuing  security  for the  payment,
     discharge and performance of the Secured Sums all  indebtedness due to such
     Charging  Company  from  any  other  Charging  Company  including  all such
     indebtedness  arising  or in  any  way  connected  with  the  Offer  or the
     financing of the Offer.

3.3  Notice Relating to the Assignment and the Charge over Target Shares:  Bidco
     shall:

     (a)  execute  the notice of the  assignment  and the charge  over the Offer
          Rights  constituted  by this deed in the form set out in Part I of the
          Third Schedule on the date hereof and:

          (i)  forthwith deliver the same to the Receiving Banker; and

          (ii) procure the execution  and delivery to the Security  Agent by the
               Receiving   Banker  of  the   acknowledgement   and   undertaking
               substantially  in the  form  set  out  in  Part  II of the  Third
               Schedule; and

     (b)  execute the contol agreement substantially in the form set out in Part
          III of the Third Schedule on the date hereof and:

          (i)  forthwith  deliver the same to the US  Depositary  for the Offer,
               Bank of New York; and

          (ii) procure the execution and delivery to the Security  Agent by such
               US Depositary of such control agreement.

3.4  Crystallisation  of Floating  Charge:  The floating  charge  created by any
     Charging  Company in clause 3.1(n)  (Charging  Clause) may be  crystallised
     into a fixed charge by notice in writing  given at any time on or after the
     Enforcement  Date by the  Security  Agent to such  Charging  Company.  Such
     crystallisation shall take effect over such Floating Charge Assets or class
     or classes of Floating  Charge  Assets as shall be specified in the notice.
     If no Floating  Charge Assets are so  specified,  it shall take effect over
     all Floating Charge Assets of the relevant Charging Company.

3.5  Automatic  Crystallisation:  If any Charging Company,  without the Security
     Agent's prior written consent, resolves to take or takes any step to charge
     (whether by way of fixed or floating  charge) or otherwise  encumber any of
     its  Floating  Charge  Assets or to create a trust  


<PAGE>

     over any such  Floating  Charge  Asset or to dispose  of any such  Floating
     Charge  Asset  except by way of sale or other  disposition  in the ordinary
     course of such Charging  Company's  business,  or if any person resolves to
     take or takes any step to levy any distress,  execution,  sequestration  or
     other process against any Floating  Charge Asset,  then the floating charge
     created  by  clause  3.1(n)   (Charging   Clause)  shall  be  automatically
     crystallised  (without  the  necessity  of notice) into a fixed charge over
     such Floating Charge Asset instantly on the occurrence of such event.

3.6  Floating Charge Assets acquired after Crystallisation:  Except as otherwise
     stated in any notice  given under clause 3.4  (Crystallisation  of Floating
     Charge) or unless  such  notice  relates  to all  Floating  Charge  Assets,
     Floating   Charge   Assets   acquired  by  any   Charging   Company   after
     crystallisation has occurred under clause 3.4  (Crystallisation of Floating
     Charge) or 3.5 (Automatic  Crystallisation)  shall continue  subject to the
     floating  charge created by clause 3.1(n)  (Charging  Clause),  so that the
     crystallisation shall be effective only as to its Floating Charge Assets in
     existence at the date of crystallisation.

3.7  Decrystallisation  of  Floating  Charge:  Any charge by a Charging  Company
     which has  crystallised  under  clause  3.4  (Crystallisation  of  Floating
     Charge) or 3.5 (Automatic  Crystallisation) may, by notice in writing given
     at any time by the Security Agent to such Charging Company,  be reconverted
     into a  floating  charge in  relation  to the Assets or class or classes of
     Assets specified in such notice.

3.8  Priority  of Fixed  Security:  Any  mortgage,  fixed  charge or other fixed
     security  whenever and however created by a Charging Company and subsisting
     in favour of the  Security  Agent  shall  (save as the  Security  Agent may
     otherwise  declare at or after the time of its creation) have priority over
     the floating charge created by clause 3.1(n) (Charging Clause).

3.9  Future  Security  subject to this Debenture:  Any debentures,  mortgages or
     charges  (fixed or  floating)  created in the future by a Charging  Company
     (except  those in favour of the  Security  Agent)  shall be expressed to be
     subject to this  Debenture  and shall rank in order of priority  behind the
     charges created by this Debenture.


4.   TITLE DOCUMENTS AND VOTING RIGHTS

4.1  Deposit of Title Deeds and Documents:  Except as otherwise expressly agreed
     in writing by the Security Agent, each Charging Company shall:

     (a)  deposit  with the  Security  Agent,  and the  Security  Agent shall be
          entitled to retain,  all deeds and documents of title  relating to all
          its Assets  charged by way of fixed charge under clause 3.1  (Charging
          Clause)   (including   policies  of  insurance   and   assurance   and
          certificates  evidencing the entitlement of the Charging  Companies to
          the Securities);

     (b)  promptly  have  registered  in the name of the  Security  Agent or its
          nominee on the date of receipt by it and/or, in relation to the Target
          Shares,  the Receiving Banker, the Target Shares in certificated form,
          and in the case of all other Securities  certificates and documents of
          title  relating  to such other  Securities  in  certificated  form and
          undated  transfers  executed in blank and such other  Documents as the
          Security  Agent may require to perfect title to such other  Securities
          (duly executed by the registered holder) or for vesting or enabling it
          to vest the same in itself,  its  nominees or any  purchaser  Provided
          that this  sub-clause  shall be  satisfied  in  relation to the Target
          Shares held by 

<PAGE>

          the Receiving Banker if the Security Agent receives from the Receiving
          Banker a duly executed Receiving Banker's Undertaking.

4.2  Charging  Companies to retain voting rights and dividends  until  Debenture
     enforceable:  Unless and until this  Debenture  becomes  enforceable or the
     Security Agent otherwise directs at any time while a Default is continuing:

     (a)  for so long as the relevant  Charging  Company  remains the registered
          owner of the Securities:

          (i)  all  voting  and other  rights  (including  the right to  receive
               dividends) attaching to Securities shall continue to be exercised
               by the relevant  Charging Company for so long as it remains their
               registered  owner,  Provided that the relevant  Charging  Company
               undertakes  not to exercise  any voting or other  rights in a way
               which is  likely to  prejudice  the  value of the  Securities  or
               otherwise  jeopardise the security constituted by this Debenture;
               and

          (ii) the  relevant  Charging  Company  shall be free to deal  with all
               dividends and interest paid thereon, subject to the provisions of
               the Facilities Agreement;

     (b)  if Securities  are registered in the name of the Security Agent or its
          nominee:

          (i)  all voting and other rights  attaching to them shall be exercised
               by  the  Security  Agent  or  its  nominee  in  accordance   with
               instructions  in  writing  from  time to time  received  from the
               relevant  Charging  Company,  Provided that the relevant Charging
               Company  undertakes not to give any  instructions to exercise any
               voting  or  other  rights  in a way  which  is in the  reasonable
               opinion of the Security  Agent  likely to prejudice  the value of
               the Securities or otherwise  jeopardise  the security  created by
               this  Debenture;  in the  absence of any such  instructions,  the
               nominee shall refrain from exercising any such rights; and

          (ii) all dividends,  distributions,  interest and other moneys paid on
               and received by the Security  Agent in respect of the  Securities
               shall  be  collected  by the  Agent  as  agent  for the  relevant
               Charging  Company  and  paid to  such  Charging  Company  to such
               account as it may from time to time specify.

4.3  Security  Agent  to  have  voting  rights  and  dividends  after  Debenture
     enforceable: At any time after this Debenture has become enforceable:

     (a)  the Security Agent may (in the name of the relevant  Charging  Company
          or otherwise and without any further  consent or authority on the part
          of such  Charging  Company)  exercise  all  voting  and  other  rights
          attaching to the Securities and any rights attaching to the Securities
          to nominate or remove a director as if the Security Agent was the sole
          beneficial owner of the Securities;

     (b)  all Derivative  Securities shall, if received by the relevant Charging
          Company or its  nominee,  be held on trust for and  forthwith  paid or
          transferred to the Security Agent; and

     (c)  each  Charging  Company  shall (and shall  procure  that its  nominees
          shall)  accept  short notice for and attend any meeting of the holders
          of any  Securities,  appoint  proxies  and  

<PAGE>

          exercise voting and other rights and powers exercisable by the holders
          of the Securities as the Security Agent may direct from time to time.


5.   COLLECTION OF RECEIVABLES

5.1  Treatment of Receivables:  Each Charging  Company shall collect and realise
     all Receivables and shall pay into such Charging Company's account with the
     Security  Agent or such  other  account  of such  Charging  Company  as the
     Security Agent may direct (a  "Collection  Account") all money which it may
     receive in respect of them  immediately on receipt.  Each Charging  Company
     shall, pending such payment,  hold all money so received upon trust for the
     Security  Agent and shall not,  without  the prior  written  consent of the
     Security Agent, charge, factor, discount,  assign,  postpone,  subordinate,
     release or waive its rights in respect of any  Receivable  in favour of any
     other person or purport to do so. The Collection  Account shall be operated
     by the  Beneficiary  with which it is maintained (if not the Security Agent
     itself) as trustee for the Security Agent.

5.2  Delivery of  Particulars  and  Receivables:  Each  Charging  Company  shall
     deliver to the Security Agent such  particulars as to the amount and nature
     of its  Receivables as the Security Agent may from time to time  reasonably
     require.


6.   NEGATIVE PLEDGE AND OTHER RESTRICTIONS

6.1  Negative Pledge and other restrictions:  No Charging Company shall, without
     the prior written consent of the Security Agent:

     (a)  create,  or agree or  attempt  to create,  or permit to  subsist,  any
          Security Interest except this Debenture;

     (b)  sell, or otherwise dispose of any Assets to any persons on terms which
          will or are intended to result in such Assets being leased or licenced
          back or  re-acquired  by such  Charging  Company  or any  other  Group
          Company;

     (c)  permit any person other than the  Security  Agent or its nominee to be
          registered as the holder of any Target Shares;

     (d)  do  anything  which  would  prejudice  the  Security  Interest  of the
          Security Agent over the Securities.

6.2  Application to Land Registrar:  Each Charging Company hereby applies to the
     Chief Land  Registrar  for a  restriction  to be entered on the register of
     title of all present registered  freehold and leasehold Land in England and
     Wales of such Charging Company,  and agrees to apply for such a restriction
     when  requested  by the  Security  Agent in  respect  of all  freehold  and
     leasehold Land in England and Wales acquired by such Charging Company after
     the date of this Debenture, in the following terms:

     "Except under an order of the  Registrar,  no disposition by the proprietor
     of the land is to be registered  without the consent of the  proprietor for
     the time being of [the charge hereby created]."

<PAGE>

7.   FURTHER ASSURANCE

7.1  Further  Assurance:  Each Charging  Company shall on demand by the Security
     Agent in writing  execute and deliver to the Security  Agent at the cost of
     such Charging Company and in such form as the Security Agent may require:

     (a)  a valid legal mortgage of standard security or other hypothecation any
          Land now or in the future belonging to such Charging Company;

     (b)  a valid fixed charge over any  interest,  not capable of being charged
          by way of legal mortgage,  in any Land now or in the future  belonging
          to such Charging Company;

     (c)  a legal  assignment  or other  fixed  security  over all or any of its
          intellectual property rights or Receivables;

     (d)  a legal charge over all or any of its Securities;

     (e)  any Documents, instruments or directions relating to any Securities in
          uncertificated  form  required  to protect or  preserve  the  Security
          Agent's title to and security over such Securities;

     (f)  a chattel  mortgage over such chattels,  plant,  machinery,  computers
          and/or other equipment of such Charging  Company as the Security Agent
          may specify;

     (g)  a fixed charge or other fixed security over any of its Floating Charge
          Assets;

     (h)  where any of its Assets are situated  outside England and Wales,  such
          fixed  security under the law of the place where the Asset is situated
          as the Security Agent may require;

     (i)  a notice to the US  Depositary  (as  defined  in the  Offer  Document)
          regarding  the Security  Agent's  interest in the American  Depositary
          Shares which are the subject of the Offer, and an acknowledgement from
          the US Depositary of such notice; and

     (j)  such other documents as the Security Agent may in its discretion think
          fit further to secure the payment of the Secured  Sums,  or to perfect
          this Debenture, or to vest title to any Asset in itself or its nominee
          or any purchaser.


8.   CONTINUING SECURITY

     This Debenture shall be a continuing security to the Security Agent and the
     Beneficiaries,  notwithstanding  any intermediate  payment or settlement of
     account or any other matter whatever, and shall be in addition to and shall
     not prejudice or be prejudiced by any right of lien,  set-off,  combination
     or other rights  exercisable by the Security Agent and the Beneficiaries as
     bankers  against  the  Charging  Companies  or  any  security,   guarantee,
     indemnity  and/or  negotiable  instrument  now or in the future held by the
     Security Agent or any Beneficiary.

<PAGE>

9.   GENERAL COVENANTS

9.1   Acquisition of Land or Intellectual Property Rights: Each Charging Company
      shall at all times immediately notify the Security Agent in writing of its
      acquisition of any interest or right in or to any Land or any intellectual
      property rights;

9.2   Negative  Covenant  regarding  Receivables:  No  Charging  Company  shall,
      without  the  prior  written  consent  of  the  Security  Agent,  seek  to
      compromise,  compound,  discharge,  postpone,  release, set-off, settle or
      subordinate  any of its  Receivables  or waive  its  rights  of  action in
      connection  with  them,  or do or omit to do  anything  which may delay or
      prejudice their full recovery.

9.3   Negative  Covenant  regarding Loan Note  Collateral  Account:  No Charging
      Company shall  utilise,  or draw down,  or otherwise  deal with or seek to
      utilise,  draw  down,  or  otherwise  deal with the Loan  Note  Collateral
      Account except as permitted by and in accordance with Clause 4.1(f) of the
      Facility Agreement.


10.   COVENANTS REGARDING SECURITIES

      Each Charging Company covenants with the Security Agent that it shall:

      10.1  Restriction on  consolidation,  subdivision etc: save with the prior
            written  consent of the Security  Agent,  not cause or permit any of
            the  Securities  to be  consolidated,  sub-divided  or converted and
            shall take such action as the  Security  Agent may direct in respect
            of  any  proposed  compromise,  arrangement,  capital  organisation,
            conversion,  exchange,  repayment or takeover offer affecting any of
            its  Securities  or any  proposal  to vary or  abrogate  any  rights
            attaching to any of the Securities;

      10.2  Pay calls  promptly:  promptly pay direct to the company in which it
            holds  Securities  any calls on any  Securities  which are not fully
            paid, and if it defaults the Security Agent may (but need not) do so
            on  behalf  of the  relevant  Charging  Company  (and any  amount so
            expended shall be a cost receivable under clause 19.1);

      10.3  Forward  notices  etc:  forward to the  Security  Agent any notices,
            reports,  accounts,  circulars and other  documents  relating to the
            Securities as soon as they are received;

      10.4  Execute  documents etc required to convert to  uncertificated  form:
            (at its expense)  execute and deliver to the Security Agent or as it
            directs such documents,  transfers and powers of attorney, give such
            instructions  and perform such other acts as the Security  Agent may
            reasonably  require  at  any  time  to  convert  any  Securities  in
            certificated form into uncertificated form;

      10.5  Covenant regarding ADR's: ensure that as regards all ADR holders who
            accept the Offer,  the American  Depositary  Shares which such ADR's
            represent are immediately exchanged for certificated Ordinary Shares
            in the Target  registered in the name of the Security Agent and that
            such ADR's are then cancelled.


11.   LEASES, POSSESSION OF LAND AND CONSOLIDATION OF MORTGAGES

11.1  No Leasing,  etc: No Charging  Company  shall,  without the prior  written
      consent of the Security Agent, exercise any power of leasing, or accepting
      surrenders  of leases of, any Land,  

<PAGE>

      nor (save where  obliged to do so by law) extend,  renew or vary any lease
      or tenancy agreement or give any licence to assign or underlet.

11.2  No Parting with Possession No Charging  Company shall part with possession
      (except on the  determination of any lease,  tenancy or licence granted to
      such Charging  Company) of any Land or share the occupation of it with any
      other person,  or agree to do so, without the prior written consent of the
      Security Agent.

11.3  Section 93 LPA 1925:  Section 93 of the Law of Property Act 1925,  dealing
      with the consolidation of mortgages, shall not apply to this Debenture.


12.   POWERS OF SALE, LEASING AND ACCEPTING SURRENDERS

12.1  Debenture  to become  Enforceable:  This  Debenture  shall be  immediately
      enforceable if the Enforcement Date shall occur.

12.2  Statutory Power of Sale: Section 103 of the Law of Property Act 1925 shall
      not apply to this  Debenture,  but the  statutory  power of sale shall (as
      between the Security Agent and a purchaser from the Security  Agent) arise
      on, and be exercisable at any time after, the execution of this Debenture.
      However,  the Security  Agent shall not exercise  such power of sale until
      the Enforcement Date has occurred,  or a Receiver has been appointed,  but
      this provision  shall not affect a purchaser or require him to ask whether
      a demand or appointment has been made.

12.3  Powers of Security  Agent to Grant Leases:  The statutory  powers of sale,
      leasing and  accepting  surrenders  exercisable  by the Security  Agent by
      virtue of this  Debenture  are  extended so as to  authorise  the Security
      Agent (whether in its own name or that of the Charging Company  concerned)
      to grant a lease or leases of any Land vested in a Charging  Company or in
      which it has an  interest,  with such rights  relating to other such Land,
      and containing  such covenants on the part of such Charging  Company,  and
      generally on such terms and conditions,  as the Security Agent shall think
      fit.

12.4  Power to Sever Fixtures:  The statutory  power of sale  exercisable by the
      Security  Agent is extended so as to authorise the Security Agent to sever
      any fixtures from Land and sell them separately.

12.5  Third  Parties not to be  concerned  with  Validity  of Demand:  No person
      dealing with the Security  Agent or any  Receiver,  its agents or brokers,
      shall  be  concerned  to  enquire   whether  this   Debenture  has  become
      enforceable,  or whether any power  exercised or purported to be exercised
      has become  exercisable,  or whether any Secured Sums remain due upon this
      Debenture,  or as to the necessity or expediency of any  stipulations  and
      conditions  subject  to which  the sale of any  Assets  shall be made,  or
      otherwise as to the propriety or  regularity of the sale of any Asset,  or
      to see to the  application of any money paid to the Security Agent or such
      Receiver,  or its agents or brokers, and each such dealing shall be deemed
      to be within the powers  hereby  conferred  and to be valid and  effectual
      accordingly.

12.6  Exclusion of  liability:  The Security  Agent shall not be liable (save in
      the event of its gross negligence or wilful misconduct) for:

      (a)   any loss  arising  out of such sale or other  disposal of any of the
            Securities  or the  exercise  of or failure to  exercise  any of the
            Security  Agent's  powers of sale  over any  Securities  under  this
            Debenture, however caused and whether or not a better price could or
            might 

<PAGE>

            have been  obtained by deferring or advancing  the date of such sale
            or other  disposal  and the  Security  Agent  shall not be liable to
            account as mortgagee in possession for any of the Securities; or

      (b)   any  neglect or default to pay any call or  instalment  or to accept
            any offer or to notify the relevant  Charging  Company of any matter
            or for any other loss of any nature  whatsoever in  connection  with
            any of the Securities.


13.   OPENING OF NEW ACCOUNTS

13.1  Ruling off  Accounts:  On receiving  notice that any Charging  Company has
      encumbered or disposed of any of its Assets, the Security Agent and/or any
      Beneficiary may rule off such Charging  Company's  account or accounts and
      open a new account or accounts with such Charging Company.

13.2  Credits  not  to  reduce  Indebtedness:  If  the  Security  Agent  or  any
      Beneficiary does not open a new account or accounts immediately on receipt
      of such notice,  it shall  nevertheless be treated as if it had done so at
      the time when it received  such notice and as from that time all  payments
      made by such Charging  Company to the Security  Agent or such  Beneficiary
      shall be treated as having  been  credited to such new account or accounts
      and shall not  operate  to reduce  the  amount  owing  from such  Charging
      Company  to the  Security  Agent or such  Beneficiary  at the time when it
      received such notice.


14.   APPOINTMENT AND POWERS OF A RECEIVER

14.1  Appointment of Receiver: At any time:

      (a)   on or after the Enforcement Date; or

      (b)   if so requested by the Primary  Borrower and/or any Charging Company
            in respect of its own Assets;

      the  Security  Agent may  appoint by writing any person or persons to be a
      receiver and manager or  receivers  and managers of all or any part of the
      Assets of the Primary  Borrower and/or such Charging  Company (as the case
      may be).

14.2  Power of  Receivers  Joint and  Several:  Where more than one  Receiver is
      appointed,  they shall have power to act  separately  unless the  Security
      Agent shall in the appointment specify to the contrary.

14.3  Security Agent to Determine  Remuneration of Receiver:  The Security Agent
      may from time to time determine the remuneration of the Receiver.

14.4  Removal of Receiver:  The Security Agent may (subject to Section 45 of the
      Insolvency  Act 1986) remove the Receiver from all or any of the Assets of
      which he is the Receiver.

14.5  Further  Appointment:  Such an  appointment  shall  not  preclude  (i) the
      Security Agent from making any  subsequent  appointment of a Receiver over
      all or any Assets over which a Receiver has not previously  been appointed
      or has  ceased  to  act,  or (ii) a  Receiver,  while  continuing  to act,
      consenting to the appointment of an additional Receiver to act with him.

<PAGE>

14.6  Receiver to Act as Agent:  The Receiver shall be the agent of the Charging
      Company concerned (which shall be solely liable for his acts, defaults and
      remuneration)   unless  and  until  such   Charging   Company   goes  into
      liquidation,  after which he shall act as  principal  and shall not become
      the agent of the Security Agent or the Beneficiaries.

14.7  Powers of Receiver: The Receiver shall have and be entitled to exercise in
      relation  to the  Charging  Company  concerned  all the  powers set out in
      Schedules 1 and 2 to the Insolvency Act 1986 and in particular,  by way of
      addition and without  limiting  such powers (and without  prejudice to the
      powers of the Security  Agent and the  Beneficiaries),  the Receiver shall
      have power:

      (a)   to take  possession  of,  collect  and get in all or any part of the
            Assets of the relevant  Charging  Company and to take and defend any
            proceedings (including proceedings for its winding up or proceedings
            by way of  arbitration)  in its name or  otherwise as he shall think
            fit;

      (b)   to carry on or concur in  carrying on the  business of the  relevant
            Charging  Company  and raise  money from any  Beneficiary  or others
            without security or on the security of all or any of its Assets;

      (c)   to sell or concur in selling (where  necessary with the leave of the
            Court), lease or concur in leasing,  licence or concur in licensing,
            grant  options  over and,  without  the need to  observe  any of the
            provisions  of Sections 99 and 100 of the Law of Property  Act 1925,
            let or concur in letting and to terminate or to accept surrenders of
            leases,  licences  or  tenancies  of all or any of the Assets of the
            relevant Charging Company in such manner and generally on such terms
            and  conditions as he shall think fit in his absolute and unfettered
            discretion  and  any  such  sale  or  disposition  may be for  cash,
            debentures, securities or other valuable consideration (in each case
            payable  in a lump  sum or by  instalments)  and to  carry  any such
            transactions  into  effect  in the  name  of and on  behalf  of such
            Charging Company;

      (d)   to promote the  formation of a  Subsidiary  or  Subsidiaries  of the
            relevant  Charging  Company  with  a  view  to  such  Subsidiary  or
            Subsidiaries purchasing,  leasing,  licensing or otherwise acquiring
            interests in all or any of the Assets of such Charging Company;

      (e)   to arrange for such  Subsidiary or Subsidiaries to trade or cease to
            trade as the Receiver may think fit from time to time;

      (f)   to sever any fixtures from the Land of which they form part;

      (g)   to exercise  all voting and other  rights  attaching  to  Securities
            owned by the relevant Charging Company;

      (h)   to arrange for the purchase, lease, licence or acquisition of all or
            any Assets of the relevant  Charging  Company by any such Subsidiary
            on a  basis  whereby  the  consideration  may be for  cash,  shares,
            debentures,  loan stock, convertible loan stock or other securities,
            shares of  profits or sums  calculated  by  reference  to profits or
            turnover or royalties or licence fees or  otherwise,  whether or not
            secured on the  assets of such  Subsidiary  and  whether or not such
            consideration  is  payable  or  receivable  in  a  lump  sum  or  by
            instalments over such period as the Receiver may think fit;

<PAGE>

      (i)   to make any arrangement or compromise with the Security Agent or any
            Beneficiary as he shall think fit;

      (j)   to make and effect all  repairs,  renewals and  improvements  to the
            Assets of the  relevant  Charging  Company  and to effect,  renew or
            increase insurances on such terms and against such risks as he shall
            think fit;

      (k)   to appoint  managers,  officers and agents for the above purposes at
            such salaries as the Receiver may determine;

      (l)   to  call  up all or any  portion  of  the  uncalled  capital  of the
            relevant Charging Company;

      (m)   to redeem  any prior  Security  Interest  and to settle and pass the
            accounts of the  encumbrancer and any accounts so settled and passed
            shall  (subject to any manifest  error) be conclusive and binding on
            the relevant  Charging Company and the money so paid shall be deemed
            an expense properly incurred by the Receiver;

      (n)   to pay the  proper  administrative  charges  of the  Security  Agent
            and/or the  Beneficiaries  in respect of time spent by their  agents
            and  employees  in dealing  with  matters  raised by the Receiver or
            relating to the receivership of the relevant Charging Company;

      (o)   to  commence  and/or  complete  any  building  operations  upon  any
            freehold or leasehold Land of the relevant  Charging  Company and to
            apply for and obtain any planning  permissions,  building regulation
            consents  or  licences  in  each  case  as he may  in  his  absolute
            discretion think fit;

      (p)   to vary the terms of the leases of any such  freehold and  leasehold
            Land;

      (q)   to take all steps necessary to effect all  registrations,  renewals,
            applications   and   notifications  as  the  Receiver  will  in  his
            discretion  think prudent to maintain in force or protect any of the
            relevant Charging Company's Intellectual Property Rights;

      (r)   to do all such  other acts and  things as may be  considered  by the
            Receiver to be  incidental  or conducive to any of the above matters
            or powers or otherwise  incidental or conducive to the preservation,
            improvement or realisation of the relevant Assets.

14.8  No Obligation to Account as Mortgagee in Possession:  Neither the Security
      Agent nor any  Beneficiary  nor the Receiver shall be liable to account as
      mortgagee in possession  or otherwise for any money not actually  received
      by it or him respectively.

14.9  Third  Parties:  A person  dealing with the Receiver in good faith and for
      full value  shall not be  concerned  to enquire  whether  the  Receiver is
      validly appointed or acting within his powers.  Neither the Security Agent
      nor any  Beneficiary  nor the  Receiver  shall be  liable  to  account  as
      mortgagee in possession  or otherwise for any money not actually  received
      by  it  or  him  respectively,   whether  by  way  of  payment,   set-off,
      counterclaim or otherwise.

14.10 Section 109, Law of Property Act 1925:  Section 109 of the Law of Property
      Act 1925 shall not apply to this Debenture.

<PAGE>

15.   POWER OF ATTORNEY

15.1  Power  of  Attorney:  Each  Charging  Company  by way of  security  hereby
      irrevocably  appoints  the Security  Agent  (whether or not a Receiver has
      been appointed) and any Receiver  separately the attorney of such Charging
      Company (with full power to appoint  substitutes and to delegate) for such
      Charging Company,  in its name and on its behalf,  and as its act and deed
      or otherwise, at any time to execute and deliver and otherwise perfect any
      agreement,  assurance,  deed,  instrument or Document,  perform any act or
      give any  instructions  in  relation  to  Securities  under  the rules and
      practices of a Relevant System or otherwise, which may be required of such
      Charging  Company under and in accordance with the terms of this Debenture
      and which such  Charging  Company has failed to do within 14 days of being
      notified by the Security  Agent that it is  required,  or (on or after the
      Enforcement Date) as may be deemed by such attorney necessary or desirable
      for any purpose of this  Debenture  or to enhance or perfect the  security
      intended to be constituted by it or to convey or transfer legal  ownership
      of any Assets.

15.2  Ratification:  Without  prejudice  to the  generality  of  the  provisions
      contained in clause 15.1 (Power of Attorney), each Charging Company hereby
      covenants with the Security Agent and separately with any Receiver that if
      required so to do such company will ratify and confirm:

      (a)   all transactions  entered into by it or (as the case may be) them at
            its or (as the case may be) their instance in the proper exercise of
            its or (as the case may be)  their  powers in  accordance  with this
            Debenture; and

      (b)   all transactions  entered into by it or (as the case may be) them in
            signing,   sealing,   delivering   and  otherwise   perfecting   any
            assignment, mortgage, charge, security, deed, assurance, document or
            act as aforesaid;

      and each Charging  Company  irrevocably  acknowledges and agrees that such
      power of attorney is (inter alia) given to the Security  Agent,  or as the
      case may be, the  Receiver  or both,  to secure the  performance  of these
      obligations owed to him or them by the Charging Companies.


16.   ADJUSTMENT OF ACCOUNT

      If the state of account  between the Security Agent or any Beneficiary and
      a Company by reference to which any Secured  Sums are  calculated  for the
      purposes of this Debenture requires  adjustment at any time because of any
      claim  made  against  the  Security  Agent  or  such   Beneficiary  by  an
      officeholder  (within  the meaning of Section  234 of the  Insolvency  Act
      1986) then, notwithstanding any other provision of this Debenture:

      (a)   such Company's  liability to the Security Agent or such  Beneficiary
            will be correspondingly adjusted; and

      (b)   the  Security  Agent or such  Beneficiary  may treat any  release or
            settlement  made by it with such  Company  or any  Charging  Company
            before any such adjustment is required as being of no effect; and

      (c)   the Security Agent or such Beneficiary may recover from such Company
            or any Charging Company such sum as will place the Security Agent or
            such  Beneficiary  in  the  same  position  as if  such  release  or
            settlement had not been made.

<PAGE>

      If any claim is made against the Security Agent or any  Beneficiary  under
      any insolvency  law, the Security Agent or such  Beneficiary may agree the
      claim or settle it on any terms it chooses without asking for the relevant
      Company's or any Charging  Company's  agreement.  If the Security Agent or
      such Beneficiary does agree or settle the claim, the Primary Borrower will
      be  liable  under  this  Debenture  as if a  court  order  had  been  made
      containing the terms which the Security Agent or Beneficiary  have agreed.
      The Primary  Borrower will be responsible for all costs and expenses which
      the Security Agent or such Beneficiary properly incurs in defending such a
      claim.


17.   OTHER POWERS EXERCISABLE BY THE SECURITY AGENT

17.1  Security Agent may Exercise  Receiver's Powers: All powers of the Receiver
      conferred  by  this  Debenture  may be  exercised  by the  Security  Agent
      following demand by the Security Agent whether as attorney of the Charging
      Companies  or otherwise  and whether or not the  Receiver  shall have been
      appointed and so that clause  14.7(m)  (Powers of Receiver)  shall be read
      and  construed  as if the words "be charged on the Assets of the  relevant
      Charging  Company"  were  substituted  for the words "be deemed an expense
      properly incurred by the Receiver."

17.2  Security Agent Empowered to receive Book Debts:  The Security Agent or any
      manager or officer of the Security Agent is hereby  irrevocably  empowered
      to receive all book debts and other debts and claims which may be assigned
      to the  Security  Agent  pursuant  to clause 7 and on  payment  to give an
      effectual  discharge for them and on non-payment to take and institute (if
      the  Security  Agent in its sole  discretion  so  decides)  all  steps and
      proceedings  either in the name of the relevant assignor or in the name of
      the Security  Agent for their  recovery and also to agree  accounts and to
      make  allowances  and to give time to any surety.  The  relevant  assignor
      hereby undertakes to ratify and confirm whatever the Security Agent or any
      manager or officer of the  Security  Agent shall do or purport to do under
      this clause 17.

17.3  Security  Agent not  obliged to take action  relating  to Book Debts:  The
      Security Agent shall have no liability or  responsibility  to any Charging
      Company  arising  out of  the  exercise  or  non-exercise  of  the  rights
      conferred on it by this clause 17, except for gross  negligence and wilful
      default. The Security Agent shall not be obliged to make any enquiry as to
      the sufficiency of any sums received by it in respect of any book debts or
      other  debt or claim so  assigned  to it or to make any  claim or take any
      other action to collect in or enforce them.


18.   APPLICATION OF MONEY RECEIVED 
      BY THE SECURITY AGENT OR A RECEIVER

18.1  Application of Recoveries:  Any money received under the powers  conferred
      by this  Debenture  shall,  subject to the discharge of any  prior-ranking
      claims,  be paid or applied in the order of priority set out in clause 8.9
      of the Facility Agreement.

18.2  Suspense Accounts:  The Security Agent may, in its absolute  discretion on
      or at any time or times  after  demand  and  pending  the  payment  to the
      Security  Agent of the whole of the  Secured  Sums,  place and keep to the
      credit of a separate or suspense account any money received,  recovered or
      realised by the Security  Agent by virtue of this Security for so long and
      in  such  manner  as  the  Security   Agent  may  determine   without  any
      intermediate  obligation  to apply it in or towards the  discharge  of any
      Secured Sum.

<PAGE>

19.   COSTS AND INTEREST ON OVERDUE AMOUNTS

19.1  Costs and  Charges:  All costs,  charges and  liabilities  (including  all
      professional fees and disbursements and Value Added Tax and/or any similar
      tax) and all other  sums  paid or  incurred  by the  Security  Agent,  the
      Beneficiaries   and/or  any  Receiver  under  this  Debenture,   shall  be
      recoverable  (on a full indemnity  basis) as a debt payable on demand from
      such of the Charging  Companies as the Security  Agent may select,  may be
      debited  without notice to any account of such Charging  Companies,  shall
      bear  interest  accordingly  and shall be  charged  on the  Assets of such
      Charging Companies.  Without prejudice to the generality of the foregoing,
      the costs recoverable by the Security Agent, the Beneficiaries  and/or any
      Receiver under this Debenture  shall include (i) all costs incurred by the
      Security Agent and the Beneficiaries in preparing and  administering  this
      Debenture  or  perfecting  the  security  created  by it,  (ii) all  costs
      (whether or not  allowable on a taxation by the Court) of all  proceedings
      for the  enforcement  of this  Debenture  or for the recovery or attempted
      recovery  of the  Secured  Sums,  (iii) all money  expended  and all costs
      arising out of the exercise of any power, right or discretion conferred by
      this Debenture,  (iv) all costs and losses arising from any default by any
      Charging  Company  in the  payment  when  due of any  Secured  Sums or the
      performance  of  its   obligations   under  this  Debenture  and  (v)  all
      administrative  charges of the Security Agent and the Beneficiaries  based
      on time spent by its employees  and agents in connection  with the affairs
      of the Companies.

19.2  Overdue Amounts: Any overdue amounts secured by this Debenture shall carry
      interest at the rate and in accordance  with the terms contained in clause
      5.4 of the Facility Agreement in relation to overdue sums or at such other
      rate agreed  between the relevant  Company and the  Security  Agent or the
      relevant Beneficiary from time to time.

19.3  Currency  Indemnity:  Moneys received or held by the Security Agent or any
      Beneficiary  pursuant to this Debenture may from time to time after demand
      has been made be converted into such currency as the Security Agent or any
      Beneficiary considers necessary or desirable to discharge the Secured Sums
      in  that  currency  at the  Security  Agent  or  that  Beneficiary's  then
      prevailing  spot  rate of  exchange  (as  conclusively  determined  by the
      Security  Agent or that  Beneficiary  acting in good faith) for purchasing
      the currency to be acquired with the existing currency.


20.   SET-OFF

      (a)   Each Beneficiary may, on or after the Enforcement  Date,  retain any
            money  standing  to the  credit of any  Charging  Company  with such
            Beneficiary  in any currency  upon any account or otherwise  (in any
            country and whether or not in such Charging Company's name) as cover
            for any Secured Sums and/or at any time or times  without  notice to
            such  Charging  Company  combine or  consolidate  all or any of such
            money with all or such part of the Secured Sums as such  Beneficiary
            may select (whether  presently  payable or not) and such Beneficiary
            may  purchase  with any such money any other  currency  required  to
            effect such combination.

      (b)   Each Charging Company irrevocably  authorises the Security Agent and
            each Beneficiary on or after the Enforcement Date in its name and at
            its expense to perform  such acts and sign such  documents as may be
            required  to give  effect to any  set-off or  transfer  pursuant  to
            clause 20(a),  including the purchase with the money standing to the
            credit  of any  such  account  of such  other  currencies  as may be
            necessary to effect such set-off or transfer.

<PAGE>

      (c)   The foregoing  provisions of this clause shall be in addition to and
            without   prejudice   to  such  rights  of   set-off,   combination,
            consolidation,  lien and other  rights  whatsoever  conferred on the
            Security Agent and the Beneficiaries by law.

      (d)   If the Security  Agent or a  Beneficiary  exercises its rights under
            this clause 20, it shall as soon as  practicable  notify the Primary
            Borrower.


21.   SECURITY AGENT AS TRUSTEE, 
      PERPETUITY PERIODS AND NO PARTNERSHIP

21.1  Security Agent:  The Security Agent hereby declares itself to be a trustee
      of this Debenture  (and any other security in its favour created  pursuant
      to this Debenture) for the  Beneficiaries.  The retirement of the Security
      Agent from being trustee and the  appointment  of any new trustee shall be
      effected in the manner provided in the Facility Agreement.

21.2  Perpetuity  Period:  The perpetuity  period applicable to the trust hereby
      constituted shall be 80 years.

21.3  No Partnership:  Nothing in this Security shall constitute or be deemed to
      constitute a partnership between the Beneficiaries.


22.   FORBEARANCE AND SEVERABILITY

22.1  No Waivers:  All rights,  powers and privileges under this Debenture shall
      continue in full force and effect, regardless of the Security Agent or any
      Beneficiary exercising, delaying in exercising or omitting to exercise any
      of them.

22.2  Invalidity and Severability:

      (a)   None of the covenants and  guarantees  given and none of the charges
            created by the  Charging  Companies  under this  Debenture  shall be
            avoided  or  invalidated  by  reason  only  of one or  more  of such
            covenants, guarantees or charges being invalid or unenforceable.

      (b)   Any provision of this  Debenture  which for any reason is or becomes
            illegal,  invalid or unenforceable  shall be ineffective only to the
            extent of such illegality, invalidity and unenforceability,  without
            invalidating the remaining provisions of this Debenture.


23.   VARIATIONS AND CONSENTS

23.1  Variations  to be in writing  signed by all parties:  No variation of this
      Debenture  shall be  considered  valid  and as  constituting  part of this
      Debenture,  unless  such  variation  shall have been made in  writing  and
      signed by the  Security  Agent (on  behalf of the  Beneficiaries)  and the
      Primary Borrower (on behalf of the Charging Companies).

23.2  Variation:   The  expression  'variation'  shall  include  any  variation,
      supplement, extension, deletion or replacement however effected.

<PAGE>

23.3  Conditional  Consents:  Save  as  otherwise  expressly  specified  in this
      Debenture, any consent of the Security Agent may be given absolutely or on
      any terms and subject to any conditions as Security Agent may determine in
      its entire discretion.


24.   AUTHORITY OF PRIMARY BORROWER

      Each Charging  Company (except the Primary  Borrower)  hereby  irrevocably
      authorises the Primary Borrower to act on its behalf in administering  the
      terms of this Debenture and in signing on its behalf any document varying,
      supplementing,   restating  and/or  replacing  the  terms  and  conditions
      contained in this Debenture or any document ancillary to it.


25.   SERVICE OF DEMANDS AND NOTICES

25.1  Addresses:

      (a)   A demand  for  payment  or any other  demand or  notice  under  this
            Debenture  may be made or given by any  manager  or  officer  of the
            Security  Agent  in  writing   addressed  to  the  Charging  Company
            concerned and served on it at the address of such  Charging  Company
            stated above or its existing or last known place of business (or, if
            more than one, any one of such places), or by facsimile transmission
            to the facsimile  number last known to the Security  Agent or by any
            other form of electronic communication which may be available.

      (b)   Any  communication  to  be  given  to  any  Beneficiary  under  this
            Debenture  must be given to the Security  Agent in writing served on
            it at the address for service of the Security  Agent given in Part B
            of the First  Schedule or the address  last  notified to the Primary
            Borrower by the Security Agent in writing.

25.2  Deemed Service:  A notice or demand shall be deemed to be duly served on a
      Charging Company:

      (a)   if delivered by hand, when left at such an address;

      (b)   if  sent by  post,  at noon on the  next  day  following  the day of
            posting  and  shall  be  effective  even  if it is  misdelivered  or
            returned undelivered;

      (c)   if given or made by facsimile or other electronic communication,  at
            the time of transmission;

      Provided that, where delivery or transmission  occurs after 6.00 p.m. on a
      Business  Day or on a day which is not a Business  Day,  service  shall be
      deemed to occur at 9.00 a.m. on the next Business Day.


26.   COUNTERPARTS

      This  Debenture  may be executed by any of the  Charging  Companies in any
      number of copies,  all of which taken together  shall  constitute a single
      Debenture.

<PAGE>

27.   ASSIGNMENT

      Each  Beneficiary  may assign or transfer  all or any of their  respective
      rights  hereunder  or hold  their  rights  hereunder  on trust  for  their
      successors or assigns or  transferees  subject always to the provisions of
      clause 16 of the Facility Agreement.


28.   SECURITY AGENT

      The provisions of clauses 17 - 21 of the Facility Agreement shall apply to
      the Security  Agent's rights,  obligations and duties under this Debenture
      as if set out in this Debenture in full.


29.   JOINT AND SEPARATE LIABILITY

      Unless  the  context  otherwise  requires,   all  covenants,   agreements,
      representations  and  warranties  on the  part of the  Charging  Companies
      contained in this  Debenture are given by them jointly and  separately and
      shall be construed accordingly.


30.   THE GIVING AND ACKNOWLEDGEMENT OF NOTICE OF ASSIGNMENT

      For the  purposes  of  Section  136 of the Law of  Property  Act  1925 and
      generally the Security Agent hereby gives, and each Charging Company which
      is  or  will  become  a  debtor  of  any  other  Charging  Company  hereby
      acknowledges,  receipt of notice of the  assignment by way of security and
      charge to the  Security  Agent under this  Debenture  of all such  present
      and/or future indebtedness.


31.   GOVERNING LAW

31.1  This  Debenture  shall be governed by and  construed  in  accordance  with
      English law.

31.2  Each Charging  Company hereby  submits,  for the exclusive  benefit of the
      Security Agent and the  Beneficiaries,  to the jurisdiction of the English
      Courts,  but without  prejudice to the right of the Security  Agent and/or
      the Beneficiaries to commence proceedings against such Charging Company in
      any other jurisdiction.


THIS  GUARANTEE AND  DEBENTURE  has been executed by each Charging  Company as a
Deed and signed by the  Security  Agent and it shall take  effect on the day and
year first above written.


<PAGE>

                               THE FIRST SCHEDULE

                                     Part A

                             The Charging Companies


                                                      Address and fax or
Name of Company                Registered Number      Telex Number

TU Finance (No. 1) Limited     3505836                Norton Rose,
(as Primary Borrower)                                 Kempson House,
                                                      Camomile Street,
                                                      London EC3A 7AN

                                                      Fax: 44 171 283 6500
                                                      Attention: Andrew Bamber/
                                                      Marcus Dougherty


TU Finance (No. 2) Limited     3514100                Norton Rose,
                                                      Kempson House,
                                                      Camomile Street,
                                                      London EC3A 7AN

                                                      Fax: 44 171 283 6500
                                                      Attention: Andrew Bamber/
                                                      Marcus Dougherty

TU Acquisitions PLC            3455523                Norton Rose,
                                                      Kempson House,
                                                      Camomile Street,
                                                      London EC3A 7AN

                                                      Fax: 44 171 283 6500
                                                      Attention: Andrew Bamber/
                                                      Marcus Dougherty


                                     Part B

                               The Security Agent


                                                      Address for Service
Name of Company                Registered Number      and Fax or Telex Number


Chase Manhattan International  938937                 Trinity Tower
Limited                                               9 Thomas More Street
                                                      London E1 9YT

                                                      Fax: + 44 171 777 2360
                                                      Attention: Stephen Clarke


<PAGE>

                               THE SECOND SCHEDULE

                               Terms of Guarantee


1.    Continuing  Security:  This  Guarantee  is a  continuing  security  to the
      Security Agent and each  Beneficiary and will continue in full force until
      no sum remains payable under the Finance  Documents and the  Beneficiaries
      have irrevocably  received or recovered all sums payable under the Finance
      Documents  irrespective  of  whatever  dealings  may occur on any  account
      between the Security Agent or such Beneficiary and the Principal.

2.    Opening of New  Accounts:  If this  Guarantee  ceases for any reason to be
      binding on the  Guarantor  as a  continuing  security  in  relation to the
      Principal,  then each Beneficiary may break such accounts of the Guarantor
      and  the  Principal  with  such  Beneficiary  as  such  Beneficiary  deems
      appropriate and open new accounts for the account holders affected.

      If that is done,  no money  credited  to such new  account at that time or
      later will have the effect of reducing the amount due to such  Beneficiary
      on the original account.  If that is not done, such Beneficiary will still
      be treated as if it had  broken  all such  accounts  at the time when such
      notice expired or this Guarantee ceased to be a continuing security and as
      if all payments made to such  Beneficiary  then or later had been credited
      to a new account with the same result.

      Such Beneficiary may also refuse payment (without notice to the Guarantor)
      of any cheque or order which, if paid or honoured, would reduce or further
      reduce the  Guarantor's  credit balances below the amount of its liability
      to such Beneficiary under this Guarantee at such time.

3.    Payments:  All  payments  falling  to be made by a  Guarantor  under  this
      Guarantee will be made to the Security  Agent or the relevant  Beneficiary
      without  any  set-off  or  counterclaim  and free  from any  deduction  or
      withholding  for or on account of any taxes or other charges in the nature
      of taxes  imposed by any  competent  authority.  If any such  deduction or
      withholding  is required by law,  the  Guarantor  will pay to the relevant
      Beneficiary any additional  amount  necessary to ensure that such Security
      Agent  receives and retains the full amount of the relevant  payment as if
      such deduction or withholding had not been made.

4.    Suspense  Account:  The Security Agent and/or any  Beneficiary  may at any
      time (without  prejudice to its other rights) place and keep for such time
      as the  Security  Agent or such  Beneficiary  may think  prudent any money
      received,  recovered or realised under or by virtue of this Guarantee on a
      separate or suspense account to the credit of either the Security Agent or
      such  Beneficiary  or  the  Guarantor  (as  the  Security  Agent  or  such
      Beneficiary thinks fit),  without any intermediate  obligation on its part
      to  apply  such  money or any part of it in or  towards  discharge  of the
      Secured Sums.

5.    Additional to Other  Security:  This Guarantee is to be in addition to and
      is not to prejudice or be  prejudiced  by any other  guarantee or security
      (including any other guarantee signed by the Guarantor) which the Security
      Agent or any  Beneficiary  may hold from or on  account  of the  Principal
      either now or in the future. This Guarantee may be enforced at any time on
      or  after  the  Enforcement   Date  without  the  Security  Agent  or  any
      Beneficiary  first making  demand on the  Principal or taking any steps or
      proceedings  against the  Principal  or having  recourse to any such other
      guarantee or security.

6.    Restriction on each Guarantor: The Guarantor shall have no right to:

<PAGE>

      (i)   make any claim (whether by way of proof in liquidation or otherwise)
            against the Principal or any property of the Principal; or

      (ii)  participate  in any security held or money  received by the Security
            Agent or any Beneficiary on account of the Secured Sums; or

      (iii) stand in the  place of the  Security  Agent  or any  Beneficiary  in
            respect of any such security or money;

      until in each case all Secured Sums have been repaid to the Security Agent
      and/or the Beneficiaries in full.

      However,  if so  directed by the  Security  Agent but not  otherwise,  the
      Guarantor shall prove in the Principal's  liquidation for the whole or any
      part of the money due or owing to the Guarantor  from the Principal in any
      manner whatever and the benefit of such proof and of all money received by
      the  Guarantor  in respect  of it shall be held on trust for the  Security
      Agent and applied in reduction of the Secured Sums.

7.    Right to act without  affecting the  Guarantee:  The Security Agent or any
      Beneficiary  may at any time  (without  affecting  its rights  against the
      Guarantor under this Guarantee)  grant,  extend,  increase,  renew,  vary,
      determine  or refuse any credit or  facility  to the  Principal,  or take,
      hold,  exchange,  vary, release,  abstain from perfecting or enforcing any
      guarantee or security for the Secured Sums,  or compromise  with or extend
      time or grant waivers,  releases or any indulgence to the Principal or any
      co-surety,  or make any arrangement,  concession or settlement with any of
      them or do or omit or neglect to do anything  whatever which, but for this
      provision,  might exonerate or discharge the Guarantor's obligations under
      this  Guarantee  (except  for a  specific  written  release  given  by the
      Security Agent of such obligations).

8.    Receipt of Payments: After this Guarantee becomes enforceable,  no payment
      received by the Security Agent or any Beneficiary  from any source (except
      the Principal) in respect of the Secured Sums will be treated  (regardless
      of the manner in which the  Security  Agent or such  Beneficiary  may deal
      with it in its books or otherwise) as reducing the  Guarantor's  liability
      to the Security Agent or such  Beneficiary  under this Guarantee,  so that
      until the Security Agent or such  Beneficiary has received payment in full
      of all Secured Sums, it will be deemed,  as between the Security  Agent or
      such  Beneficiary  and the  Guarantor  and except  for any  payment by the
      Principal, to remain wholly unsatisfied.

9.    Adjustments:  If the state of account  between the  Security  Agent or any
      Beneficiary  and the Principal (by reference to which any Secured Sums are
      calculated for the purposes of this Guarantee)  requires adjustment at any
      time  because  of any  claim  made  against  the  Security  Agent  or such
      Beneficiary by an office-holder  (within the meaning of Section 234 of the
      Insolvency Act 1986),  then,  notwithstanding  any other provision of this
      Guarantee:

      (a)   the Guarantor's  liability to the Security Agent or such Beneficiary
            will be correspondingly adjusted, and

      (b)   the  Security  Agent or such  Beneficiary  may treat any  release or
            settlement made by it with the Guarantor  before any such adjustment
            is required as being of no effect, and


<PAGE>

      (c)   the  Security  Agent  or  such  Beneficiary  may  recover  from  the
            Guarantor  such  sum as  will  place  the  Security  Agent  or  such
            Beneficiary  in the same  position as if such release or  settlement
            had not been made.

      If any claim is made against the Security Agent or any  Beneficiary  under
      any insolvency  law, the Security Agent or such  Beneficiary may agree the
      claim or settle it on any terms it chooses without the necessity of asking
      for the Guarantor's  agreement.  If the Security Agent or such Beneficiary
      does agree or settle the claim,  the  Guarantor  will be liable under this
      Guarantee as if a court order had been made containing the terms which the
      Security  Agent or such  Beneficiary  have agreed.  The Guarantor  will be
      responsible  for all costs and expenses  which the Security  Agent or such
      Beneficiary properly incurs in defending such a claim.

10.   Retention:  The Security  Agent may keep the  security  held by it for the
      Guarantor's  liability  under  this  Guarantee  in  order to  protect  the
      Security  Agent and the  Beneficiaries  against any  possible  claim under
      insolvency  law for such period after all Secured Sums have been satisfied
      as the Security  Agent  reasonably  considers to be necessary to avoid any
      risk under  applicable  insolvency  law.  If a claim is made  against  the
      Security Agent or any Beneficiary  within that period,  the Security Agent
      may keep the security until that claim has finally been dealt with.

11.   Guaranteed   Liabilities   Continue  to  be  Payable:  The  winding-up  or
      dissolution  of the Principal  will not affect the  Guarantor's  liability
      under this  Guarantee  and any sum  payable to the  Security  Agent or any
      Beneficiary  at the  date  of  the  commencement  of  such  winding-up  or
      immediately prior to such dissolution (as the case may be) will be treated
      as continuing payable until actually paid in full.

12.   Capacity of  Principal:  If any question  arises as to the capacity of the
      Principal  in  relation  to any  dealing  between  the  Principal  and the
      Security  Agent or any  Beneficiary,  or as to the capacity,  authority or
      power of any officer, employee or agent of the Principal to bind it to any
      transaction with the Security Agent or any  Beneficiary,  or as to whether
      any of the Secured Sums are  immediately  due and payable,  that  question
      shall,  as  between  the  Security  Agent  or  such  Beneficiary  and  the
      Guarantor,  be disregarded and the Guarantor will for the purposes of this
      Guarantee  be and  continue  to be  liable to the  Security  Agent or such
      Beneficiary  in respect of any such dealing,  transaction  and/or  Secured
      Sums as if the Guarantor were a principal debtor.

13.   Currency  Conversion:  Any money  received  by the  Security  Agent or any
      Beneficiary  under or by virtue of this  Guarantee may be converted by the
      Security  Agent  or such  Beneficiary  at any time as it  thinks  fit (and
      notwithstanding  any previous  conversion)  into any currency in which any
      part of the  Secured  Sums is due or owing to the  Security  Agent or such
      Beneficiary, in which event the net amount available to the Security Agent
      or such  Beneficiary in such other currency  (after allowing for all costs
      of conversion)  shall be deemed to be the amount  received by the Security
      Agent or such Beneficiary under or by virtue of this Guarantee.

14.   Admission  and   Acknowledgement   of   Indebtedness:   Any  admission  or
      acknowledgement in writing by the Principal or on its behalf of the amount
      of any Secured  Sums or otherwise  in relation to this  Guarantee,  or any
      judgment  or award  obtained  by the  Security  Agent  or any  Beneficiary
      against  the  Principal,  or  any  proof  by  the  Security  Agent  or any
      Beneficiary  in winding up which is admitted,  or any statement of account
      furnished by the Security  Agent or any  Beneficiary  the  correctness  of
      which is  certified  by any one of its  directors,  regional  directors or
      managers,  will be binding and conclusive on the Guarantor  (except in the
      case of manifest error).


<PAGE>

15.   Financial   Assistance:   Notwithstanding  any  other  provision  of  this
      Guarantee,  this  Guarantee  shall not operate to  guarantee  any money or
      liability if and insofar as such money was borrowed or such  liability was
      incurred  directly or indirectly for the purpose of the acquisition by any
      person of shares in the Guarantor or its holding  company or the reduction
      or discharge of any  existing  liability  incurred for the purpose of such
      acquisition and if and for so long as it would not be lawful under Chapter
      VI, Part V, of the  Companies  Act 1985 for such money or  liability to be
      guaranteed by this Guarantee.

16.   Disability or Incapacity of any Principal:  As a separate and  independent
      stipulation and without  prejudice to the provisions of clause 2 (Covenant
      to Pay), the Guarantor agrees that all sums of money which have become due
      hereunder  and which may not be  recoverable  from it on the  footing of a
      guarantee  whether by reason of any legal  limitation  on or disability or
      incapacity of any Company or any other fact or  circumstance,  and whether
      known to any Beneficiary or not, shall as to an equivalent  amount thereof
      nevertheless be recoverable from the Guarantor as sole or principal debtor
      or debtors in respect  thereof and shall be paid on demand in writing made
      by the Security Trustee.

17.   No Termination:  Other than with the prior written consent of the Security
      Agent,  the Guarantor shall not terminate its guarantee  contained in this
      Debenture whilst any part of the Secured Sums remains outstanding.


<PAGE>

                               THE THIRD SCHEDULE

                                     PART I

               Form of Notice and Instructions to Receiving Banker


To:  [The Receiving Banker]                                  [           ] 1998



Dear Sirs,

Offer Document dated [           ] 1998 made relating to an offer for The Energy
Group PLC (the  "Agreement");  agreement  with the receiving  banks to the offer
dated [           ] 1998 (the "Receiving Banker Agreement");

1.    We refer to the Agreement and the Receiving Banker Agreement.  We attach a
      copy of a guarantee and debenture (the "Deed") dated  [        ] 1998 made
      between,  inter alia, Chase Manhattan Bank Limited (the "Security  Agent")
      and ourselves.  Terms defined in the Deed are to have the same meanings in
      this letter.

2.    We hereby give you notice that the Offer Rights (which  include our rights
      under both the  Agreement and the Receiving  Banker  Agreement)  have been
      assigned to the Security Agent by the Deed and all the ordinary  shares of
      [        ] each in The Energy Group PLC (the "Shares") in respect of which
      acceptances  are received by you pursuant to the Offer for the purchase by
      us of the Shares have been charged to the Security Agent.

3.    We   irrevocably   and   unconditionally   instruct  and   authorise   you
      (notwithstanding  any previous  directions  which we may have given you to
      the contrary):

      (a)   unless  otherwise  directed  by the  Security  Agent,  to furnish or
            disclose to the Security Agent in addition to ourselves all notices,
            matters or things  required  under the Agreement to be furnished and
            disclosed to ourselves;

      (b)   to accept from and agree with the Security Agent (and not ourselves)
            all  claims   under,   discharges   for  and  waivers,   variations,
            terminations  and  cancellations  of the Offer  Rights  without  any
            reference to or further authority from us;

      (c)   to register or cause to be  registered  in the name of the  Security
            Agent (or as the Security Agent may otherwise direct) all the Shares
            in respect of which  acceptances are received by you pursuant to the
            Offer;

      (d)   to  deliver  or  cause  to  be  delivered  to  the  Security   Agent
            certificates  for the Shares so registered,  together with any other
            documents of title relating thereto;

      (e)   pending  such  registration  and  delivery,  to treat all  Shares in
            respect of which  acceptances  are  received by you  pursuant to the
            Offer as charged to the  Security  Agent and to keep in safe custody
            all  acceptances,  certificates  and/or  other  documents  of  title
            relating thereto and not to part with possession of the same without
            the prior written consent of the Security Agent;


<PAGE>

      (f)   to provide to the Security Agent such  information as it may require
            from  time to time in  connection  with the  Shares  charged  to it,
            without further  authority from us and without further  reference to
            us.

4.    This notice and the instructions and  authorisations  herein contained are
      irrevocable  and may not be amended,  abrogated or  withdrawn  without the
      Security  Agent's  express  prior  written  consent.   These  instructions
      supersede and override any previous  instructions  given by us in relation
      to the matters dealt with in this letter.

5.    This letter shall be governed by and construed in accordance with the laws
      of England.

6.    Please confirm your acknowledgement of this Notice by signing the enclosed
      form of  acknowledgement  and  undertaking  and by  returning  the same to
      Messrs  Lovell White Durrant at 65 Holborn  Viaduct,  London EC1A 2DY (Ref
      A1/PM/MJC) and Chase Manhattan  International  Limited at Trinity Tower, 9
      Thomas  More  Street,  London E1 9YT marked for the  attention  of Stephen
      Clarke.

Signed by


 ................................
for and on behalf of
TU Acquisitions PLC


<PAGE>

                                     PART II

                             Form of Acknowledgement
                       and Undertaking by Receiving Banker


To:      Lovell White Durrant
         65 Holborn Viaduct
         London EC1A 2DY

         Ref:   A1/PM/MJC

         Chase Manhattan International Limited
         Trinity Tower
         9 Thomas More Street
         London E1 9YT

         Attention:  Stephen Clarke

                                                          Date:

Dear Sirs

The Energy Group PLC

1.    We hereby acknowledge  receipt of a letter dated [        ] 1998 addressed
      to us by TU Acquisitions PLC (a copy of which is annexed)  together with a
      copy of the Deed  referred  to in it.  Expressions  defined in the annexed
      letter and the Deed shall have the same  meanings in this  letter,  unless
      the context otherwise requires.

2.    We confirm our  acceptance  of the  instructions  contained in the annexed
      letter and we undertake to you to act in  accordance  with and comply with
      those instructions in all respects.

3.    We confirm that we have not received notice of any other assignment of the
      Offer Document Rights.

4.    We  acknowledge  that all  Shares  in  respect  of which  acceptances  are
      received by us pursuant to the Offer shall  (subject to the Offer becoming
      or being declared  unconditional) be treated as charged to you as provided
      in the  Deed  and  registered  in your  name or as you may  direct  and we
      undertake not to do or omit to do anything  inconsistent with the terms of
      the Deed.

5.    The above  acknowledgements  and  undertakings  are given in the knowledge
      that  they are  required  by you  pursuant  to the  Deed and the  Facility
      Agreement and in consideration of your making facilities  available to the
      Borrowers on the terms set out in the Facility Agreement.


Yours faithfully
for and on behalf of
[Receiving Banker]



 ...........................
Director


<PAGE>

                                    PART III

            Form of control agreement to be executed by among others
                    the US Depositary for the Offer and Bidco


<PAGE>

EXECUTED and DELIVERED as a                             )
Deed by TU FINANCE (NO. 1) LIMITED                      )
(pursuant to a resolution of its Board                  )
of Directors) acting by:                                )


                           [L Anderson]       Attorney in fact


                           [R Shapard]        Attorney in fact



EXECUTED and DELIVERED as a                             )
Deed by TU FINANCE (NO. 2) LIMITED                      )
(pursuant to a resolution of its Board                  )
of Directors) acting by:                                )


                           [L Anderson]       Attorney in fact


                           [R Shapard]        Attorney in fact



EXECUTED and DELIVERED as a                             )
Deed by TU ACQUISITIONS PLC                             )
(pursuant to a resolution of its Board                  )
of Directors) acting by:                                )


                           [L Anderson]       Attorney in fact


                           [R Shapard]        Attorney in fact



SIGNED by                  [J Ritchie]                  )
for and on behalf of                                    )
CHASE MANHATTAN INTERNATIONAL LIMITED                   )