Document:

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                                                                     EXHIBIT 4.5

DRAFT: 25/02/03

THIS FIRST DEED OF ACCESSION TO THE FUNDING 1 DEED OF CHARGE is made on [6th
March], 2003 BETWEEN

(1)      PERMANENT FUNDING (NO. 1) LIMITED (registered number 4267660), a
         private limited company incorporated under the laws of England and
         Wales, whose registered office is at Blackwell House, Guildhall Yard,
         London EC2V 5AE ("FUNDING 1");

(2)      PERMANENT FINANCING (NO. 1) PLC (registered number 4416192), a public
         limited company incorporated under the laws of England and Wales, whose
         registered office is at Blackwell House, Guildhall Yard, London EC2V
         5AE (the "FIRST ISSUER");

(3)      STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company
         organised under the laws of the Commonwealth of Massachusetts, United
         States of America, acting through its office at 225 Franklin Street,
         Boston, Massachusetts 02110, acting as a co-trustee in its capacity as
         Security Trustee;

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

(5)      HALIFAX PLC (registered number 2367076), a public limited company
         incorporated under the laws of England and Wales, whose registered
         office is at Trinity Road, Halifax, West Yorkshire HX1 2RG, acting in
         its capacity as Cash Manager;

(6)      HALIFAX PLC (registered number 2367076), a public limited company
         incorporated under the laws of England and Wales, whose registered
         office is at Trinity Road, Halifax, West Yorkshire HX1 2RG, acting in
         its capacity as Seller;

(7)      THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND, established by an Act
         of the Parliament of Scotland in 1695, as amended, acting through its
         office situated at 116 Wellington Street, Leeds LS1 4LT, acting in its
         capacity as Account Bank;

(8)      THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND, established by an Act
         of the Parliament of Scotland in 1695, as amended, acting through its
         office situated at 116 Wellington Street, Leeds LS1 4LT, England in its
         capacity as Funding 1 GIC Provider;

(9)      HALIFAX PLC (registered number 2367076), a public limited company
         incorporated under the laws of England and Wales, whose registered
         office is at Trinity Road, Halifax, West Yorkshire HX1 2RG acting in
         its capacity as Funding 1 Swap Provider;

(10)     HALIFAX PLC (registered number 2367076), a public limited company
         incorporated under the laws of England and Wales, whose registered
         office is at Trinity Road, Halifax, West Yorkshire HX1 2RG acting in
         its capacity as First Start-up Loan Provider (the "FIRST START-UP LOAN
         PROVIDER") and Second Start-up Loan Provider (the "SECOND START-UP LOAN
         PROVIDER");

(11)     JPMORGAN CHASE BANK acting through its office at 125 London Wall,
         London EC2Y 5AJ, acting in its capacity as Funding 1 Liquidity Facility
         Provider;

(12)     STRUCTURED FINANCE MANAGEMENT LIMITED (registered number 3853947), a
         private limited company incorporated under the laws of England and
         Wales, whose registered

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         office is at Blackwell House, Guildhall Yard, London EC2V 5AE acting in
         its capacity as the Funding 1 Corporate Services Provider; and

(13)     PERMANENT FINANCING (NO. 2) PLC (registered number 4623188), a public
         limited company incorporated under the laws of England and Wales, whose
         registered office is at Blackwell House, Guildhall Yard, London EC2V
         5AE (the "SECOND ISSUER").

WHEREAS

(A)      Pursuant to the terms of an intercompany loan agreement dated [6th
         March], 2003 made between Funding 1 and the Second Issuer (the "SECOND
         ISSUER INTERCOMPANY LOAN AGREEMENT"), the Second Issuer has agreed to
         make the Second Issuer Term Advances available to Funding 1 and Funding
         1 has agreed to secure its obligations and other liabilities to the
         Second Issuer thereunder pursuant to the Funding 1 Deed of Charge.

(B)      Pursuant to the terms of a start-up loan agreement dated [6th March],
         2003 made between Funding 1 and the Second Start-up Loan Provider (the
         "SECOND START-UP LOAN AGREEMENT"), the Second Start-up Loan Provider
         has agreed to make a subordinated loan to Funding 1 and Funding 1 has
         agreed to secure its obligations and other liabilities to the Second
         Start-up Loan provider thereunder pursuant to the Funding 1 Deed of
         Charge.

(C)      Funding 1 has agreed to provide the Security Trustee with the benefit
         of the security described in the Funding 1 Deed of Charge to secure
         Funding 1's obligations to the Funding 1 Secured Creditors.

(D)      The terms of the Funding 1 Deed of Charge permit Funding 1 to secure
         its obligations to a New Funding 1 Secured Creditor thereunder.

(E)      The Second Issuer and the Second Start-up Loan Provider have agreed to
         enter into this Deed to accede to the provisions of the Funding 1 Deed
         of Charge.

(F)      The Funding 1 Secured Creditors have agreed to enter into this Deed to,
         among other things, acknowledge and agree to such accession and to
         permit any consequential changes to the Funding 1 Priority of Payments
         set out in PART I, PART II and PART III of SCHEDULE 3 of the Funding 1
         Deed of Charge as are required and any other amendment as may be
         required to give effect to this Accession Undertaking.

NOW THIS DEED WITNESSES AS FOLLOWS

1.       INTERPRETATION

         The Amended and Restated Master Definitions and Construction Schedule
         signed for the purposes of identification by Allen & Overy and Sidley
         Austin Brown & Wood on [5th March], 2003 (as the same may be amended,
         varied or supplemented from time to time with the consent of the
         parties hereto) are expressly and specifically incorporated into this
         Deed and, accordingly, the expressions defined in the Amended and
         Restated Master Definitions and Construction Schedule (as so amended,
         varied or supplemented) shall, except where the context otherwise
         requires and save where otherwise defined herein, have the same
         meanings in this Deed, including the Recitals hereto and this Deed
         shall be construed in accordance with the interpretation provisions set
         out in Clause 2 of the Amended and Restated Master Definitions and
         Construction Schedule.

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2.       REPRESENTATIONS AND WARRANTIES

2.1      The Second Issuer hereby represents and warrants to the Security
         Trustee and each of the Funding 1 Secured Creditors in respect of
         itself that as of the date of this Deed:

         (a)      pursuant to the terms of the Second Issuer Intercompany Loan
                  Agreement, Funding 1 has agreed to pay to the Second Issuer
                  the amounts set out in the Second Issuer Intercompany Loan
                  Agreement; and

         (b)      the Second Issuer Intercompany Loan Agreement expressly
                  provides that all amounts due from Funding 1 thereunder are to
                  be secured by the Funding 1 Deed of Charge.

2.2      The Second Start-up Loan Provider hereby represents and warrants to the
         Security Trustee and each of the Funding 1 Secured Creditors in respect
         of itself that as of the date of this Deed:

         (a)      pursuant to the terms of the Second Start-up Loan Agreement,
                  Funding 1 has agreed to pay to the Second Start-up Loan
                  Provider the amounts set out in the Second Start-up Loan
                  Agreement; and

         (b)      the Second Start-up Loan Agreement expressly provides that all
                  amounts due from Funding 1 thereunder are to be secured by the
                  Funding 1 Deed of Charge.

2.3      Funding 1 hereby represents and warrants to the Security Trustee and
         each of the Funding 1 Secured Creditors that as at the date of this
         Deed, the conditions to incurring further secured Financial
         Indebtedness set out in CLAUSE 2.2 (New Intercompany Loan Agreements)
         of the Intercompany Loan Terms and Conditions are satisfied.

3.       ACCESSION

         In consideration of the Second Issuer and the Second Start-up Loan
         Provider being accepted as Funding 1 Secured Creditors for the purposes
         of the Funding 1 Deed of Charge by the parties thereto as from the date
         of this Deed, each of the Second Issuer and the Second Start-up Loan
         Provider:

         (a)      confirms that as from the date of this Deed, it intends to be
                  a party to the Funding 1 Deed of Charge as a Funding 1 Secured
                  Creditor;

         (b)      undertakes to comply with and be bound by all of the
                  provisions of the Amended and Restated Master Definitions and
                  Construction Schedule (as the same may be further amended,
                  varied or restated from time to time) and the Funding 1 Deed
                  of Charge in its capacity as a Funding 1 Secured Creditor, as
                  if it had been an original party thereto;

         (c)      undertakes to perform, comply with and be bound by all of the
                  provisions of the Funding 1 Deed of Charge in its capacity as
                  a Funding 1 Secured Creditor, as if it had been an original
                  party thereto as provided in CLAUSE 31.8 (Funding 1 Secured
                  Creditors) (including without limitation CLAUSES 8.4
                  (Priorities of Payment - After Service of an Intercompany Loan
                  Acceleration Notice), 8.5 (Application of Monies Received
                  After Intercompany Loan Acceleration Notice) and 9.2 (No
                  Enforcement by Funding 1 Secured Creditors)); and

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         (d)      agrees that the Security Trustee shall be the Security Trustee
                  of the Funding 1 Deed of Charge for all Funding 1 Secured
                  Creditors upon and subject to the terms set out in the Funding
                  1 Deed of Charge.

4.       SCOPE OF THE FUNDING 1 DEED OF CHARGE

         Funding 1, the Second Issuer, the Second Start-up Loan Provider and the
         Security Trustee hereby agree that for relevant purposes under the
         Funding 1 Deed of Charge and the Amended and Restated Master
         Definitions and Construction Schedule:

         (a)      the Agreement shall be treated as a Funding 1 Agreement; and

         (b)      the Second Issuer and the Second Start-up Loan Provider shall
                  be treated as an Funding 1 Secured Creditors.

5.       AMENDMENT TO THE FUNDING 1 PRIORITY OF PAYMENTS

         The Funding 1 Secured Creditors agree to amend and restate the Funding
         1 Priority of Payments set out in PARTS I, II and III of SCHEDULE 3 of
         the Funding 1 Deed of Charge in accordance with APPENDIX 1 hereto.

6.       FURTHER AMENDMENTS

6.1      CLAUSE 3.5 of the Funding 1 Deed of Charge is hereby amended by the
         insertion of the following words as a new sentence immediately after
         the words "by way of security":

         "The floating charge created hereby is a qualifying floating charge for
         the purpose of paragraph 14 of Schedule B1 of the Insolvency Act 1986."

6.2      CLAUSE 18.2 of the Funding 1 Deed of Charge is hereby amended as
         follows:

         (a)      by the insertion of the words "Subject as set out below,"
                  immediately before the words "In addition and without
                  prejudice to"; and

         (b)      by the insertion of the following as a new paragraph after sub
                  paragraph (b):

                  "The floating charge created by CLAUSE 3.5 of this Deed may
                  not be converted into a fixed charge solely as a result of the
                  obtaining of a moratorium (or anything done with a view to
                  obtaining a moratorium) under the Insolvency Act 2000 except
                  with leave of the court."

6.3      CLAUSE 8.7 of the Funding 1 Deed of Charge is hereby amended by the
         insertion after the words "Following presentation of a petition for an
         administration order in relation to Funding 1" of the following words:

         ", the filing of documents with the court for the appointment of an
         administrator in relation to Funding 1 or the service of a notice of
         intention to appoint an administrator in relation to Funding 1,"

6.4      CLAUSE 13.1 of the Funding 1 Deed of Charge is hereby amended as
         follows:

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         (a)      by the re-numbering of the paragraph as SUB-PARAGRAPH (a) and
                  by the insertion of the words "Subject to PARAGRAPH (b) below"
                  at the start thereof; and

         (b)      by the insertion of the following SUB-PARAGRAPH (b):

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

6.5      CLAUSES 5.1(c) and 5.5 of the Funding 1 Deed of Charge is hereby
         amended by the deletion of the word "first" from the third and fourth
         lines thereof, respectively.

6.6      CLAUSES 8.5 of the Funding 1 Deed of Charge is hereby amended by the
         insertion of the words "from Funding 1" immediately after the words
         "all monies received or recovered by it" on the third line thereof.

6.7      CLAUSE 27.2 of the Funding 1 Deed of Charge is hereby amended by the
         deletion of the words "(whether a trust corporation or not)" from the
         fourth line thereof and the insertion of the words "(in which case such
         person must be a Trust Corporation)" after the words "separate trustee"
         on the fifth line thereof.

6.8      Clause 27 of the Funding 1 Deed of Charge is hereby amended by the
         insertion of a new clause 27.4 as follows:

         "Notwithstanding the provisions of Clause 27.1 (Powers of Funding 1),
         any corporation into which the Funding 1 Security Trustee may be merged
         or converted or with which it may be consolidated, or any corporation
         resulting from any merger, conversion or consolidation to which the
         Funding 1 Security Trustee shall be a party, or any corporation
         succeeding to all or substantially all the corporate trust business of
         the Funding 1 Security Trustee, shall be the successor of the Funding 1
         Security Trustee hereunder without any consent or sanction of the
         Funding 1 Secured Creditors, provided such corporation shall be
         otherwise qualified and eligible under this Clause, without the
         execution or filing of any paper or any further act on the part of any
         of the parties hereto (unless otherwise required by applicable law to
         effect such succession)."

7.       MISCELLANEOUS

7.1      Save as expressly amended by this Deed, the Funding 1 Deed of Charge
         shall remain in full force and effect. This Deed shall form part of the
         Funding 1 Deed of Charge and references therein to "this Funding 1 Deed
         of Charge" shall be read as references to the Funding 1 Deed of Charge
         as amended by this Deed.

7.2      For the purposes of the definition of "First Issuer Transaction
         Account" contained in the First Issuer Master Definitions and
         Construction Schedule, it is agreed that the First Issuer may, with the
         prior written consent of the security trustee, replace any existing
         First Issuer Transaction Account with a replacement bank account
         thereafter designated, and to be treated as, the First Issuer
         Transaction Account for the purposes of the Transaction Documents.

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8.       APPLICATION

         Prior to and following enforcement of the Funding 1 Security all
         amounts at any time held by Funding 1, the Cash Manager or the Security
         Trustee in respect of the security created under this Deed shall be
         held and/or applied by such person subject to and in accordance with
         the relevant provisions of the Funding 1 Deed of Charge.

9.       NOTICES AND DEMANDS

         Any notice or communication under or in connection with this Deed, the
         Funding 1 Deed of Charge or the Amended and Restated Master Definitions
         and Construction Schedule shall be given in the manner and at the times
         set out in CLAUSE 30 (Notices and Demands) of the Funding 1 Deed of
         Charge to the addresses given in this Clause or at such other address
         as the recipient may have notified to the other parties hereto and/or
         thereto in writing.

         The address referred to in this CLAUSE 9 for the Second Issuer is:

                                    Permanent Financing (No. 2) PLC
                                    Blackwell House
                                    Guildhall Yard
                                    London
                                    EC2V 5AE
         Facsimile:                 +44 (0) 20 7556 0975
         For the attention of:      The Directors

         with a copy to:            HBOS Treasury Services plc
                                    33 Old Broad Street
                                    London
                                    EC2N 1HZ

         Facsimile:                 +44 (0) 20 7574 8784
         For the attention of:      Head of Capital Markets and Securitisation

         The address referred to in this CLAUSE 9 for the Second Start-up Loan
         Provider is:

                                    Halifax plc
                                    Trinity Road
                                    Halifax
                                    West Yorkshire
                                    HX1 2RG

         Facsimile:                 +44 (0) 1422 391 777
         For the attention of:      the Mortgage Securitisation Managers

         with a copy to:            HBOS Treasury Services plc
                                    33 Old Broad Street
                                    London
                                    EC2N 1HZ

         Facsimile:                 +44 (0) 20 7574 8784
         For the attention of:      the Head of Capital Markets and
                                    Securitisation

         The address referred to in this CLAUSE 9 for the Security Trustees are:

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                                    State Street Bank and Trust Company
                                    c/o U.S. Bank National Association
                                    1 Federal Street
                                    3rd Floor
                                    Boston, Massachusetts 02110

         Facsimile:                 +1 (617) 603 6638
         For the attention of:      Corporate Trust Services

                                    U.S. Bank National Association
                                    1 Federal Street
                                    3rd Floor
                                    Boston, Massachusetts 02110

         Facsimile:                 +1 (617) 603 6638
         For the attention of:      Corporate Trust Services

         or such other address and/or numbers as the Second Issuer, the Second
         Start-up Loan Provider or the Security Trustee may notify to the
         parties to the Funding 1 Deed of Charge in accordance with the
         provisions thereof.

10.      CHOICE OF LAW

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

DULY EXECUTED AND DELIVERED AS A DEED by each of the parties hereto or on its
behalf on the date appearing on page 1.

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FUNDING 1

EXECUTED as a DEED by                              )
PERMANENT FUNDING (NO. 1)                          )
LIMITED acting by two                              )
directors/a director and the secretary             )

Director

Director/Secretary

FIRST ISSUER

EXECUTED as a DEED by                              )
PERMANENT FINANCING (NO. 1)                        )
PLC acting by two                                  )
directors/a director and the secretary             )

Director

Director/Secretary

SELLER

EXECUTED as a DEED by                              )
HALIFAX PLC                                        )
IN ITS CAPACITY AS SELLER                          )
acting by its attorney                             )
in the presence of                                 )

Witness:

Name:

Address:

                                       8
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CASH MANAGER

EXECUTED as a DEED by                            )
HALIFAX PLC                                      )
IN ITS CAPACITY AS CASH MANAGER                  )
acting by its attorney                           )
in the presence of                               )

Witness:

Name:

Address:

ACCOUNT BANK

EXECUTED as a DEED by                            )
THE GOVERNOR AND COMPANY OF                      )
THE BANK OF SCOTLAND                             )
IN ITS CAPACITY AS ACCOUNT BANK                  )
acting by two directors/a director               )
and the secretary                                )
Director
Director/Secretary

FUNDING 1 GIC PROVIDER

EXECUTED as a DEED by                            )
THE GOVERNOR AND COMPANY OF                      )
THE BANK OF SCOTLAND                             )
IN ITS CAPACITY AS FUNDING 1 GIC PROVIDER        )
acting by two directors/a director               )
and the secretary                                )
Director
Director/Secretary

FUNDING 1 SWAP PROVIDER

EXECUTED as a DEED by                            )
HALIFAX PLC                                      )
IN ITS CAPACITY AS FUNDING 1 SWAP PROVIDER       )
acting by its attorney                           )
in the presence of                               )

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Witness:

Name:

Address:

FUNDING 1 CORPORATE SERVICES PROVIDER

EXECUTED as a DEED by                               )
STRUCTURED FINANCE                                  )
MANAGEMENT LIMITED                                  )
acting by two Directors/a director                  )
and the secretary                                   )

Director

Director/Secretary

START-UP LOAN PROVIDER

EXECUTED as a DEED by                               )
HALIFAX PLC                                         )
IN ITS CAPACITY AS FIRST START-UP LOAN              )
PROVIDER AND SECOND START-UP                        )
LOAN PROVIDER                                       )
acting by its attorney                              )
in the presence of                                  )

Witness:

Name:

Address:

FUNDING 1 LIQUIDITY FACILITY PROVIDER

EXECUTED as a DEED by                               )
JPMORGAN CHASE BANK                                 )
acting by its attorney                              )
in the presence of                                  )

Witness:

Name:

Address:

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SECURITY TRUSTEE

EXECUTED as a DEED by                              )
STATE STREET BANK AND                              )
TRUST COMPANY                                      )
acting by its attorney in the presence of          )

Witness:

Name:

Address:

SECURITY TRUSTEE

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

Authorised Signatory:

SECOND ISSUER

EXECUTED as a DEED by                              )
PERMANENT FINANCING (NO. 2) PLC                    )
PLC acting by two                                  )
directors/a director and the secretary             )

Director

Director/Secretary

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                                   APPENDIX 1

               AMENDED AND RESTATED FUNDING 1 PRIORITY OF PAYMENTS

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                                   SCHEDULE 3

                         FUNDING 1 PRIORITY OF PAYMENTS

                                     PART I

             FUNDING 1 PRE-ENFORCEMENT REVENUE PRIORITY OF PAYMENTS

1.       CALCULATION OF FUNDING 1 AVAILABLE REVENUE RECEIPTS

1.1      On the day falling four London Business Days prior to each Funding 1
         Interest Payment Date, the Cash Manager will calculate the amount of
         Funding 1 Available Revenue Receipts that available to be applied on
         the next Funding 1 Interest Payment Date in accordance with the Funding
         1 Pre-Enforcement Revenue Priority of Payments.

1.2      Subject to paragraph 1.3 below, if there would be insufficient Funding
         1 Available Revenue Receipts to meet Funding 1's obligations on the
         next Funding 1 Interest Payment Date under the Funding 1
         Pre-Enforcement Revenue Priority of Payments, then Funding 1 (or the
         Cash Manager on its behalf) shall pay or provide for that deficit by
         applying amounts then standing to the credit of (i) the Funding 1
         Principal Ledger, if any, and (ii) any amounts standing to the credit
         of the Cash Accumulation Ledger after deducting the amounts standing to
         the credit of the Funding 1 Principal Ledger (if any) from such ledger,
         and the Cash Manager shall make a corresponding entry in the relevant
         Principal Deficiency Ledger.

1.3      Funding 1 Principal Receipts may not be used to pay interest on any
         Term Advance if and to the extent that would result in a deficiency
         being recorded or an existing deficiency being increased on a Principal
         Deficiency Sub-Ledger relating to a higher ranking Term Advance.

1.4      If, on a Funding 1 Interest Payment Date, there is a deficit of Funding
         1 Available Revenue Receipts and there are no (or insufficient) amounts
         standing to the credit of the Funding 1 Principal Ledger or the Cash
         Accumulation Ledger to cure that deficit as described in PARAGRAPHS 1.2
         and 1.3 above, then the Cash Manager will direct Funding 1 to request a
         drawing pursuant to CLAUSE 5.1 of the Funding 1 Liquidity Facility
         Agreement to apply towards the deficit.

2.       DISTRIBUTION OF FUNDING 1 AVAILABLE REVENUE RECEIPTS PRIOR TO THE
         SERVICE OF AN INTERCOMPANY LOAN ACCELERATION NOTICE ON FUNDING 1

2.1      This section sets out the order of priority of payments of Funding 1
         Available Revenue Receipts as at the Closing Date. If Funding 1 enters
         into New Intercompany Loan Agreements, then this order of priority may
         change pursuant to CLAUSE 7.5 of the Funding 1 Deed of Charge.

2.2      Except for amounts due to third parties by the First Issuer and/or the
         Second Issuer and/or Funding 1 under paragraph (a) below or amounts due
         to the Account Bank and/or the First Issuer Account Bank and/or the
         Second Issuer Account Bank which shall be paid when due, on each
         Funding 1 Interest Payment Date prior to the service of an Intercompany
         Loan Acceleration Notice on Funding 1, the Cash Manager will apply the
         Funding 1 Available Revenue Receipts in the following order of priority
         (being the Funding 1 Pre-Enforcement Revenue Priority of Payments):

(a)      firstly, in or towards satisfaction of pro rata and pari passu, the
         amounts due to:

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         (i)      the Security Trustee (together with interest and any amount in
                  respect of VAT on those amounts) and to provide for any
                  amounts due or to become due in the immediately following
                  Interest Period to the Security Trustee under the Funding 1
                  Deed of Charge;

         (ii)     pro rata and pari passu, to pay amounts due to the First
                  Issuer in respect of the First Issuer's obligations specified
                  in items (a) to (c) inclusive of the First Issuer
                  Pre-Enforcement Revenue Priority of Payments or, as the case
                  may be, items (a) and (b) of the First Issuer Post-Enforcement
                  Priority of Payments;

         (iii)    pro rata and pari passu, to pay amounts due to the Second
                  Issuer in respect of the Second Issuer's obligations specified
                  in items (a) to (c) inclusive of the Second Issuer
                  Pre-Enforcement Revenue Priority of Payments or, as the case
                  may be, items (a) and (b) of the Second Issuer
                  Post-Enforcement Priority of Payments;

         (iv)     any third party creditors of Funding 1 (other than those
                  referred to later in this order of priority of payments),
                  which amounts have been incurred without breach by Funding 1
                  of the Funding 1 Agreements (and for which payment has not
                  been provided for elsewhere) and to provide for any of these
                  amounts expected to become due and payable in the immediately
                  following Interest Period by Funding 1 and to pay or discharge
                  any liability of Funding 1 for corporation tax on any
                  chargeable income or gain of Funding 1;

(b)      secondly, in or towards satisfaction of amounts due to the Funding 1
         Liquidity Facility Provider under the Funding 1 Liquidity Facility
         Agreement (except for amounts drawn thereunder to repay principal on
         the Bullet Term Advances and any Funding 1 Liquidity Subordinated
         Amounts);

(c)      thirdly, in or towards satisfaction of amounts due and payable to the
         Cash Manager under the Cash Management Agreement (together with any
         amount in respect of VAT on those amounts);

(d)      fourthly, in or towards satisfaction, pro rata and pari passu, of
         amounts, if any, due and payable to the Account Bank under the terms of
         the Bank Account Agreement and to the Funding 1 Corporate Services
         Provider under the Funding 1 Corporate Services Agreement;

(e)      fifthly, in or towards satisfaction of all amounts (if any) due and
         payable to the Funding 1 Swap Provider under the Funding 1 Swap
         Agreement (including termination payments but excluding any Funding 1
         Swap Excluded Termination Amount);

(f)      sixthly, in or towards satisfaction, pro rata and pari passu, of the
         amounts of interest due and payable on the Term AAA Advances;

(g)      seventhly, towards a credit to the AAA Principal Deficiency Sub-Ledger
         in an amount sufficient to eliminate any debit on that ledger;

(h)      eighthly, in or towards satisfaction, pro rata and pari passu, of the
         amounts of interest due and payable on the Term AA Advances;

(i)      ninthly, towards a credit to the AA Principal Deficiency Sub-Ledger in
         an amount sufficient to eliminate any debit on that ledger;

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(j)      tenthly, in or towards satisfaction, pro rata and pari passu, of
         amounts of interest due and payable on the Term BBB Advances;

(k)      eleventhly, towards a credit to the BBB Principal Deficiency Sub-Ledger
         in an amount sufficient to eliminate any debit on that ledger;

(l)      twelfthly, in or towards satisfaction, pro rata and pari passu,
         according to the respective amounts thereof:

         (i)      any amounts due to the First Issuer in respect of the First
                  Issuer's obligations (if any) to make a termination payment to
                  a First Issuer Swap Provider (but excluding any First Issuer
                  Swap Excluded Termination Amount); and

         (ii)     any amounts due to the Second Issuer in respect of the Second
                  Issuer's obligations (if any) to make a termination payment to
                  a Second Issuer Swap Provider (but excluding any Second Issuer
                  Swap Excluded Termination Amount);

(m)      thirteenthly, towards a credit to the Reserve Ledger in an amount up to
         the Reserve Fund Required Amount taking into account any net
         replenishment of the Reserve Fund on that Funding 1 Interest Payment
         Date from Funding 1 Available Principal Receipts;

(n)      fourteenthly, in or towards satisfaction, pro rata and pari passu, of
         any amounts due (without double counting) to:

         (i)      the First Issuer in respect of the First Issuer's obligations
                  to make any termination payment to a First Issuer Swap
                  Provider as a result of a First Issuer Swap Provider Downgrade
                  Termination Event;

         (ii)     the Second Issuer in respect of the Second Issuer's
                  obligations to make any termination payment to a Second Issuer
                  Swap Provider as a result of a Second Issuer Swap Provider
                  Downgrade Termination Event;

         (iii)    the First Issuer in respect of any other amounts due and
                  payable under the First Issuer Intercompany Loan Agreement and
                  not otherwise provided for in this order of priorities:

         (iv)     the Second Issuer in respect of any other amounts due and
                  payable under the Second Issuer Intercompany Loan Agreement
                  and not otherwise provided for in this order of priorities:

         (v)      after the occurrence of a Funding 1 Swap Provider Default or a
                  Funding 1 Swap Provider Downgrade Termination Event, towards
                  payment of any termination amount due and payable by Funding 1
                  under the Funding 1 Swap Agreement; and

         (iv)     the Funding 1 Liquidity Facility Provider to pay any Funding 1
                  Liquidity Subordinated Amounts due under the Funding 1
                  Liquidity Facility Agreement;

(o)      fifteenthly, towards payment pro rata and pari passu amounts due to:

         (i)      the First Start-up Loan Provider under the First Start-up Loan
                  Agreement; and

         (ii)     the Second Start-up Loan Provider under the Second Start-up
                  Loan Agreement;

                                       15
<PAGE>

(p)      sixteenthly, towards payment of an amount equal to 0.01 per cent. of
         the Funding 1 Available Revenue Receipts; and

(q)      seventeenthly, towards payment to the shareholders of Funding 1 of any
         dividend declared by Funding 1.

                                       16
<PAGE>

                                     PART II

                   FUNDING 1 PRINCIPAL PRIORITIES OF PAYMENTS

1.       DUE AND PAYABLE DATES OF TERM ADVANCES

1.1      Each First Issuer Term Advance shall become "DUE AND PAYABLE" on the
         earlier to occur of:

         (a)      each respective First Issuer Term Advances Due Date;

         (b)      the date upon which a Trigger Event occurs;

         (c)      the date upon which the Note Trustee serves a Note
                  Acceleration Notice on the First Issuer; and

         (d)      the date upon the Security Trustee serves an Intercompany Loan
                  Acceleration Notice on Funding 1.

1.2      Each Second Issuer Term Advance shall become "DUE AND PAYABLE" on the
         earlier to occur of:

         (a)      each respective Second Issuer Term Advances Due Date;

         (b)      the date upon which a Trigger Event occurs;

         (c)      the date upon which the Note Trustee serves a Note
                  Acceleration Notice on the Second Issuer;

         (d)      the date upon the Security Trustee serves an Intercompany Loan
                  Acceleration Notice on Funding 1; and

         (e)      the date upon which a step-up date occurs in relation to the
                  relevant Second Issuer Term Advance.

1.3      If there are insufficient Funding 1 Available Principal Receipts
         available to repay a Term Advance on a Funding 1 Interest Payment Date
         upon which that Term Advance is due and payable (either in full or as a
         Scheduled Amortisation Instalment), then the shortfall will be repaid
         on subsequent Funding 1 Interest Payment Dates from Funding 1 Available
         Principal Receipts until that Term Advance is fully repaid.

2.       REPAYMENT OF TERM ADVANCES OF EACH SERIES PRIOR TO THE OCCURRENCE OF A
         TRIGGER EVENT AND PRIOR TO THE SERVICE ON FUNDING 1 OF AN INTERCOMPANY
         LOAN ACCELERATION NOTICE OR THE SERVICE ON EACH ISSUER OF A NOTE
         ACCELERATION NOTICE

2.1      On each Funding 1 Interest Payment Date (but prior to the date on which
         (i) a Trigger Event occurs, (ii) the Security Trustee serves an
         Intercompany Loan Acceleration Notice on Funding 1 or (iii) each Issuer
         has been served with a Note Acceleration Notice by the Security
         Trustee), the Cash Manager shall apply Funding 1 Available Principal
         Receipts in the following order of priority:

                                       17
<PAGE>

         (a)      firstly, towards repayment of amounts due to the Funding 1
                  Liquidity Facility Provider under the Funding 1 Liquidity
                  Facility to the extent only that amounts were drawn thereunder
                  in order to make Eligible Liquidity Facility Principal
                  Repayments;

         (b)      secondly, towards replenishment of the Reserve Fund to the
                  extent only that monies have been drawn from the Reserve Fund
                  to make Eligible Reserve Fund Principal Repayments;

         (c)      thirdly, towards repayment of all Term AAA Advances that are
                  then due and payable in an order of priority based on their
                  Final Repayment Date, so that the earliest maturing Term AAA
                  Advance is paid first (and if any Term AAA Advances have the
                  same Final Repayment Date, then those Term Advances will be
                  repaid pro rata and pari passu), in each case subject to Rules
                  (1), (2) and (3) set out in PARAGRAPHS 2.2(a), (b) and (c)
                  below;

         (d)      fourthly, pro rata and pari passu towards repayment of all
                  Term AA Advances that are then due and payable, in each case
                  subject to Rules (1), (2) and (3) set out in PARAGRAPHS
                  2.2(a), (b) and (c) below;

         (e)      fifthly, pro rata and pari passu towards repayment of all Term
                  BBB Advances that are then due and payable, in each case
                  subject to Rules (1), (2) and (3) set out in PARAGRAPHS
                  2.2(a), (b) and (c) below;

         (f)      sixthly, towards a credit to the Cash Accumulation Ledger
                  until the balance is equal to Funding 1's Cash Accumulation
                  Liability (as calculated after any payments are made at
                  PARAGRAPH 2.1(c) above); and

         (g)      seventhly, the remainder shall be credited to the Funding 1
                  Principal Ledger.

2.2      In the applicable circumstances, the following Rules apply in
         determining the amounts to be paid under PARAGRAPHS 2.1(c), (d) and (e)
         above and, where indicated, PARAGRAPHS 3.1(c), (d) and (e) and 4.1(c),
         (d) and (e) below:

         (a)      Rule (1) - Deferral of repayment of Pass-Through Term Advances
                  and/or Scheduled Amortisation Instalments in certain
                  circumstances.

                  (A)      Deferral of Term AA Advances and/or Term BB Advances

                  (i)      If on a Funding 1 Interest Payment Date:

                           (1)      there is a debit balance on the BBB
                                    Principal Deficiency Sub-Ledger or the AA
                                    Principal Deficiency Sub-Ledger, after
                                    application of the Funding 1 Available
                                    Revenue Receipts on that Funding 1 Interest
                                    Payment Date; or

                           (2)      the Adjusted Reserve Fund Level is less than
                                    the Reserve Fund Threshold; or

                           (3)      the aggregate Outstanding Principal Balance
                                    of Loans in the Mortgages Trust, in respect
                                    of which the aggregate amount in arrears is
                                    more than three times the Monthly Payment
                                    then due, is more than 5 per cent. of the
                                    aggregate Outstanding Principal Balance of
                                    Loans in the Mortgages Trust,

                                       18
<PAGE>

                           then until the relevant circumstances as described in
                           SUB-PARAGRAPHS 2.2(a)(A)(i)(1), (2) or (3) above has
                           been cured or otherwise ceases to exist, if:

                           (a)      any Term AAA Advance (whether or not such
                                    Term AAA Advance is then due and payable)
                                    remains outstanding after making the
                                    payments under PARAGRAPH 2.1(c) above the
                                    Term AA Advances (including the Issuer Term
                                    AA Advances) will not be entitled to
                                    Principal Repayments under PARAGRAPH 2.1(d)
                                    above; and/or

                           (b)      any Term AAA Advance or any AA Term Advance
                                    (whether or not such Term AAA Advance or
                                    Term AA Advance is then due and payable)
                                    remains outstanding after making the
                                    payments under PARAGRAPHS 2.1 (c) and/or (d)
                                    above then the Term BBB Advances (including
                                    the Issuer Term BBB Advances) will not be
                                    entitled to Principal Repayments under
                                    PARAGRAPH 2.1(e) above.

                  (B)      Deferral of Scheduled Amortisation Term Advances when
                           CPR is below certain threshold(s) prior to Step-up
                           Date:

                  If on a Funding 1 Interest Payment Date:

                    (i)    one or more Bullet Term Advances are within a Cash
                           Accumulation Period at that time (irrespective of
                           whether any Scheduled Amortisation Instalments are
                           then in a Cash Accumulation Period); and

                    (ii)   either:

                             (1)    the quarterly CPR is less than 10 per
                                    cent.; or

                             (2)    both:

                                    (I)      the quarterly CPR is equal to or
                                             greater than 10 per cent., but less
                                             than 15 per cent.; and

                                    (II)     the annualised CPR is less than 10
                                             per cent.,

                                    then on or before their Step-up Dates the
                                    Scheduled Amortisation Term Advances will be
                                    entitled to Principal Repayments under
                                    PARAGRAPH 2.1(c) above only the extent
                                    permitted under the Scheduled Amortisation
                                    Repayment Restrictions.

                  (C)      Deferral of original Pass-Through Term Advances when
                           CPR is below a certain threshold prior to Step-up
                           Date:

                  If on a Funding 1 Interest Payment Date:

                  (i)      one or more Bullet Term Advances and/or Scheduled
                           Amortisation Instalments are within a Cash
                           Accumulation Period at that time; and

                                       19
<PAGE>

                  (ii)     the quarterly CPR is less than 15 per cent.; and

                  (iii)    there is a Cash Accumulation Shortfall at that time,

                  then, on or before their Step-up Dates, the Original
                  Pass-Through Term Advances will be entitled to principal
                  repayments under PARAGRAPHS 2.1(c), (d) and (e) (as
                  applicable) above only to the extent permitted under the
                  Pass-Through Repayment Restrictions.

         (b)      Rule (2) - Repayment of Payable Pass-Through Term Advances
                  after the occurrence of a Step-up Date

                  Following the occurrence of the Step-up Date under an
                  Intercompany Loan Agreement ("INTERCOMPANY LOAN A") but prior
                  to the time which Rule (3) (as set out in PARAGRAPH 2.2(c)
                  below) becomes applicable and provided that the Funding 1
                  Share of the Trust Property is greater than zero, the
                  aggregate amount repaid on a Funding 1 Interest Payment Date
                  in relation to Term Advances (other than Bullet Term Advances
                  or Scheduled Amortisation Instalments) under that Intercompany
                  Loan A under PARAGRAPHS 2.1(c), (d) and (e) above shall be
                  limited to an amount calculated as follows:

<TABLE>
<S>                                           <C>
                  Funding 1 Principal Funds x Outstanding Principal Balance of Intercompany Loan A
                                              ----------------------------------------------------
                                                Aggregate Outstanding Principal Balance of all
                                                                Intercompany Loans
</TABLE>

         (c)      Rule (3) - Repayment of Term Advances after service of a Note
                  Acceleration Notice on one or more (but not all) of the
                  Issuers

                  If the Note Trustee serves a Note Acceleration Notice on one
                  or more (but not all) of the Issuers, then this Rule (3) will
                  apply. In these circumstances:

                  (i)      service of a Note Acceleration Notice will not result
                           in automatic enforcement of the Funding 1 Security;

                  (ii)     all of the Term Advances (including any outstanding
                           Bullet Term Advances and Scheduled Amortisation
                           Instalments) under the Intercompany Loan relating to
                           the relevant Issuer who has been served a Note
                           Acceleration Notice ("INTERCOMPANY LOAN B") will
                           become immediately due and payable;

                  (iii)    the Cash Manager shall apply the appropriate amount
                           of Funding 1 Available Principal Receipts allocated
                           to Intercompany Loan B at the relevant level of the
                           Funding 1 Principal Priorities of Payments, towards
                           repayment, pro rata and pari passu, of any Term AAA
                           Advances outstanding under that Intercompany Loan B
                           (that is, those Term AAA Advances will not be repaid
                           in an order of priority based on their Final
                           Repayment Date); and

                  (iv)     the aggregate amount repaid on a Funding 1 Interest
                           Payment Date in respect of Intercompany Loan B under
                           PARAGRAPHS 2.1(c), (d) and (e), 3.1(c), (d) and (e)
                           or 4.1(c), (d) and (e) (as applicable) of the
                           relevant priority of payments shall be limited to an
                           amount calculated as follows:

                                       20
<PAGE>

<TABLE>
<S>                                  <C>
         Funding 1 Principal Funds x Outstanding Principal Balance of Intercompany Loan B
                                     ----------------------------------------------------
                                        Aggregate Outstanding Principal Balance of all
                                                        Intercompany Loans
</TABLE>

         Allocations involving Rule (2) or Rule (3)

         Where Rule (2) or Rule (3) applies at a level of any priority of
         payments, the funds available for making payments at that level shall
         first be allocated without reference to Rule (2) or Rule (3) (as
         applicable). However, if the amount so allocated to one or more Term
         Advances exceeds the amount permitted under Rule (2) or Rule (3) (as
         applicable) to be paid in respect of those Term Advances (the "CAPPED
         ADVANCES"), the excess shall then be reallocated among any other Term
         Advances at that level using the method of allocation as applies at
         that level but without reference to the Capped Advances in calculating
         such reallocation. If a further such excess arises as a result of the
         reallocation process, the reallocation process shall be repeated at
         that level in relation to each such further excess that arises until no
         further funds can be allocated at that level following which the
         remaining excess shall then be applied at the next level of that
         Priority of Payments.

3.       REPAYMENT OF TERM ADVANCES OF EACH SERIES FOLLOWING THE OCCURRENCE OF A
         NON-ASSET TRIGGER EVENT BUT PRIOR TO THE SERVICE ON FUNDING 1 OF AN
         INTERCOMPANY LOAN ACCELERATION NOTICE OR THE SERVICE ON EACH ISSUER OF
         A NOTE ACCELERATION NOTICE

3.1      On each Funding 1 Interest Payment Date following the occurrence of a
         Non-Asset Trigger Event (but prior to the date on which (i) an Asset
         Trigger Event occurs, (ii) the Security Trustee serves an Intercompany
         Loan Acceleration Notice on Funding 1 or (iii) each Issuer has been
         served with a Note Acceleration Notice), the Bullet Term Advances and
         the Scheduled Amortisation Term Advances under each Intercompany Loan
         will be deemed to be Pass-Through Term Advances and, on each Funding 1
         Interest Payment Date, Funding 1 will be required to apply Funding 1
         Available Principal Receipts in the following order of priority:

         (a)      firstly, towards repayment of amounts due to the Funding 1
                  Liquidity Facility Provider under the Funding 1 Liquidity
                  Facility to the extent only that amounts were drawn thereunder
                  in order to make Eligible Liquidity Facility Principal
                  Repayments;

         (b)      secondly, towards replenishment of the Reserve Fund to the
                  extent only that monies have been drawn from the Reserve Fund
                  to make Eligible Reserve Fund Principal Repayments;

         (c)      thirdly, to repay the Term AAA Advance with the earliest Final
                  Repayment Date, then to repay the Term AAA Advance with the
                  next earliest Final Repayment Date, and so on until the Term
                  AAA Advances are fully repaid;

         (d)      fourthly, pro rata and pari passu, to repay the Term AA
                  Advances, until those Term AA Advances are fully repaid; and

         (e)      fifthly, pro rata and pari passu, to repay the Term BBB
                  Advances, until each of those Term BBB Advances are fully
                  repaid.

                                       21
<PAGE>

4.       REPAYMENT OF TERM ADVANCES OF EACH SERIES FOLLOWING THE OCCURRENCE OF
         AN ASSET TRIGGER EVENT BUT PRIOR TO THE SERVICE ON FUNDING 1 OF AN
         INTERCOMPANY LOAN ACCELERATION NOTICE OR THE SERVICE ON EACH ISSUER OF
         A NOTE ACCELERATION NOTICE

4.1      Following the occurrence of an Asset Trigger Event (whether or not a
         Non-Asset Trigger Event occurs or has occurred) (but prior to (i)
         service by the Security Trustee of an Intercompany Loan Acceleration
         Notice on Funding 1 or (ii) each issuer has been served with a Note
         Acceleration Notice), the Bullet Term Advances and the Scheduled
         Amortisation Term Advances in respect of all Intercompany Loans will be
         deemed to be Pass-Through Term Advances, and on each Funding 1 Interest
         Payment Date Funding 1 will be required to apply Funding 1 Available
         Principal Receipts in the following order of priority:

         (a)      firstly, towards repayment of amounts due to the Funding 1
                  Liquidity Facility Provider under the Funding 1 Liquidity
                  Facility to the extent only that those amounts were drawn in
                  order to make Eligible Liquidity Facility Principal
                  Repayments;

         (b)      secondly, towards replenishment of the Reserve Fund to the
                  extent only that monies have been drawn from the Reserve Fund
                  to make Eligible Reserve Fund Principal Repayments;

         (c)      thirdly, pro rata and pari passu, towards repayment of the
                  Term AAA Advances, until each of those Term AAA Advances is
                  fully repaid;

         (d)      fourthly, pro rata and pari passu, towards repayment of the
                  Term AA Advances until each of those Term AA Advances is fully
                  repaid; and

         (e)      fifthly, pro rata and pari passu, towards repayment of the
                  Term BBB Advances, until each of those Term BBB Advances is
                  fully repaid.

5.       REPAYMENT OF TERM ADVANCES OF EACH SERIES FOLLOWING THE SERVICE ON EACH
         ISSUER OF A NOTE ACCELERATION NOTICE BUT PRIOR TO THE SERVICE ON
         FUNDING 1 OF AN INTERCOMPANY LOAN ACCELERATION NOTICE

5.1      If each Issuer has been served with a Note Acceleration Notice, then
         that will not result in automatic enforcement of the Funding 1 Security
         under the Funding 1 Deed of Charge. In those circumstances, however,
         the Bullet Term Advances and any Scheduled Amortisation Term Advances
         under each Issuer's respective Intercompany Loan will be deemed to be
         Pass-Through Term Advances and Funding 1 will be required to apply
         Funding 1 Available Principal Receipts on each Funding 1 Interest
         Payment Date in the following order of priority:

         (a)      firstly, towards repayment to the Funding 1 Liquidity Facility
                  Provider of amounts drawn under the Funding 1 Liquidity
                  Facility on the prior Funding 1 Interest Payment Date in order
                  to make Eligible Liquidity Facility Principal Repayments;

         (b)      secondly, towards replenishment of the Reserve Fund to the
                  extent only that monies have been drawn from the Reserve Fund
                  to make Eligible Reserve Fund Principal Repayments;

         (c)      thirdly, pro rata and pari passu, towards repayment of the
                  Term AAA Advances, until each of those Term AAA Advances is
                  fully repaid.

         (d)      fourthly, pro rata and pari passu, towards repayment of the
                  Term AA Advances, until each of those Term AA Advances is
                  fully repaid; and

                                       22
<PAGE>

         (e)      fifthly, pro rata and pari passu, towards repayment of the
                  Term BBB Advances, until each of those Term BBB Advances is
                  fully repaid

6.       REPAYMENT OF TERM ADVANCES WHEN FUNDING 1 RECEIVES THE AMOUNT
         OUTSTANDING UNDER AN INTERCOMPANY LOAN

         If Funding 1 receives a payment from the Seller in the circumstances
         set out in CLAUSE 7 of the Mortgages Trust Deed or the proceeds of a
         New Intercompany Loan which are to be used to refinance another
         Intercompany Loan (such payment by the Seller or such proceeds being a
         "FULL REPAYMENT AMOUNT"), then Funding 1 will not apply the Full
         Repayment Amount as described in PARAGRAPHS 2 to 5 above. Instead,
         Funding 1 will apply the Full Repayment Amount to repay the relevant
         Intercompany Loan. If at any time only one Intercompany Loan is
         outstanding, then Funding 1 will apply the Full Repayment Amount first
         to repay amounts due to the Funding 1 Liquidity Facility Provider under
         the Funding 1 Liquidity Facility to the extent only that amounts were
         drawn thereunder in order to repay the principal amounts of any Bullet
         Term Advances made under any of the Intercompany Loans and the
         remainder shall be applied to repay the relevant Intercompany Loan.

                                       23
<PAGE>

                                    PART III

                 FUNDING 1 POST-ENFORCEMENT PRIORITY OF PAYMENTS

All monies received or recovered by the Security Trustee or the Receiver in
respect of the Funding 1 Security subsequent to the Security Trustee serving an
Intercompany Loan Acceleration Notice on Funding 1, will be applied (save to the
extent required by law) by the Security Trustee or the Receiver on each Funding
1 Interest Payment Date in accordance with the following order of priority (in
each case only and to the extent that payments or provision of a higher priority
have been made in full):

(a)      firstly, in or towards satisfaction of, pro rata and pari passu,
         amounts due to:

         (i)      the Security Trustee and any Receiver appointed by the
                  Security Trustee, together with interest and any amount in
                  respect of VAT on those amounts, and to provide for any
                  amounts due or to become due to the Security Trustee and the
                  Receiver in the following Interest Period under the Funding 1
                  Deed of Charge;

         (ii)     the First Issuer in respect of the First Issuer's obligations
                  specified in items (a) and (b) of the First Issuer
                  Post-Enforcement Priority of Payments; and

         (iii)    the Second Issuer in respect of the Second Issuer's
                  obligations specified in items (a) and (b) of the Second
                  Issuer Post-Enforcement Priority of Payments;

(b)      secondly, in or towards satisfaction of amounts due and payable to the
         Cash Manager and any costs, charges, liabilities and expenses then due
         or to become due and payable to the Cash Manager under the Cash
         Management Agreement, together with VAT on those amounts;

(c)      thirdly, in or towards satisfaction of, pro rata and pari passu,
         amounts (if any) due to the Account Bank under the terms of the Bank
         Account Agreement and to the Funding 1 Corporate Services Provider
         under the Funding 1 Corporate Services Agreements;

(d)      fourthly, in or towards satisfaction of amounts (if any) due to the
         Funding 1 Liquidity Facility Provider under the Funding 1 Liquidity
         Facility Agreement (except for any Funding 1 Liquidity Facility
         Subordinated Amounts);

(e)      fifthly, in or towards satisfaction of amounts (if any) due to the
         Funding 1 Swap Provider under the Funding 1 Swap Agreement (including
         any termination payment but excluding any Funding 1 Swap Excluded
         Termination Amount;

(f)      sixthly, in or towards satisfaction of, pro rata and pari passu,
         amounts of interest and principal due and payable on the Term AAA
         Advances;

(g)      seventhly, in or towards satisfaction of, pro rata and pari passu,
         amounts of interest and principal due and payable on the Term AA
         Advances;

(h)      eighthly, in or towards satisfaction of, pro rata and pari passu,
         amounts of interest and principal due and payable on the Term BBB
         Advances;

(i)      ninthly, in or towards satisfaction of any amounts due to:

                                       24
<PAGE>

         (i)      the First Issuer in respect of the First Issuer's obligation's
                  (if any) to make a termination payment to a First Issuer Swap
                  Provider (but excluding any First Issuer Swap Excluded
                  Termination Amount);

         (ii)     the Second Issuer in respect of the Second Issuer's
                  obligations (if any) to make a termination payment to a Second
                  Issuer Swap Provider (but excluding any Second Issuer Swap
                  Excluded Termination Amount);

(j)      tenthly, in or towards satisfaction of, pro rata and pari passu
         (without double counting):

         (i)      amounts due to the First Issuer in respect of the First
                  Issuer's obligations to pay any termination payment to a First
                  Issuer Swap Provider as a result of a First Issuer Swap
                  Provider Default or a First Issuer Swap Provider Downgrade
                  Termination Event (as appropriate);

         (ii)     amounts due to the Second Issuer in respect of the Second
                  Issuer's obligations to pay any termination payment to a
                  Second Issuer Swap Provider as a result of a Current Swap
                  Provider Default or an Swap Provider Downgrade Termination
                  Event (as appropriate);

         (iii)    any other amounts due to the First Issuer under the First
                  Issuer Intercompany Loan Agreement and not otherwise provided
                  for earlier in this order of priorities;

         (iv)     any other amounts due to the Second Issuer under the Second
                  Issuer Intercompany Loan Agreement and not otherwise provided
                  for earlier in this order of priorities;

         (v)      any Funding 1 Liquidity Subordinated Amounts due to the
                  Funding 1 Liquidity Facility Provider; and

         (vi)     amounts due to the Funding 1 Swap Provider in respect of any
                  termination payment due to the Funding 1 Swap Provider as a
                  result of a Funding 1 Swap Provider Default or a Funding 1
                  Swap Provider Downgrade Termination Event; and

(k)      eleventhly, towards payment, pro rata and pari passu, of amounts due
         to:

         (i)      the First Start-up Loan Provider under the First Start-up Loan
                  Agreement; and

         (ii)     the Second Start-up Loan Provider under the Second Start-up
                  Loan Agreement.

                                       25
<PAGE>

                             DATED [6TH MARCH], 2003

                        PERMANENT FUNDING (NO. 1) LIMITED

                                       and

                         PERMANENT FINANCING (NO. 1) PLC

                                       and

                         PERMANENT FINANCING (NO. 2) PLC

                                       and

                       STATE STREET BANK AND TRUST COMPANY

                                       and

                         U.S. BANK NATIONAL ASSOCIATION

                                       and

                                   HALIFAX PLC

                                       and

                THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND

                                       and

                               JPMORGAN CHASE BANK

                                       and

                      STRUCTURED FINANCE MANAGEMENT LIMITED

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

               FIRST DEED OF ACCESSION TO FUNDING 1 DEED OF CHARGE

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

                                  ALLEN & OVERY
                                     London
                                  ICM:639292.4

<PAGE>

                                    CONTENTS

<TABLE>
<CAPTION>
CLAUSE                                                                                                    PAGE
------                                                                                                    ----
<S>   <C>                                                                                                <C>
1.    Interpretation.........................................................................................2
2.    Representations and Warranties.........................................................................3
3.    Accession..............................................................................................3
4.    Scope of the Funding 1 Deed of Charge..................................................................4
5.    Amendment to the Funding 1 Priority of Payments........................................................4
6.    Further Amendments.....................................................................................4
7.    Miscellaneous..........................................................................................5
8.    Application............................................................................................6
9.    Notices and Demands....................................................................................6
10.   Choice of Law..........................................................................................7

APPENDIX 1..................................................................................................12
Schedule 3..................................................................................................13
Part I - Funding 1 Pre-Enforcement Revenue Priority of Payments.............................................13
Part II - Funding 1 Principal Priorities of Payments........................................................17
Part III - Funding 1 Post-Enforcement Priority of Payments..................................................24
</TABLE><PAGE>
                                                                     Exhibit 4.6
-------------------------------------------------------------------------------
Draft: 25/02/03

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

BETWEEN:

(1)    PERMANENT FINANCING (NO. 2) PLC (registered number 4623188) whose
       registered office is at Blackwell House, Guildhall Yard, London EC2V 5AE
       (the "SECOND ISSUER"); and

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

WHEREAS:

(1)    By a resolution of a duly authorised Board of Directors of the Second
       Issuer passed on o, 2003 the Second Issuer has resolved to issue the
       Second Issuer Notes which are constituted by this Deed and secured by the
       Second Issuer Deed of Charge.

(2)    The Note Trustee has agreed to act as trustee of these presents for the
       benefit of the Noteholders upon and subject to the terms and conditions
       of these presents.

NOW THIS SECOND ISSUER TRUST DEED WITNESSES AND IT IS AGREED AND DECLARED:

1.     DEFINITIONS

(A)    The Amended and Restated Master Definitions and Construction Schedule and
       the Second Issuer Master Definitions and Construction Schedule, both
       signed for the purposes of identification by Allen & Overy and Sidley
       Austin Brown & Wood on [5th March], 2003 (as the same may be amended,
       varied or supplemented from time to time with the consent of the parties
       hereto) are expressly and specifically incorporated into this Deed and,
       accordingly, the expressions defined in the Amended and Restated Master
       Definitions and Construction Schedule and the Second Issuer Master
       Definitions and Construction Schedule (as so amended, varied or
       supplemented) shall, except where the context otherwise requires and save
       where otherwise defined herein, have the same meanings in this Deed. In
       the event of a conflict between the Amended and Restated Master
       Definitions and Construction Schedule and the Second Issuer Master
       Definitions and Construction Schedule, the Second Issuer Master
       Definitions Schedule shall prevail.

(B)    (i)    All references in these presents to principal and/or interest in
              respect of the Second Issuer Notes or to any monies payable by the
              Second Issuer under these presents shall be deemed to include a
              reference to any additional amounts which may be payable under
              CONDITION 4(B) or, if applicable, under any undertaking or
              covenant given pursuant to CLAUSE 2(B).

       (ii)   All references in these presents to "(POUND)", "STERLING" or
              "POUNDS STERLING" shall be construed as references to the
              lawful currency or currency unit for the time being of the
              United Kingdom. All references to "(EURO)", "EUR", "euro" or
              "EURO" shall be construed as references to the single currency
              introduced at the third stage of European Economic and Monetary
              Union pursuant to the Treaty establishing the European
              Communities as amended from time to time. All references to "$",
              "US$"

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              or "US DOLLARS" shall be construed as references to the lawful
              currency or currency unit for the time being of the United
              States of America.

       (iii)  All references in this Deed to "THESE PRESENTS" means this
              Deed, the schedules hereto, the Second Issuer Notes, the
              Conditions, any deed expressed to be supplemental hereto or
              thereto and the Second Issuer Deed of Charge and the schedules
              thereto, all as from time to time supplemented or modified in
              accordance with the provisions contained in this Deed and/or
              where applicable, therein contained.

       (iv)   All references in these presents to guarantees or to an
              obligation being guaranteed shall be deemed to include
              respectively references to indemnities or to an indemnity being
              given in respect thereof.

       (v)    All references in these presents to any action, remedy or
              method of proceeding for the enforcement of the rights of
              creditors shall be deemed to include, in respect of any
              jurisdiction other than England, references to such action,
              remedy or method of proceeding for the enforcement of the
              rights of creditors available or appropriate in such
              jurisdiction as shall most nearly approximate to such action,
              remedy or method of proceeding described or referred to in
              these presents.

       (vi)   All references in these presents to taking proceedings against
              the Second Issuer shall be deemed to include references to
              proving in the winding up of the Second Issuer.

       (vii)  All references in these presents to DTC, Euroclear and
              Clearstream, Luxembourg, shall be deemed to include references
              to any other or additional clearing system as may be approved
              in writing by the Note Trustee.

       (viii) Unless the context otherwise requires words or expressions
              used in these presents shall bear the same meanings as in the
              Companies Act 1985 of England.

       (ix)   Whenever this Deed refers to a provision of the Trust
              Indenture Act, the provision is incorporated by reference in
              and made part of this Deed. All other Trust Indenture Act
              terms used in this Deed that are defined by the Trust
              Indenture Act, defined in the Trust Indenture Act by reference
              to another statute or defined by SEC rule have the meanings
              assigned to them in the Trust Indenture Act.

2.     COVENANT TO REPAY AND TO PAY INTEREST ON SECOND ISSUER NOTES

(A)    The aggregate principal amount of:

       (i)    the Series 1 Class A Second Issuer Notes is limited to
              US$[1,000,000,000];

       (ii)   the Series 1 Class B Second Issuer Notes is limited to
              US$[34,000,000];

       (iii)  the Series 1 Class C Second Issuer Notes is limited to
              US$[34,000,000];

       (iv)   the Series 2 Class A Second Issuer Notes is limited to
              US$[1,750,000,000];

       (v)    the Series 2 Class B Second Issuer Notes is limited to
              US$[61,000,000];

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       (vi)   the Series 2 Class C Second Issuer Notes is limited to
              US$[61,000,000];

       (vii)  the Series 3 Class A Second Issuer Notes is limited to
              (EURO)[1,250,000,000];

       (viii) the Series 3 Class B Second Issuer Notes is limited to
              (EURO)[43,500,000];

       (ix)   the Series 3 Class C Second Issuer Notes is limited to
              (EURO)[43,500,000];

       (x)    the Series 4 Class A Second Issuer Notes is limited to
              US$[1,750,000,000];

       (xi)   the Series 4 Class B Second Issuer Notes is limited to
              (EURO)[56,500,000];

       (xii)  the Series 4 Class C Second Issuer Notes is limited to
              (EURO)[56,500,000];

       (xiii) the Series 5 Class A Second Issuer Notes is limited
              to(pound)[750,000,000];

       (xiv)  the Series 5 Class B Second Issuer Notes is limited
              to (pound)[26,000,000]; and

       (xv)   the Series 5 Class C Second Issuer Notes is limited
              to(pound)[26,000,000].

(B)    The Second Issuer covenants with the Note Trustee that it will, in
       accordance with these presents, on the due date for the final maturity of
       the Second Issuer Notes provided for in the Conditions, or on such
       earlier date as the same or any part thereof may become due and repayable
       thereunder, pay or procure to be paid unconditionally to or to the order
       of the Note Trustee in euro, US dollars or sterling, as applicable, in
       London or New York City, as applicable, in immediately available funds
       the principal amount of the Second Issuer Notes repayable on that date
       and shall in the meantime and until the due date for the final maturity
       of the Second Issuer Notes (both before and after any judgment or other
       order of a court of competent jurisdiction) pay or procure to be paid
       unconditionally to or to the order of the Note Trustee as aforesaid
       interest (which shall accrue from day to day) on the Principal Amount
       Outstanding of the Second Issuer Notes at the rates set out in or (as the
       case may be) calculated from time to time in accordance with CONDITION 4
       and on the dates provided for in the Conditions PROVIDED THAT:

       (i)    every payment of principal or interest in respect of the Second
              Issuer Notes to or to the account of the Principal Paying Agent,
              in the manner provided in the Second Issuer Paying Agent and Agent
              Bank Agreement, shall operate in satisfaction pro tanto of the
              relative covenant by the Second Issuer in this Clause except to
              the extent that there is default in the subsequent payment thereof
              in accordance with the Conditions to the Noteholders;

       (ii)   in any case where payment of principal is not made to the Note
              Trustee or the Principal Paying Agent on or before the due date,
              interest shall continue to accrue on the principal amount of the
              Second Issuer Notes (both before and after any judgment or other
              order of a court of competent jurisdiction) at the rates aforesaid
              (or, if higher, the rate of interest on judgment debts for the
              time being provided by English law) up to and including the date
              which the Note Trustee determines to be the date on and after
              which payment is to be made to the Noteholders in respect thereof
              as stated in a notice given to the Noteholders in accordance with
              CONDITION 14 (such date to be not later than 30 days after the day
              on which the whole of such principal amount,

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                                       4
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              together with an amount equal to the interest which has accrued
              and is to accrue pursuant to this proviso up to and including that
              date, has been received by the Note Trustee or the Principal
              Paying Agent);

       (iii)  in any case where payment of the whole or any part of the
              principal amount of any Second Issuer Note is improperly withheld
              or refused upon due presentation thereof (other than in
              circumstances contemplated by proviso (ii) above) interest shall
              accrue on that principal amount of which has been so withheld or
              refused (both before and after any judgment or other order of a
              court of competent jurisdiction) at the rates aforesaid (or, if
              higher, the rate of interest on judgment debts for the time being
              provided by English law) from and including the date of such
              withholding or refusal up to and including the date on which, upon
              further presentation of the relevant Second Issuer Note, payment
              of the full amount (including interest as aforesaid) in euro, US
              dollars or sterling, as applicable, payable in respect of such
              Second Issuer Note is made or (if earlier) the seventh day after
              notice is given to the relevant Noteholder (either individually or
              in accordance with CONDITION 14) that the full amount (including
              interest as aforesaid) in euro, US dollars or sterling, as
              applicable, payable in respect of such Second Issuer Note is
              available for payment, provided that, upon further presentation
              thereof being duly made, such payment is made; and

       (iv)   notwithstanding any other provision of this Deed, the right of any
              Noteholder to receive payment of principal and interest on the
              Second Issuer Notes, on or after the respective due dates
              expressed in the Second Issuer Notes, or to bring suit for the
              enforcement of any such payment on or after such respective dates,
              shall not be impaired or affected without the consent of the
              Noteholder.

       The Second Issuer shall pay Additional Interest in accordance with
       CONDITION 4(B).

       The Note Trustee will hold the benefit of the covenants contained in
       this Clause on trust for the Noteholders and itself in accordance with
       this Deed.

(C)    At any time after a Note Event of Default shall have occurred or the
       Second Issuer Notes shall otherwise have become due and repayable or the
       Definitive Second Issuer Notes have not been issued when so required in
       accordance with this Deed and the relative Global Second Issuer Notes,
       the Note Trustee may and shall, if directed by an Extraordinary
       Resolution of the Noteholders and subject to it being indemnified and/or
       secured to its satisfaction:

       (i)    by notice in writing to the Second Issuer, the Principal Paying
              Agent, the US Paying Agent, the Transfer Agent and the Registrar
              require the Principal Paying Agent, the US Paying Agent, the
              Transfer Agent and the Registrar pursuant to the Second Issuer
              Paying Agent and Agent Bank Agreement and by notice in writing to
              the Second Issuer:

              (a) act thereafter as Principal Paying Agent, US Paying Agent,
                  Transfer Agent and Registrar of the Note Trustee in relation
                  to payments to be made by or on behalf of the Note Trustee
                  under the provisions of this Deed mutatis mutandis on the
                  terms provided in the Second Issuer Paying Agent and Agent
                  Bank Agreement (save that the Note Trustee's liability under
                  any provisions thereof for the indemnification, remuneration
                  and payment of out-of-pocket expenses of the Paying Agents,
                  the Transfer Agent and the Registrar shall be

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                                       5
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                  limited to the amounts for the time being held by the Note
                  Trustee on the trusts of these presents relating to the
                  relevant Second Issuer Notes and available for such purpose)
                  and thereafter to hold all Second Issuer Notes and all sums,
                  documents and records held by them in respect of Second Issuer
                  Notes on behalf of the Note Trustee; or

              (b) deliver up all Second Issuer Notes and all sums, documents and
                  records held by them in respect of the Second Issuer Notes to
                  the Note Trustee or as the Note Trustee shall direct in such
                  notice provided that such notice shall be deemed not to apply
                  to any documents or records which the relevant Paying Agent or
                  the Registrar, as the case may be, is obliged not to release
                  by any law or regulation; and/or

       (ii)   by notice in writing to the Second Issuer require it to make all
              subsequent payments in respect of the Second Issuer Notes to or to
              the order of the Note Trustee and not to the Principal Paying
              Agent; with effect from the issue of any such notice to the Second
              Issuer and until such notice is withdrawn CLAUSE 2(B)(I) relating
              to the Second Issuer Notes shall cease to have effect.

(D)    The Second Issuer shall require each paying agent not a party to the
       Second Issuer Paying Agent and Agent Bank Agreement to agree in writing
       to hold in trust to the extent required by the Trust Indenture Act for
       the benefit of the Noteholders or the Note Trustee all money held by such
       paying agent for the payment of principal of or interest on the Second
       Issuer Notes (whether such money has been paid to it by the Second Issuer
       or any other obligor of the Second Issuer Notes), and the Second Issuer
       and such paying agent shall each notify the Note Trustee of any default
       by the Second Issuer (or any other obligor of the Second Issuer Notes) in
       making any such payment.

3.     FORM AND ISSUE OF SECOND ISSUER NOTES

(A)    (i)    The Series 1 Second Issuer Notes, the Series 2 Second Issuer Notes
              and the Series 4 Class A Second Issuer Notes will be initially
              offered and sold pursuant to a Registration Statement filed with
              the United States Securities and Exchange Commission. Each class
              of the Series 1 Second Issuer Notes, the Series 2 Second Issuer
              Notes and the Series 4 Class A Second Issuer Notes will initially
              be represented by a separate global note in registered form (the
              "SERIES 1 CLASS A GLOBAL SECOND ISSUER NOTE", the "SERIES 1 CLASS
              B GLOBAL SECOND ISSUER NOTE", the "SERIES 1 CLASS C GLOBAL SECOND
              ISSUER NOTE", the "SERIES 2 CLASS A GLOBAL SECOND ISSUER NOTE",
              the "SERIES 2 CLASS B GLOBAL SECOND ISSUER NOTE", the "SERIES 2
              CLASS C GLOBAL SECOND ISSUER NOTE" and the "SERIES 4 CLASS A
              GLOBAL SECOND ISSUER NOTE" respectively, and together the "DOLLAR
              GLOBAL SECOND ISSUER NOTES"), in each case without coupons or
              talons attached and which, in aggregate, will represent the
              aggregate principal amount outstanding of the Series 1 Second
              Issuer Notes, the Series 2 Second Issuer Notes and the Series 4
              Class A Second Issuer Notes.

       (ii)   The Series 3 Second Issuer Notes, the Series 4 Class B Issuer
              Notes, the Series 4 Class C Issuer Notes and the Series 5 Second
              Issuer Notes will be initially offered and sold outside the United
              States to non-US persons pursuant to Regulation S ("REG S") under
              the United States Securities Act of 1933, as amended (the
              "SECURITIES ACT"). Each class of the Series 3 Second Issuer Notes,
              the Series 4 Class B Issuer

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                                       6
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              Notes, the Series 4 Class C Issuer Notes and the Series 5 Second
              Issuer Notes will initially be represented by a global note in
              registered form (the "SERIES 3 CLASS A GLOBAL SECOND ISSUER NOTE",
              , the "SERIES 3 CLASS B GLOBAL SECOND ISSUER NOTE", the "SERIES 3
              CLASS C GLOBAL SECOND ISSUER NOTE", the "SERIES 4 CLASS B GLOBAL
              SECOND ISSUER NOTE", the "SERIES 4 CLASS C GLOBAL SECOND ISSUER
              NOTE", the "SERIES 5 CLASS A GLOBAL SECOND ISSUER NOTE", the
              "SERIES 5 CLASS B GLOBAL SECOND ISSUER NOTE" and the "SERIES 5
              CLASS C GLOBAL SECOND ISSUER NOTE" together, the "REG S GLOBAL
              SECOND ISSUER NOTES" and, together with the Dollar Global Second
              Issuer Notes, the "GLOBAL SECOND ISSUER NOTES"), in each case
              without coupons or talons attached and which, in aggregate, will
              represent the aggregate principal amount outstanding of the Series
              3 Second Issuer Notes, the Series 4 Class B Second Issuer Notes,
              the Series 4 Class C Second Issuer Notes and the Series 5 Second
              Issuer Notes.

(B)    The Global Second Issuer Notes shall be printed or typed in, or
       substantially in, the respective forms set out in SCHEDULE 1 and may be
       executed in facsimile. Each Global Second Issuer Note shall represent
       such of the outstanding Second Issuer Notes of the relevant class as
       shall be specified therein and each shall provide that it shall represent
       the aggregate Principal Amount Outstanding of the relevant class of
       Second Issuer Notes from time to time endorsed thereon and that the
       aggregate Principal Amount Outstanding of the Second Issuer Notes
       represented thereby may from time to time be reduced or increased, as
       appropriate, to reflect exchanges, redemptions, purchases and transfers
       of interests therein in accordance with the terms of this Deed and the
       Second Issuer Paying Agent and Agent Bank Agreement. Any endorsement of a
       Global Second Issuer Note to reflect the amount of any increase or
       decrease in the Principal Amount Outstanding of the Second Issuer Notes
       represented thereby shall be made by the Registrar in accordance with
       CLAUSE 5. Title to the Global Second Issuer Notes shall pass by and upon
       the registration in the Register in respect thereof in accordance with
       the provisions of these presents. The Global Second Issuer Notes shall be
       issuable only in registered form without coupons or talons attached and
       signed manually by a person duly authorised by the Second Issuer on
       behalf of the Second Issuer and shall be authenticated by or on behalf of
       the Registrar. The Global Second Issuer Notes so executed and
       authenticated shall be binding and valid obligations of the Second
       Issuer, notwithstanding that such duly authorised person no longer holds
       that office at the time the Registrar authenticates the relevant Global
       Second Issuer Note.

(C)    The Global Second Issuer Notes shall be issued by the Second Issuer to
       Cede & Co., as nominee for DTC, in respect of each Dollar Global Second
       Issuer Note and to Citivic Nominees Limited, as nominee for the Common
       Depositary, in respect of each Reg S Global Second Issuer Note, on terms
       that Cede & Co. and Citivic Nominees Limited shall, respectively, hold
       the same for the account of the persons who would otherwise be entitled
       to receive the Definitive Second Issuer Notes and the successors in title
       to such persons appearing in the records of DTC, Euroclear and
       Clearstream, Luxembourg for the time being. Upon the issuance of each
       such Global Second Issuer Notes, DTC, Euroclear and Clearstream,
       Luxembourg shall credit, on their respective internal book-entry
       registration and transfer systems, the accounts of holders of Book-Entry
       Interests with the respective interests owned by such Noteholders.

(D)    The provisions of the "Operating Procedures of the Euroclear System" and
       "Terms and Conditions Governing Use of Euroclear" and the "General Terms
       and Conditions of Clearstream, Luxembourg" and "Customer Handbook" of
       Clearstream, Luxembourg shall be

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       applicable to interests in the Global Second Issuer Notes that are held
       through Euroclear and Clearstream, Luxembourg.

(E)    The Second Issuer shall issue Definitive Second Issuer Notes only if any
       of the following applies while any of the Second Issuer Notes of any
       class are represented by a Global Second Issuer Note of the relevant
       class at any time after the fortieth day following the later of the
       Second Issuer Closing Date and the date of the issue of such Global
       Second Issuer Note:

       (i)    (in the case of Dollar Global Second Issuer Notes) DTC has
              notified the Second Issuer that it is at any time unwilling or
              unable to continue as the registered holder of such Dollar Global
              Second Issuer Notes or is at any time unwilling or unable to
              continue as, or ceases to be, a clearing agency registered under
              the Exchange Act, and a successor to DTC registered as a clearing
              agency under the Exchange Act is not able to be appointed by the
              Second Issuer within 90 days of such notification, or (in the case
              of the Reg S Global Second Issuer Notes) both Euroclear and
              Clearstream, Luxembourg are closed for business for a continuous
              period of 14 days (other than by reason of holiday, statutory or
              otherwise) or announce an intention permanently to cease business
              and do so cease to do business and no alternative clearing system
              satisfactory to the Note Trustee is available; and

       (ii)   as a result of any amendment to, or change in, the laws or
              regulations of the United Kingdom (or of any political
              sub-division thereof) or of any authority therein or thereof
              having power to tax or in the interpretation or administration by
              a revenue authority or a court or administration of such laws or
              regulations which becomes effective on or after the Second Issuer
              Closing Date, the Second Issuer or any Paying Agent is or will be
              required to make any deduction or withholding from any payment in
              respect of the Second Issuer Notes which would not be required
              were the Second Issuer Notes in definitive form.

       If required by this CLAUSE 3, the Second Issuer shall, at its sole cost
       and expense within 30 days of the occurrence of the relevant event, issue
       Definitive Second Issuer Notes of the same class as the class of Second
       Issuer Notes represented by the relevant Global Second Issuer Note in
       exchange for the whole (or the remaining part(s) outstanding) of the
       relevant Global Second Issuer Note. If Definitive Second Issuer Notes are
       issued, the beneficial interests represented by the Reg S Global Second
       Issuer Notes of each class shall be exchanged by the Second Issuer for
       Definitive Second Issuer Notes of that class ("REG S DEFINITIVE SECOND
       ISSUER NOTES") and the beneficial interests represented by the Dollar
       Global Second Issuer Note of each class shall be exchanged by the Second
       Issuer for Definitive Second Issuer Notes of that class ("DOLLAR
       DEFINITIVE SECOND ISSUER NOTES").

(F)    The Definitive Second Issuer Notes shall be printed or typed in, or
       substantially in, the form set out in SCHEDULE 2 in the denomination and
       transferable in units of (i) US$1,000 and US$10,000 (in the case of the
       Series 1 Second Issuer Notes, the Series 2 Second Issuer Notes and the
       Series 4 Class A Second Issuer Notes), (ii) (EURO)500,000 (in the case of
       the Series 3 Second Issuer Notes, the Series 4 Class B Issuer Notes and
       the Series 4 Class C Issuer Notes) and (iii)(pound)1,000 or(pouND)10,000
       (in the case of the Series 5 Second Issuer Notes) each or, in each case,
       integral multiples thereof or in such other denominations as the Note
       Trustee shall determine and notify to the relevant Noteholders, shall be
       serially numbered and shall be endorsed with a form of transfer in the
       form or substantially in the form also set out in SCHEDULE 2. Title to
       the Definitive Second Issuer Notes shall pass by and upon the
       registration in the Register in respect thereof in accordance with the
       provisions of these

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                                       8
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       presents. The Definitive Second Issuer Notes shall be issuable only in
       registered form without coupons or talons attached and signed manually or
       in facsimile by a person duly authorised by or on behalf of the Second
       Issuer and shall be authenticated by or on behalf of the Registrar. Each
       Second Issuer Note so executed and authenticated shall be a binding and
       valid obligation of the Second Issuer notwithstanding that such duly
       authorised person (for whatever reason) no longer holds that office at
       the time the Registrar authenticates the Second Issuer Note.

(G)    If the Second Issuer is obliged to issue or procure the issue of any
       Definitive Second Issuer Notes pursuant to CLAUSE 3(E) but fails to do so
       within 30 days of the occurrence of the relevant event described in
       CLAUSE 3(E), then the Second Issuer shall indemnify the Note Trustee, the
       registered holder of the relevant Global Second Issuer Note(s) and the
       relevant Noteholders and keep them indemnified against any and all loss
       or damage incurred by any of them if the amount received by the Note
       Trustee, the registered holder of such Global Second Issuer Note(s) or
       the relevant Noteholders in respect of the Second Issuer Notes is less
       than the amount that would have been received had Definitive Second
       Issuer Notes been issued in accordance with CLAUSE 3(E). If and for so
       long as the Second Issuer discharges its obligations under this
       indemnity, the breach by the Second Issuer of the provisions of CLAUSE
       3(E) shall be deemed to be cured ab initio.

4.     REPLACEMENT OF SECOND ISSUER NOTES

       If a mutilated or defaced Global Second Issuer Note or Definitive Second
       Issuer Note is surrendered to the Registrar or Transfer Agent or if a
       Noteholder claims that a Global Second Issuer Note or Definitive Second
       Issuer Note has been lost, stolen or destroyed, the Second Issuer shall
       issue, and the Registrar shall authenticate, a replacement Global Second
       Issuer Note or Definitive Second Issuer Note, respectively, on receipt of
       satisfactory evidence in accordance with CONDITION 13. An indemnity for
       an amount sufficient in the judgement of the Second Issuer and the
       Registrar to protect the Second Issuer and the Registrar from any loss
       which any of them may suffer if a Global Second Issuer Note or a
       Definitive Second Issuer Note is replaced may be required by the Second
       Issuer and the Registrar. The Second Issuer may charge such Noteholder
       for its costs in replacing such Second Issuer Note.

5.     REGISTER, TRANSFER AND EXCHANGE OF SECOND ISSUER NOTES

(A)    TRANSFER AND EXCHANGE OF GLOBAL SECOND ISSUER NOTES

       A Global Second Issuer Note will be exchanged by the Second Issuer for
       another Global Second Issuer Note or Definitive Second Issuer Note(s)
       only in the circumstances set forth in CLAUSE 3(E), the Conditions, the
       Second Issuer Paying Agent and Agent Bank Agreement and the relevant
       Global Second Issuer Note. Upon the occurrence of any of the events
       specified therein concerning their exchange for Definitive Second Issuer
       Notes, Definitive Second Issuer Notes of the relevant class shall be
       issued in such names as the Second Issuer shall instruct the Registrar
       (based on the instructions of DTC and Euroclear and Clearstream,
       Luxembourg) and the Registrar shall cause the Principal Amount
       Outstanding of the applicable Global Second Issuer Note to be reduced
       accordingly, cancel such Global Second Issuer Note (if applicable) and
       direct DTC and Euroclear and Clearstream, Luxembourg to make
       corresponding reductions in their book-entry systems, and the Second
       Issuer shall execute and the Registrar shall authenticate such Definitive
       Second Issuer Notes of the relevant class in the appropriate principal
       amounts and the Registrar will register them. The Registrar shall deliver
       such Definitive Second Issuer Notes to the persons in whose names

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       such Second Issuer Notes are so registered. Reg S Definitive Second
       Issuer Notes issued in exchange for a Book-Entry Interest pursuant to
       this CLAUSE 5(A) shall bear the legend set forth in CLAUSE 5(D), and
       shall be subject to all restrictions on transfer contained therein to the
       same extent as the Global Second Issuer Note so exchanged. Global Second
       Issuer Notes may also be exchanged or replaced, in whole or in part, as
       provided in CLAUSE 4. Every Second Issuer Note authenticated and
       delivered in exchange for, or in lieu of, a Global Second Issuer Note or
       any portion thereof, pursuant to CLAUSE 4 hereof, shall be authenticated
       and delivered in the form of, and shall be, a Global Second Issuer Note.
       A Global Second Issuer Note may not be exchanged for another Second
       Issuer Note other than as provided in this CLAUSE 5(A).

(B)    TRANSFER AND EXCHANGE OF BOOK-ENTRY INTERESTS

       The transfer and exchange of Book-Entry Interests shall be effected
       through DTC, Euroclear and/or Clearstream, Luxembourg, as the case may
       be, in accordance with these presents, the Second Issuer Paying Agent and
       Agent Bank Agreement and the procedures therefor of DTC, Euroclear and/or
       Clearstream, Luxembourg, as the case may be. Book-Entry Interests shall
       be subject to restrictions on transfer comparable to those set forth
       herein and in the Second Issuer Paying Agent and Agent Bank Agreement to
       the extent required by the Securities Act. The Note Trustee shall have no
       obligation to ascertain or to monitor DTC's, Euroclear's or Clearstream,
       Luxembourg's compliance with any such restrictions on transfer.

(C)    TRANSFER OF DEFINITIVE SECOND ISSUER NOTES

       Definitive Second Issuer Notes may be transferred in whole or in part
       (provided that any partial transfer relates to a Definitive Second Issuer
       Note) in the principal amount of, in the case of the Series 1 Second
       Issuer Notes, the Series 2 Second Issuer Notes and the Series 4 Class A
       Second Issuer Notes, US$1,000 or US$10,000; in the case of the Series 3
       Second Issuer Notes, the Series 4 Class B Issuer Notes and the Series 4
       Class C Issuer Notes, (EURO)500,000; and in the case of THe Series 5
       Second Issuer Notes, (pound)1,000 or (pound)10,000 or, in each case, any
       integral multiple thereof or in SUch other denominations as the Note
       Trustee shall determine and notify to the relevant Noteholders. When
       Definitive Second Issuer Notes are presented by a Noteholder to the
       Registrar with a request to register the transfer of such Definitive
       Second Issuer Notes, the Registrar shall register the transfer as
       requested only if such Definitive Second Issuer Notes are presented or
       surrendered for registration of transfer and are endorsed or accompanied
       by a written instrument of transfer in form satisfactory to the Registrar
       duly executed by such Noteholder or by his attorney duly authorised in
       writing and upon receipt of such certificates and other documents as
       shall be necessary to evidence compliance with the restrictions on
       transfer contained in this Agreement and in the Second Issuer Paying
       Agent and Agent Bank Agreement. Thereupon, the Registrar shall request
       the Second Issuer to issue and the Registrar shall itself authenticate
       new Definitive Second Issuer Notes required to be issued in connection
       with such transfer. In the case of a transfer of part only of such
       Definitive Second Issuer Note, a new Definitive Second Issuer Note in
       respect of the balance not transferred will be issued to the transferor.
       All transfers of Definitive Second Issuer Notes are subject to any
       restrictions on transfer set forth on such Definitive Second Issuer Notes
       and the detailed regulations concerning transfers in the Second Issuer
       Paying Agent and Agent Bank Agreement.

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(D)    REGULATION S LEGEND

       Each Reg S Global Second Issuer Note and each Reg S Definitive Second
       Issuer Note issued in exchange therefor shall bear a legend in
       substantially the following form:

       "THIS SECOND ISSUER NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
       THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
       ACT") OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND, AS A
       MATTER OF U.S. LAW, PRIOR TO THE DATE THAT IS 40 DAYS AFTER THE LATER OF
       THE CLOSING DATE AND THE COMMENCEMENT OF THE OFFERING OF THE SECOND
       ISSUER NOTES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
       IN THE UNITED STATES OR TO A U.S. PERSON (AS DEFINED IN REGULATION S
       UNDER THE SECURITIES ACT) EXCEPT PURSUANT TO AN EXEMPTION FROM THE
       REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
       ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES."

(E)    CANCELLATION AND/OR ADJUSTMENT OF GLOBAL SECOND ISSUER NOTES

       At such time as all Book-Entry Interests in respect of a Global Second
       Issuer Note have been exchanged for Definitive Second Issuer Notes, such
       Global Second Issuer Note shall be returned to or retained and cancelled
       by the Registrar as set out in the Second Issuer Paying Agent and Agent
       Bank Agreement. At any time prior to such cancellation, if any Book-Entry
       Interest is exchanged for an interest in another Global Second Issuer
       Note, the principal amount of Second Issuer Notes represented by such
       Global Second Issuer Note shall be reduced accordingly and an endorsement
       shall be made on such Global Second Issuer Note by the Registrar to
       reflect such reduction.

(F)    GENERAL PROVISIONS RELATING TO ALL TRANSFERS AND EXCHANGES

       (i)    To permit registrations of transfers and exchanges of Second
              Issuer Notes, the Second Issuer shall execute and the Registrar
              shall authenticate Global Second Issuer Notes and Definitive
              Second Issuer Notes upon a written order signed by an officer of
              the Second Issuer.

       (ii)   No service fee shall be charged to a Noteholder for any
              registration of a Definitive Second Issuer Note on transfer or
              exchange but the Second Issuer may require payment of a sum
              sufficient to cover any stamp or transfer tax or similar
              governmental charge payable in connection therewith (other than
              any such stamp or transfer taxes or similar governmental charge
              payable upon exchange or transfer pursuant to CONDITION 13) and
              the Registrar may require an indemnity in respect of such tax or
              charge.

       (iii)  All Global Second Issuer Notes and Definitive Second Issuer Notes
              issued upon any registration of transfer or exchange of Global
              Second Issuer Notes or Definitive Second Issuer Notes shall be the
              valid obligations of the Second Issuer, evidencing the same debt
              and entitled to the same benefits under this Deed, as the Global
              Second Issuer Notes or Definitive Second Issuer Notes surrendered
              upon such registration of transfer or exchange.
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(G)    REGISTER OF SECOND ISSUER NOTES

       The Second Issuer shall at all times ensure that the Registrar maintains
       in London, or at such other place as the Note Trustee may agree in
       writing, a register (the "REGISTER") in respect of the Second Issuer
       Notes showing the amount of the Global Second Issuer Notes or Definitive
       Second Issuer Notes, as the case may be, from time to time outstanding
       and the dates of issue and all subsequent transfers and changes of
       ownership thereof and the names and addresses of the holders of the
       Global Second Issuer Notes or the Definitive Second Issuer Notes. So long
       as DTC or its nominee, or the Common Depositary or its nominee, is the
       registered holder of a Global Second Issuer Note, DTC or the Common
       Depositary, as the case may be, will be considered the sole registered
       holder of such Global Second Issuer Note for all purposes under this
       Second Issuer Trust Deed. Each Second Issuer Note, whether in global or
       definitive form, shall have an identifying serial number which shall be
       entered on the Register. The Note Trustee and the holders of such Second
       Issuer Notes or any of them and any person authorised by it or any of
       them may at all reasonable times during office hours inspect the Register
       and take copies of or extracts from it.

6.     FEES, DUTIES AND TAXES

       The Second Issuer will pay any stamp duty, issue, registration,
       documentary or other taxes of a similar nature and duties payable in the
       United Kingdom, Belgium, Luxembourg or the United States, including
       interest and penalties, on or in connection with (i) the execution and
       delivery of these presents and the Transaction Documents to which it is a
       party and any documents executed pursuant thereto, (ii) the constitution
       and original issue of the Second Issuer Notes, and (iii) any action in
       any jurisdiction taken by or on behalf of the Note Trustee or (where
       permitted under these presents so to do) any Noteholder to enforce the
       Second Issuer Notes.

7.     COVENANT OF COMPLIANCE

       The Second Issuer covenants with the Note Trustee that it will comply
       with and perform and observe all the provisions of these presents, the
       Second Issuer Notes, the Second Issuer Deed of Charge, the Second Issuer
       Paying Agent and Agent Bank Agreement and the documents executed pursuant
       thereto and the other Transaction Documents which are expressed to be
       binding on it. The Conditions shall be binding on the Second Issuer, the
       Noteholders, the Note Trustee and all persons claiming through or under
       any of them. The Note Trustee shall be entitled to enforce the
       obligations of the Second Issuer under the Second Issuer Notes and the
       Conditions and to exercise any other rights, powers, authorities and
       discretions conferred upon the Note Trustee in the Conditions as if the
       same were set out and contained in this Deed, which shall be read and
       construed as one document with the Second Issuer Notes. The Note Trustee
       shall hold the benefit of this covenant upon trust for itself and the
       Noteholders according to its and their respective interests. The
       provisions of SCHEDULE 4 shall have effect in the same manner as if
       herein set forth.

8.     CANCELLATION OF SECOND ISSUER NOTES AND RECORDS

(A)    The Second Issuer shall procure that all Second Issuer Notes (i)
       redeemed, (ii) being mutilated or defaced, surrendered and replaced
       pursuant to CONDITION 13 or (iii) exchanged as provided in these presents
       shall forthwith be cancelled by or on behalf of the Second Issuer and a
       certificate stating:

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       (i)    the aggregate principal amount of Second Issuer Notes which have
              been redeemed;

       (ii)   the serial numbers of Second Issuer Notes of each class so
              redeemed;

       (iii)  the aggregate amount of interest paid (and the due dates of such
              payments) on Second Issuer Notes of each class; and

       (iv)   the aggregate principal amounts of Second Issuer Notes of each
              class which have been so exchanged and replaced and the serial
              numbers of such Second Issuer Notes in definitive form,

       shall be given to the Note Trustee by or on behalf of the Second Issuer
       as soon as possible and in any event within four months after the date of
       such redemption, purchase, cancellation, exchange or replacement, as the
       case may be. The Note Trustee may accept without further investigation or
       inquiry such certificate as conclusive evidence of such redemption,
       purchase, exchange or replacement pro tanto of the Second Issuer Notes or
       payment of interest thereon and of cancellation of the relative Second
       Issuer Notes.

(B)    The Second Issuer shall procure that the Registrar shall keep a full and
       complete record of all Second Issuer Notes and of their redemption,
       cancellation, payment or exchange (as the case may be) and of all
       replacement Second Issuer Notes issued in substitution for lost, stolen,
       mutilated, defaced or destroyed Second Issuer Notes. The Second Issuer
       shall procure that the Registrar shall at all reasonable times make such
       record available to the Second Issuer and the Note Trustee.

(C)    All records and certificates maintained pursuant to this Clause shall
       make a distinction between Definitive Second Issuer Notes and Global
       Second Issuer Notes.

9.     ENFORCEMENT

(A)    The Note Trustee may at any time, at its discretion and without notice,
       take such proceedings and/or other action as it may think fit against or
       in relation to the Second Issuer or any other person as it may think fit
       to enforce its obligations under these presents, the Second Issuer Notes
       or any of the other Transaction Documents.

(B)    Unless the contrary be proved to the satisfaction of the Note Trustee,
       proof that as regards any specified Second Issuer Note the Second Issuer
       has made default in paying any amount due in respect of such Second
       Issuer Note shall be sufficient evidence that the same default has been
       made as regards all other Second Issuer Notes in respect of which the
       relevant amount is due and payable.

(C)    References in CLAUSES 2(B)(II) and 2(B)(III) or the provisions of any
       trust deed supplemental to this Deed corresponding to CLAUSES 2(B)(II)
       and 2(B)(III) to "the rates aforesaid" shall, in the event of such Second
       Issuer Notes having become due and repayable, with effect from the expiry
       of the Interest Period during which such Second Issuer Notes become due
       and repayable, be construed as references to rates of interest calculated
       mutatis mutandis in accordance with the Conditions except that no notices
       need be published in respect thereof.

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10.    PROCEEDINGS, ACTIONS AND INDEMNIFICATION

(A)    The Note Trustee shall not be bound to take any proceedings mentioned in
       CLAUSE 9(A) or any other action in relation to these presents, the Second
       Issuer Notes or any documents executed pursuant thereto or any of the
       other Transaction Documents to which the Note Trustee is a party unless
       (i) respectively directed or requested to do so by an Extraordinary
       Resolution of the Class A Second Issuer Noteholders, the Class B Second
       Issuer Noteholders or the Class C Second Issuer Noteholders, as the case
       may be, or in writing by the holders of at least one-quarter in aggregate
       Principal Amount Outstanding of the Class A Second Issuer Notes, the
       Class B Second Issuer Notes or the Class C Second Issuer Notes, as the
       case may be, and (ii) it shall be indemnified and/or secured to its
       satisfaction against all liabilities, actions, proceedings, claims and
       demands to which it may be or become liable and all costs, charges,
       damages and expenses which may be incurred by it in connection therewith,
       and the terms of such indemnity may include the provisions of a fighting
       fund, non-recourse loan or other similar arrangement PROVIDED THAT:

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

       (ii)   the Note Trustee shall not be obliged to act at the direction or
              request of the Class C Second Issuer Noteholders as aforesaid
              unless (x) either the Note Trustee is of the sole opinion that to
              do so would not be materially prejudicial to the interests of the
              Class A Second Issuer Noteholders or such action is sanctioned by
              an Extraordinary Resolution of the Class A Second Issuer
              Noteholders and (y) either the Note Trustee is of the sole opinion
              that to do so would not be materially prejudicial to the interests
              of the Class B Second Issuer Noteholders or such action is
              sanctioned by an Extraordinary Resolution of the Class B Second
              Issuer Noteholders;

(B)    Save as provided below, only the Note Trustee may enforce the provisions
       of these presents, the Conditions or the Second Issuer Notes. No
       Noteholder shall be entitled to proceed directly against the Second
       Issuer or any other party to any of the Transaction Documents unless the
       Note Trustee having become bound as aforesaid to take proceedings fails
       to do so within a reasonable period and such failure is continuing
       provided that no Class C Second Issuer Noteholder and no Class B Second
       Issuer Noteholder shall be entitled to take proceedings for the winding
       up or administration of the Second Issuer for so long as there are any
       Class A Second Issuer Notes outstanding and no Class C Second Issuer
       Noteholder shall be entitled to take proceedings for the winding up or
       administration of the Second Issuer for so long as there are any Class B
       Second Issuer Notes outstanding. Consistent with Section 316 of the Trust
       Indenture Act, each Noteholder shall have the right to institute
       proceedings for the enforcement of payment of principal and interest on
       the Second Issuer Notes held by it, on or after the maturity date of the
       relevant Second Issuer Notes set out on the face of such Second Issuer
       Notes.

11.    DISCHARGE OF PAYMENT

       Any payment to be made in respect of the Second Issuer Notes by the
       Second Issuer or the Note Trustee may be made in accordance with the
       Conditions and any payment so made shall

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       be a good discharge of the relevant payment obligation of the Second
       Issuer or, as the case may be, the Note Trustee.

12.    PARTIAL PAYMENTS

       Upon presentation and surrender to the Registrar of a Definitive Second
       Issuer Note that is redeemed in part, the Registrar shall authenticate
       for the holder a new Definitive Second Issuer Note equal in principal
       amount to the principal amount of the unredeemed portion of the
       Definitive Second Issuer Note surrendered. Upon presentation of a Global
       Second Issuer Note that is redeemed in part, the Registrar shall make a
       notation on Part I of the Schedule thereto to reduce the aggregate
       principal amount of such Global Second Issuer Note to an amount equal to
       the aggregate principal amount of the unredeemed portion of the Global
       Second Issuer Note presented.

13.    COVENANTS BY THE SECOND ISSUER

       So long as any of the Second Issuer Notes remains outstanding (or, in the
       case of PARAGRAPHS (H), (I), (J), (N) and (O), so long as any of the
       Second Issuer Notes remains liable to prescription or, in the case of
       PARAGRAPH (Q), until the expiry of a period of 30 days after the
       "relevant date" (as defined in CONDITION 7) in respect of the payment of
       principal in respect of all such Second Issuer Notes remaining
       outstanding at such time) the Second Issuer covenants with the Note
       Trustee that it shall:

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

       (B)    INFORMATION: give or procure to be given to the Note Trustee such
              opinions, certificates, information and evidence as the Note
              Trustee shall require and in such form as it shall require,
              including without limitation the procurement by the Second Issuer
              of all such certificates called for by the Note Trustee pursuant
              to this Deed for the purpose of the discharge or exercise of the
              duties, trusts, powers, authorities and discretions vested in it
              under these presents or by operation of law;

       (C)    ACCOUNTS FOR STOCK EXCHANGE: cause to be prepared and certified by
              the Auditors of the Second Issuer in respect of each Financial
              Period, accounts in such form as will comply with all relevant
              legal and accounting requirements and all requirements for the
              time being of any stock exchange, competent listing authority
              and/or quotation system on or by which the Second Issuer Notes are
              listed, quoted and/or traded;

       (D)    BOOKS AND RECORDS: at all times keep proper books of account and
              allow the Note Trustee and any person appointed by the Note
              Trustee free access to such books of account at all reasonable
              times during normal business hours;

       (E)    NOTEHOLDER INFORMATION: send to the Note Trustee (in addition to
              any copies to which it may be entitled as a holder of any
              securities of the Second Issuer) two copies in English of every
              balance sheet, profit and loss account, report, circular and
              notice of general meeting and every other document issued or sent
              to its shareholders as a class together with any of the foregoing,
              and every document issued or sent to holders of securities other
              than its shareholders (including the Noteholders) as soon as
              practicable after the issue or publication thereof;

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                                       15
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       (F)    NOTICE OF NOTE EVENT OF DEFAULT: give notice in writing to the
              Note Trustee of the occurrence of any Note Event of Default or any
              matter it concludes, acting reasonably, to be likely to give rise
              to a Note Event of Default immediately upon becoming aware
              thereof, including the status of any such default or matter and
              what action the Second Issuer is taking or proposes to take with
              respect thereto, and without waiting for the Note Trustee to take
              any action;

       (G)    NOTICE OF DEFERRAL OF PAYMENTS: as soon as practicable after
              becoming aware that any part of a payment of interest on the
              Second Issuer Notes will be deferred or that a payment previously
              deferred will be made in accordance with CONDITION 4, give notice
              thereof to the Noteholders in accordance with CONDITION 14 and,
              for so long as the Second Issuer Notes are listed on the official
              list of the United Kingdom Listing Authority and admitted to
              trading on the London Stock Exchange, in accordance with the
              listing rules of the United Kingdom Listing Authority and the
              rules of the London Stock Exchange;

       (H)    CERTIFICATES RELATING TO FINANCIAL INFORMATION: give to the Note
              Trustee (a) within 14 days after demand by the Note Trustee
              therefor and (b) (without the necessity for any such demand)
              promptly after the publication of its audited accounts in respect
              of each Financial Period commencing with the financial period
              first ending after the date hereof and in any event not later than
              120 days after the end of each such financial period a certificate
              signed by two directors of the Second Issuer to the effect that as
              at a date not more than seven days before delivering such
              certificate (the "CERTIFICATION DATE") there did not exist and had
              not existed since the certification date of the previous
              certificate (or in the case of the first such certificate the date
              hereof) any Note Event of Default (or if such exists or existed,
              specifying the same) and that during the period from and including
              the certification date of the last such certificate (or in the
              case of the first such certificate the date hereof) to and
              including the certification date of such certificate the Second
              Issuer has complied, to the best of such directors' knowledge and
              belief, with all its obligations contained in these presents and
              each of the Transaction Documents to which it is a party or (if
              such is not the case) specifying the respects in which it has not
              so complied;

       (I)    FURTHER ASSURANCES: at all times execute and do all such further
              documents, acts and things as may be necessary at any time or
              times in the opinion of the Note Trustee to give effect to these
              presents and the other Transaction Documents only in so far as
              permitted by law;

       (J)    AGENT BANK, REFERENCE BANKS ETC.: at all times maintain an Agent
              Bank, four Reference Banks, a Paying Agent, a Transfer Agent and a
              Registrar in accordance with the Conditions;

       (K)    NOTIFICATION OF NON-PAYMENT: procure the Principal Paying Agent
              (or any other relevant Paying Agent) to notify the Note Trustee
              forthwith in the event that (i) the Principal Paying Agent (or
              other relevant Paying Agent) does not, on or before the due date
              for any payment in respect of any of the Second Issuer Notes,
              receive unconditionally pursuant to the Second Issuer Paying Agent
              and Agent Bank Agreement, as applicable, payment of the full
              amount in the requisite currency of the monies payable on such due
              date on all such Second Issuer Notes, or (ii) there are
              insufficient funds in euro, US dollars, or sterling, as the case
              may be, available to the

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              Principal Paying Agent to discharge the amount of the monies
              payable on such due date;

       (L)    NOTIFICATION OF LATE UNCONDITIONAL PAYMENT: in the event of any
              unconditional payment to the Principal Paying Agent, any other
              relevant Paying Agent, or the Note Trustee of any sum due in
              respect of any of the Second Issuer Notes being made after the due
              date for payment thereof forthwith give or procure to be given
              notice to the relevant Noteholders in accordance with CONDITION 14
              that such payment has been made;

       (M)    LISTING: use reasonable endeavours to maintain the listing of the
              Second Issuer Notes on the official list of the United Kingdom
              Listing Authority and to maintain the admission to trading of the
              Second Issuer Notes on the London Stock Exchange or, if it is
              unable to do so having used reasonable endeavours, use reasonable
              endeavours to obtain and maintain a quotation, listing and
              admission to trading of the Second Issuer Notes on or by such
              other stock exchanges, competent listing authorities and/or
              quotation systems as the Second Issuer may decide (with the prior
              written approval of the Note Trustee) and shall also upon
              obtaining a quotation, listing and admission to trading of such
              Second Issuer Notes on or by such other stock exchanges, competent
              listing authorities and/or quotation systems enter into a trust
              deed supplemental to this Deed to effect such consequential
              amendments to this Deed as the Note Trustee may require or as
              shall be requisite to comply with the requirements of any such
              stock exchange, competent listing authority and/or quotation
              system;

       (N)    CHANGE OF AGENT BANK, REFERENCE BANKS, ETC.: give notice to the
              Noteholders in accordance with CONDITION 14 of any appointment,
              resignation or removal of any Agent Bank, Reference Banks, Paying
              Agent, Transfer Agent or Registrar (other than the appointment of
              the initial Agent Bank, Reference Banks, Paying Agents, Transfer
              Agent and Registrar) after, except in the case of resignation,
              having obtained the prior written approval of the Note Trustee
              (such approval not to be unreasonably withheld or delayed) thereto
              or any change of any Paying Agent's, Agent Bank's, Transfer
              Agent's or Registrar's specified office and (except as provided by
              the Second Issuer Paying Agent and Agent Bank Agreement or the
              Conditions) at least 30 days prior to such event taking effect;
              PROVIDED ALWAYS THAT so long as any of the Second Issuer Notes
              remains outstanding in the case of the termination of the
              appointment of the Agent Bank, Transfer Agent or the Registrar or
              so long as any of the Second Issuer Notes remains liable to
              prescription in the case of the termination of the appointment of
              the Principal Paying Agent no such termination shall take effect
              until a new Agent Bank, Transfer Agent, Registrar or Principal
              Paying Agent, as the case may be, has been appointed on terms
              previously approved in writing by the Note Trustee;

       (O)    PRE-APPROVAL OF NOTICES: obtain the prior written approval of the
              Note Trustee to, and promptly give to the Note Trustee and the
              Rating Agencies two copies of, the form of every notice given to
              the Noteholders in accordance with CONDITION 14 (such approval,
              unless so expressed, not to constitute an invitation or inducement
              to engage in investment activities within the meaning of Section
              21 of the Financial Services and Markets Act 2000);
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                                       17
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       (P)    AVAILABILITY OF MEETING MATERIALS: from time to time as required
              or contemplated by this Deed or as reasonably requested by the
              Note Trustee, make available through the Paying Agents, or
              otherwise, such documents as may be required by the Noteholders in
              connection with meetings of Noteholders;

       (Q)    COMPLIANCE WITH SECOND ISSUER PAYING AGENT AND AGENT BANK
              AGREEMENT AND OTHER TRANSACTION DOCUMENTS: use its best endeavours
              to procure that the Agent Bank, the Paying Agents, the Transfer
              Agent and the Registrar comply with and perform all their
              respective obligations under the Second Issuer Paying Agent and
              Agent Bank Agreement and the other Transaction Documents and (in
              the case of the Paying Agents, the Transfer Agent and the
              Registrar) any notice given by the Note Trustee pursuant to CLAUSE
              2(C)(I) and not make any amendment or modification to the Second
              Issuer Paying Agent and Agent Bank Agreement or any other
              Transaction Documents or agree to waive or authorise any breach
              thereof without the prior written approval of the Note Trustee;

       (R)    EXERCISE OF REDEMPTION RIGHTS: in the event that Funding 1 elects
              to prepay any Term Advance in whole or in part under CLAUSE 8 of
              the Intercompany Loan Terms and Conditions, the Second Issuer
              shall exercise its right to redeem the corresponding class or
              classes of Second Issuer Notes in the same respective aggregate
              principal amounts as such Term Advance on the same Interest
              Payment Date under CONDITION 5(B);

       (S)    REDEMPTION REQUIREMENTS: not give notice of its election to redeem
              all or any part of a class or classes of Second Issuer Notes
              pursuant to CONDITION 5(D) or (E) unless it shall first have:

              (i)   given prior written notice to the Note Trustee of its
                    intention so to do in accordance with the Second Issuer
                    Paying Agent and Agent Bank Agreement;

              (ii)  delivered to the Note Trustee a certificate signed by two
                    directors of the Second Issuer certifying that the Second
                    Issuer will have the necessary funds on the Interest Payment
                    Date on which redemption is to occur (the "REDEMPTION DATE")
                    to discharge all amounts required under the Second Issuer
                    Deed of Charge to be paid in priority to such class or
                    classes of Second Issuer Notes on the redemption date, and
                    to redeem such class or classes of Second Issuer Notes in
                    whole or, as the case may be, in part; and that all such
                    funds will on such redemption date be subject to the
                    security constituted by the Second Issuer Deed of Charge and
                    not subject to the interest of any other person; and

              (iii) provided evidence acceptable to the Note Trustee of the
                    matters certified by it in PARAGRAPH (ii) above,

              provided always that the provisions of this subclause are
              subject to and without prejudice to the provisions of CLAUSE
              13(O);

       (T)    UNITED STATES REPORTING REQUIREMENTS: file with the Note Trustee
              copies of the annual reports and of the information, documents,
              and other reports (or copies of such portions of any of the
              foregoing as the SEC may by rules and regulations

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              prescribe) which the Second Issuer is required to file with the
              SEC pursuant to Section 13 or 15(d) of the Exchange Act within 15
              days after it files them with the SEC and comply with the other
              provisions of Section 314(a) of the Trust Indenture Act;

       (U)    INTEREST IN SECOND ISSUER CHARGED PROPERTY: ensure that, save as
              permitted in these presents, the Second Issuer Deed of Charge, the
              Conditions and the other Transaction Documents, no person other
              than the Second Issuer and the Security Trustee shall have any
              equitable interest in the Second Issuer Charged Property;

       (V)    MAINTENANCE OF SECOND ISSUER CASH MANAGER: ensure that there is at
              all times a cash manager appointed in accordance with the
              provisions of the Second Issuer Cash Management Agreement;

       (W)    TAX DEDUCTION: take reasonable steps to ensure that it does not
              engage in any course of conduct that would lead to a deduction,
              for United Kingdom corporation tax purposes, in respect of accrued
              interest or discount on the Second Issuer Notes by the Second
              Issuer being denied, postponed or restricted (whether such denial,
              postponement or restriction results from the application of
              paragraph 2 or 13 of Schedule 9 of the Finance Act 1996 or
              otherwise);

       (X)    UNITED KINGDOM AND UNITED STATES TAX STATUS: ensure that it is at
              all times solely resident in the United Kingdom for United Kingdom
              tax purposes and has no branch, business establishment or other
              fixed establishment outside the United Kingdom; and furthermore,
              ensure that it will not engage in any activities in the United
              States (directly or through agents), will not derive any income
              from United States sources as determined under United States
              income tax principles, and will not hold any property if doing so
              would cause it to be engaged or deemed to be engaged in a trade or
              business within the United States as determined under United
              States income tax principles;

       (Y)    PRE-ENFORCEMENT PAYMENTS: ensure that amounts standing to the
              credit of the Second Issuer Transaction Account will be applied by
              the Second Issuer in or towards satisfaction of such of the
              obligations set out in the Second Issuer Cash Management Agreement
              as may be, at any given time, then due and payable (in each case
              only if and to the extent that payments or provisions of a higher
              order of priority which are also due and payable or are likely to
              fall due at that time or prior to the next succeeding Interest
              Payment Date have been made or provided for in full);

       (Z)    AVAILABILITY OF INFORMATION: make available for inspection by
              Noteholders at the specified office of the Registrar during normal
              business hours on any Business Day copies of each balance sheet
              and profit and loss account sent to the Note Trustee pursuant to
              CLAUSE 13(E), this Deed, and the other Transaction Documents and
              promptly provide the Registrar with the information specified in
              CONDITION 5(C);

       (AA)   RATINGS: furnish, or procure that there is furnished, from time to
              time, any and all documents, instruments, information and
              undertakings that may be reasonably necessary in order to maintain
              the current ratings of the Second Issuer Notes by the Rating
              Agencies (save that when any such document, instrument,
              information and/or undertaking is not within the possession or
              control of the Second Issuer, the Second Issuer agrees only to use
              its best efforts to furnish, or procure that there is furnished,

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              from time to time any such documents, instruments, information and
              undertakings as may be reasonably necessary in order to maintain
              the current ratings of the Second Issuer Notes by the Rating
              Agencies);

       (BB)   CALCULATIONS: do, or procure that there are done on its behalf,
              all calculations required pursuant to the Conditions;

       (CC)   DTC, EUROCLEAR AND CLEARSTREAM, LUXEMBOURG: use its reasonable
              endeavours to procure that DTC, Euroclear and/or Clearstream,
              Luxembourg (as the case may be) issue(s) any certificate or other
              document requested by the Note Trustee acting reasonably pursuant
              to these presents as soon as practicable after such request;

       (DD)   INFORMATION REGARDING NOTEHOLDERS: furnish or cause to be
              furnished to the Note Trustee on 30th June and 31st December of
              each year, commencing 30th June, 2003 and at such other times as
              the Note Trustee may request in writing, all information in the
              possession or control of the Second Issuer, or of the Registrar as
              to the names and addresses of the Noteholders, and requiring the
              Note Trustee to preserve, in as current a form as is reasonably
              practicable, all such information so furnished to it;

       (EE)   OFFICERS' CERTIFICATES AND OPINIONS OF COUNSEL; STATEMENTS TO BE
              CONTAINED THEREIN: upon any application, demand or request by the
              Second Issuer to the Note Trustee to take any action under any of
              the provisions of this Deed (other than the issuance of Second
              Issuer Notes) and upon request of the Note Trustee, furnish to the
              Note Trustee an officers' certificate and opinion of counsel
              complying with the provisions of Section 314 of the Trust
              Indenture Act (an "OFFICERS' CERTIFICATE" and "OPINION OF
              COUNSEL", respectively);

       (FF)   AUTHORISED SIGNATORIES: upon the execution of this Deed and
              thereafter forthwith upon any change of the same, deliver to the
              Note Trustee (with a copy to the Principal Paying Agent and the
              Registrar) a list of the Authorised Signatories of the Second
              Issuer, together with certified specimen signatures of the same;
              and

       (GG)   NEW NOTES: procure that notice of any New Notes to be issued by
              any New Issuer is given to the Noteholders in accordance with
              CONDITION 14.

14.    REMUNERATION AND INDEMNIFICATION OF THE NOTE TRUSTEE

(A)    The Second Issuer shall pay to the Note Trustee remuneration for its
       services as trustee as from the date of this Deed, such remuneration to
       be at such rate and to be paid on such dates as may from time to time be
       agreed in writing between the Second Issuer and the Note Trustee. The
       rate of remuneration in force from time to time may upon the final
       redemption of the whole of the Second Issuer Notes of any series be
       reduced by such amount as shall be agreed in writing between the Second
       Issuer and the Note Trustee, such reduced remuneration to be calculated
       from such date as shall be agreed as aforesaid. Such remuneration shall
       accrue from day to day and be payable (in priority to payments to the
       Noteholders) up to and including the date when, all the Second Issuer
       Notes having become due for redemption, the redemption monies and
       interest thereon to the date of redemption have been paid to the
       Principal Paying Agent or, as the case may be, the Note Trustee PROVIDED
       THAT if upon due presentation of any Second Issuer Note or any cheque
       payment of the monies due in respect thereof is improperly withheld or
       refused, remuneration will commence again to accrue until payment to
       Noteholders is made.
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(B)    In the event of the occurrence of a Note Event of Default or the Note
       Trustee in its absolute discretion considering it necessary, or being
       requested by the Second Issuer to undertake duties which the Note Trustee
       and the Second Issuer agree to be of an exceptional nature or otherwise
       outside the scope of the normal duties of the Note Trustee under this
       Deed, the Second Issuer shall pay to the Note Trustee such additional
       remuneration as shall be agreed between them.

(C)    The Second Issuer shall pay to the Note Trustee in addition an amount
       equal to the amount of any value added tax or similar tax chargeable in
       respect of its remuneration under this Deed against production of a valid
       tax invoice.

(D)    In the event of the Note Trustee and the Second Issuer failing to agree:

       (i)    (in a case to which SUB-CLAUSE (A) above applies) upon the amount
              of the remuneration; or

       (ii)   (in a case to which SUB-CLAUSE (B) above applies) upon whether
              such duties shall be of an exceptional nature or otherwise outside
              the scope of the normal duties of the Note Trustee under this
              Deed, or upon such additional remuneration,

       such matters shall be determined by a merchant or investment bank (acting
       as an expert and not as an arbitrator) selected by the Note Trustee and
       approved by the Second Issuer or, failing such approval, nominated (on
       the application of the Note Trustee) by the President for the time being
       of The Law Society of England and Wales (the expenses involved in such
       nomination and the fees of such merchant or investment bank being payable
       by the Second Issuer) and the determination of any such merchant or
       investment bank shall be final and binding upon the Note Trustee and the
       Second Issuer.

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

(F)    All amounts payable pursuant to SUB-CLAUSE (E) above and/or CLAUSE 15(L)
       shall be payable by the Second Issuer on the date specified in a written
       demand by the Note Trustee and in the case of payments actually made by
       the Note Trustee prior to such demand shall (if not paid within three
       days after such demand and the Note Trustee so requires) carry interest
       at the rate of three per cent. per annum above the mean base rate from
       time to time of the Reference Banks from the date specified in such
       demand, and in all other cases shall (if not paid on the date specified
       in such demand or, if later, within three days after such demand and, in
       either case, the Note Trustee so requires) carry interest at such rate
       from the date specified in such demand. All remuneration payable to the
       Note Trustee shall carry interest at such rate from the due date
       therefor.
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(G)    Unless otherwise specifically stated in any discharge of this Deed the
       provisions of this Clause and CLAUSE 15(L) shall continue in full force
       and effect notwithstanding such discharge.

(H)    The Note Trustee shall be entitled in its absolute discretion to
       determine in respect of which series of Second Issuer Notes any
       liabilities incurred under this Deed have been incurred.

15.    SUPPLEMENT TO TRUSTEE ACTS

       Section 1 of the Trustee Act 2000 shall not apply to the duties of the
       Trustee in relation to the trusts constituted by these presents. Where
       there are any inconsistencies between the Trustee Acts and the provisions
       of these presents, the provisions of these presents shall, to the extent
       allowed by law, prevail and, in the case of any such inconsistency with
       the Trustee Act 2000, the provisions of these presents shall constitute a
       restriction or exclusion for the purposes of that Act.

       The Note Trustee shall have all the powers conferred upon trustees by the
       Trustee Act 1925 of England and Wales and by way of supplement thereto it
       is expressly declared as follows (which provisions, except as expressly
       provided in this CLAUSE 15, shall be in lieu of the provisions contained
       in Section 315(a) of the Trust Indenture Act):

       (A)    EXPERT ADVICE OR OPINION: the Note Trustee may in relation to
              these presents or the other Transaction Documents act on the
              advice or opinion of or any information obtained from any lawyer,
              valuer, accountant, surveyor, banker, broker, auctioneer or other
              expert whether obtained by the Second Issuer, the Note Trustee,
              the Principal Paying Agent, the Registrar or otherwise and shall
              not be responsible for any liability occasioned by so acting in
              good faith; any such advice, opinion or information may be sent or
              obtained by letter, telex, telegram, facsimile transmission,
              e-mail or cable and the Note Trustee shall not be liable for
              acting on any advice, opinion or information purporting to be
              conveyed by any such letter, telex, telegram, facsimile
              transmission or cable although the same shall contain some error
              or shall not be authentic;

       (B)    CERTIFICATE AS SUFFICIENT EVIDENCE: the Note Trustee may call for
              and shall be at liberty to accept as sufficient evidence of any
              fact or matter or the expediency of any transaction or thing a
              certificate signed by any two directors of the Second Issuer and
              the Note Trustee shall not be bound in any such case to call for
              further evidence or be responsible for any liability that may be
              occasioned by it or any other person acting on such certificate;

       (C)    CUSTODY OF DOCUMENTS: the Note Trustee shall be at liberty to hold
              these presents and any other documents relating thereto or any
              other Transaction Documents or to deposit them in any part of the
              world with any banker or banking company or company whose business
              includes undertaking the safe custody of documents or lawyer or
              firm of lawyers considered by the Note Trustee to be of good
              repute and the Note Trustee shall not be responsible for or
              required to insure against any liability incurred in connection
              with any such holding or deposit and may pay all sums required to
              be paid on account of or in respect of any such deposit;

       (D)    APPLICATION OF PROCEEDS: the Note Trustee shall not be responsible
              for the receipt or application of the proceeds of the issue of any
              of the Second Issuer Notes by the

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<PAGE>

                                       22
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              Second Issuer, the exchange of any Global Second Issuer Note for
              another Global Second Issuer Note or Definitive Second Issuer
              Notes or the exchange of any Definitive Second Issuer Note for
              another Definitive Second Issuer Note or the delivery of any
              Global Second Issuer Note or Definitive Second Issuer Notes to the
              person(s) entitled to it or them;

       (E)    ASSUMPTION OF NO DEFAULT: except to the extent required pursuant
              to Section 315(b) of the Trust Indenture Act, the Note Trustee
              shall not be bound to give notice to any person of the execution
              of any documents comprised or referred to in these presents or to
              take any steps to ascertain whether any Note Event of Default has
              happened and, until it shall have actual written notice pursuant
              to these presents to the contrary, the Note Trustee shall be
              entitled to assume that no Note Event of Default has occurred and
              that the Second Issuer is observing and performing all of its
              obligations under these presents;

       (F)    ABSOLUTE DISCRETION: save as expressly otherwise provided in this
              Deed, the Note Trustee shall have absolute and uncontrolled
              discretion as to the exercise or non-exercise of its trusts,
              powers, authorities and discretions under these presents (the
              exercise or non-exercise of which as between the Note Trustee and
              the Noteholders shall be conclusive and binding on the
              Noteholders) and provided it shall not have acted fraudulently or
              negligently or in breach of the terms of this Deed, shall not be
              responsible for any liability which may result from their exercise
              or non-exercise;

       (G)    RELIANCE ON EXTRAORDINARY RESOLUTION: the Note Trustee shall not
              be liable to any person by reason of having acted upon any
              Extraordinary Resolution in writing or any Extraordinary
              Resolution or other resolution purporting to have been passed at
              any meeting of the Noteholders of all or any class or classes in
              respect whereof minutes have been made and signed even though
              subsequent to its acting it may be found that there was some
              defect in the constitution of the meeting or the passing of the
              resolution or (in the case of an Extraordinary Resolution in
              writing) that not all Noteholders had signed the Extraordinary
              Resolution or that for any reason the resolution was not valid or
              binding upon such Noteholders;

       (H)    RELIANCE ON NOTICE OF PREPAYMENT: without prejudice to the right
              of the Note Trustee to require and/or accept any other evidence,
              the Note Trustee may accept as conclusive evidence of the matters
              certified therein a certificate signed by two directors of the
              Second Issuer under CLAUSE 13(S)(ii). The Note Trustee shall have
              no responsibility to the Noteholders or any other person for
              guaranteeing or ensuring that the Second Issuer's liabilities in
              respect of the Second Issuer Notes and any other amounts are in
              fact discharged on the due date and shall have no liability to the
              Noteholders or any other person for any failure by the Second
              Issuer to discharge or pay such liabilities and other amounts;

       (I)    SECOND ISSUER CHARGED PROPERTY: the Note Trustee may accept
              without enquiry, requisition or objection such title as the Second
              Issuer may have to the Second Issuer Charged Property or any part
              thereof from time to time and shall not be bound to investigate or
              make any enquiry into the title of the Second Issuer to the Second
              Issuer Charged Property or any part thereof from time to time
              whether or not any default or failure is or was known to the Note
              Trustee or might be, or might have been, discovered upon
              examination, inquiry or investigation and whether or not capable
              of remedy. Notwithstanding the generality of the foregoing, each
              Noteholder

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                                       23
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              shall be solely responsible for making its own independent
              appraisal of and investigation into the financial condition,
              creditworthiness, condition, affairs, status and nature of the
              Second Issuer, and the Note Trustee shall not at any time have any
              responsibility for the same and each Noteholder shall not rely on
              the Note Trustee in respect thereof;

       (J)    RELIANCE ON CERTIFICATES OR CONFIRMATIONS: except in the event of
              wilful default or manifest error, the Note Trustee shall be
              entitled to rely without investigation or enquiry on a certificate
              or confirmation of the Agent Bank, any Paying Agent, any Rating
              Agency or any Reference Bank in respect of every matter and
              circumstance for which a certificate or confirmation of the Agent
              Bank, any Paying Agent, any Rating Agency or any Reference Bank is
              expressly provided for under these presents, the Conditions or any
              other Transaction Document and to call for and rely upon a
              certificate or confirmation of the Agent Bank, any Paying Agent,
              any Rating Agency or any Reference Bank or any other person as to
              any other fact or matter prima facie within the knowledge of the
              Agent Bank, any Paying Agent, any Rating Agency or any Reference
              Bank or such other person, as sufficient evidence thereof and the
              Note Trustee shall not be bound in any such case to call for
              further evidence or be responsible for any loss, liability, costs,
              damages, expenses or inconvenience that may be occasioned by its
              failing so to do or the exercise or non-exercise by the Note
              Trustee of any of its powers, duties and discretions hereunder;

       (K)    SECOND ISSUER NOTES NOT AUTHENTIC: the Note Trustee shall not be
              liable to any person by reason of having accepted as valid or not
              having rejected any Second Issuer Note purporting to be such and
              subsequently found to be forged or not authentic;

       (L)    INDEMNITY: without prejudice to the right of indemnity by law
              given to trustees, the Second Issuer shall indemnify the Note
              Trustee (except where the Note Trustee is indemnified by the
              Noteholders) and keep it or him indemnified against all
              liabilities to which it or he may be or become subject or which
              may be incurred by it or him in the proper execution or purported
              proper execution of any of its or his trusts, powers, authorities
              and discretions under these presents or any other Transaction
              Document or its or his functions under any such appointment or in
              respect of any other matter or thing done or omitted in any way
              relating to these presents or any other Transaction Document or
              any such appointment save to the extent that the same arises as a
              result of wilful default, wilful misconduct, fraud or breach of
              trust on the part of the Note Trustee. The Note Trustee shall keep
              the Second Issuer informed of the progress of any claims against
              the Note Trustee;

       (M)    CONSENT OR APPROVAL: any consent or approval given by the Note
              Trustee for the purposes of these presents or the Second Issuer
              Notes may be given on such terms and subject to such conditions
              (if any) as the Note Trustee thinks fit (acting reasonably) and,
              notwithstanding anything to the contrary in these presents or the
              Second Issuer Notes, may be given retrospectively;

       (N)    NO DISCLOSURE OBLIGATION: unless and to the extent ordered so to
              do by a court of competent jurisdiction, the Note Trustee shall
              not be required to disclose to any Noteholder any information
              (including, without limitation, information of a confidential,
              financial or price sensitive nature) made available to the Note
              Trustee by the Second Issuer or any other person in connection
              with these presents or any

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<PAGE>

                                       24
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              other Transaction Document and no Noteholder shall be entitled to
              take any action to obtain from the Note Trustee any such
              information;

       (O)    CURRENCY CONVERSION: where it is necessary or desirable for any
              purpose in connection with these presents to convert any sum from
              one currency to another it shall be converted (unless otherwise
              provided by these presents or required by law) at such rate or
              rates, in accordance with such method and as at such date for the
              determination of such rate of exchange, as may be agreed by the
              Note Trustee in consultation with the Second Issuer and any rate,
              method and date so agreed shall be binding on the Second Issuer
              and the Noteholders;

       (P)    CERTIFICATE IN RESPECT OF MATERIAL PREJUDICE: the Note Trustee may
              certify whether or not any of the conditions, events and acts set
              out in CONDITION 9 (each of which conditions, events and acts
              shall, unless the Note Trustee in its absolute discretion shall
              otherwise determine, for all the purposes of these presents be
              deemed to include the circumstances resulting therein and the
              consequences resulting therefrom) is in its opinion materially
              prejudicial to the interests of the Noteholders of the relevant
              class or classes and any such certificate shall be conclusive and
              binding upon the Second Issuer and the Noteholders;

       (Q)    DETERMINATION BY NOTE TRUSTEE: the Note Trustee as between itself
              and the Noteholders may determine all questions and doubts arising
              in relation to any of the provisions of this Deed. Every such
              determination, whether or not relating in whole or in part to the
              acts or proceedings of the Note Trustee, shall be conclusive and
              shall bind the Note Trustee and the Noteholders;

       (R)    INTERESTS OF NOTEHOLDERS: in connection with the exercise by the
              Note Trustee of any of its trusts, duties, rights, powers,
              authorities and discretions under these presents and the other
              Transaction Documents:

              (i)   where it is required to have regard to the interests of the
                    Noteholders of any class, it shall have regard to the
                    interests of such Noteholders as a class and, in particular
                    but without prejudice to the generality of the foregoing,
                    shall not have regard to, or be in any way liable for, the
                    consequences of any exercise thereof for individual
                    Noteholders resulting from their being for any purpose
                    domiciled or resident in, or otherwise connected with, or
                    subject to the jurisdiction of, any particular territory,
                    and the Note Trustee shall not be entitled to require, nor
                    shall any Noteholder be entitled to claim, from the Second
                    Issuer or any other person, any indemnification or payment
                    in respect of any tax consequence of any such exercise upon
                    individual Noteholders;

              (ii)  except where expressly provided otherwise, it shall have
                    regard to the interests of the Class A Second Issuer
                    Noteholders, the Class B Second Issuer Noteholders and the
                    Class C Second Issuer Noteholders equally PROVIDED THAT (a)
                    if in the opinion of the Note Trustee there is a conflict
                    between the interests of the Class A Second Issuer
                    Noteholders, on the one hand and the interests of the Class
                    B Second Issuer Noteholders and/or the Class C Second Issuer
                    Noteholders on the other hand, the Note Trustee shall have
                    regard only to the interests of the Class A Second Issuer
                    Noteholders and subject to (b), if in the opinion of the
                    Note Trustee there is a conflict between the interests of
                    the Class B Second Issuer Noteholders on

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                                       25
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                    one hand and the interests of the Class C Second Issuer
                    Noteholders on the other hand, the Note Trustee shall have
                    regard only to the interests of the Class B Second Issuer
                    Noteholders; but so that this proviso shall not apply in the
                    case of powers, authorities or discretions in relation to
                    which it is expressly stated that they may be exercised by
                    the Note Trustee only if in its opinion the interests of all
                    the Noteholders would not be materially prejudiced thereby;
                    and

              (iii) it shall not have regard to, or be in any way liable for,
                    the consequences of any exercise thereof for any other
                    Second Issuer Secured Creditor or any other person,

              the Note Trustee shall be entitled to assume, for the purposes of
              exercising any power, right, trust, authority, duty or discretion
              under or in relation to the Second Issuer Notes, these presents or
              any of the other Transaction Documents, that such exercise will
              not be materially prejudicial to the interests of the Class A
              Second Issuer Noteholders if each of the Rating Agencies has
              confirmed that the then current rating by it of the Class A Second
              Issuer Notes would not be adversely affected by such exercise,
              that such exercise will not be materially prejudicial to the
              interests of the Class B Second Issuer Noteholders if each of the
              Rating Agencies has confirmed that the then current rating by it
              of the Class B Second Issuer Notes would not be adversely affected
              by such exercise and that such exercise will not be materially
              prejudicial to the interests of the Class C Second Issuer
              Noteholders if each of the Rating Agencies has confirmed that the
              then current rating by it of the Class C Second Issuer Notes will
              not be adversely affected by such exercise;

       (S)    CERTIFICATE OF PRINCIPAL AMOUNT OUTSTANDING: the Note Trustee may
              call for any certificate or other document to be issued by DTC,
              Euroclear or Clearstream, Luxembourg as to the Principal Amount
              Outstanding of Second Issuer Notes represented by a Global Second
              Issuer Note standing to the account of any person. Any such
              certificate or other document shall (in the absence of manifest
              error) be conclusive and binding for all purposes. The Note
              Trustee shall not be liable to any person by reason of having
              accepted as valid or not having rejected any certificate or other
              document to such effect purporting to be issued by DTC, Euroclear
              or Clearstream, Luxembourg and subsequently found to be forged or
              not authentic;

       (T)    PROFESSIONAL CHARGES: any trustee of these presents being a
              lawyer, accountant, broker or other person engaged in any
              profession or business shall be entitled to charge and be paid all
              usual professional and other charges for business transacted and
              acts done by him or his firm in connection with the trusts of
              these presents and also his reasonable charges in addition to
              disbursements for all other work and business done and all time
              spent by him or his firm in connection with matters arising in
              connection with these presents;

       (U)    POWER OF ATTORNEY: the Note Trustee may whenever it thinks fit
              (acting reasonably) delegate by power of attorney or otherwise to
              any person or persons or fluctuating body of persons (whether
              being a joint trustee of these presents or not) all or any of its
              trusts, powers, authorities and discretions under these presents.
              Such delegation may be made upon such terms (including power to
              sub-delegate) and subject to such conditions and regulations as
              the Note Trustee may in the interests of the Noteholders think
              fit. The Note Trustee shall not be under any obligation to

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              supervise the proceedings or acts of any such delegate or
              sub-delegate or be in any way responsible for any liability
              incurred by reason of any misconduct or default on the part of any
              such delegate or sub-delegate (except where such delegate or
              sub-delegate is an affiliate, associate or otherwise connected
              with the Note Trustee). The Note Trustee shall within a reasonable
              time after any such delegation or any renewal, extension or
              termination thereof give notice thereof to the Second Issuer;

       (V)    DELEGATION: the Note Trustee may in the conduct of the trusts of
              these presents instead of acting personally employ and pay an
              agent (whether being a lawyer or other professional person) to
              transact or conduct, or concur in transacting or conducting, any
              business and to do, or concur in doing, all acts required to be
              done in connection with these presents. The Note Trustee shall not
              be in any way responsible for any liability incurred by reason of
              any misconduct or default on the part of any such agent or be
              bound to supervise the proceedings or acts of any such agent;

       (W)    RATINGS: the Note Trustee shall have no responsibility for the
              maintenance of any rating of any of the Second Issuer Notes by the
              Rating Agencies or any other person;

       (X)    NO REQUIREMENT TO PERFORM ILLEGAL ACTS, ETC.: no provision of
              these presents shall require the Note Trustee to do anything which
              may be illegal or contrary to applicable law or regulation or
              expend or risk its own funds or otherwise incur any financial
              liability in the performance of any of its duties, or in the
              exercise of any of its rights or powers or otherwise in connection
              with these presents, any other Transaction Document or the Second
              Issuer Notes (including, without limitation, forming any opinion
              or employing any legal, financial or other adviser), if it shall
              believe that repayment of such funds or adequate indemnity against
              such risk or liability is not assured to it;

       (Y)    REPORTS BY NOTE TRUSTEE TO NOTEHOLDERS: if required by Section
              313(a) of the Trust Indenture Act, within 60 days after 31st
              December of any year, commencing 31st December 2003, the Note
              Trustee shall deliver to each Noteholder a brief report dated as
              of such 31st December that complies with Section 313(a) of the
              Trust Indenture Act. The Note Trustee also shall comply with
              Section 313(b), (c) and (d) of the Trust Indenture Act. Reports
              delivered pursuant to this CLAUSE 15 (Z) shall be sent as provided
              in CLAUSE 24;

       (Z)    PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE SECOND ISSUER: the
              Note Trustee shall comply with Section 311(a) of the Trust
              Indenture Act, excluding any creditor relationship listed in
              Section 311(b) of the Trust Indenture Act. A Note Trustee who has
              resigned or been removed shall be subject to Section 311(a) of the
              Trust Indenture Act to the extent indicated therein. The
              provisions of Section 311 of the Trust Indenture Act shall apply
              to the Second Issuer as the obligor of the Second Issuer Notes;

       (AA)   RESPONSIBILITY FOR REPORTS ETC: the Note Trustee has no
              responsibility to verify or monitor the contents of, or (if
              applicable) to check any calculations contained in, any reports,
              information, documents, Officers' Certificate and Opinions of
              Counsel delivered to the Note Trustee in accordance with CLAUSE
              13(T), (EE) or (FF) or CLAUSE 27, and is under no obligation to
              inform Noteholders of the contents of any such reports,
              information, documents, Officers' Certificate and Opinions of
              Counsel,

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<PAGE>

                                       27
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              other than allowing Noteholders upon reasonable notice, to inspect
              such reports, information, documents, Officers' Certificate and
              Opinions of Counsel;

       (BB)   AUDITORS REPORTS AND CERTIFICATES: any certificate or report of
              the Auditors called for by or provided to the Note Trustee in
              accordance with or for the purposes of these presents may be
              relied on upon by the Note Trustee without further investigation
              or enquiry as sufficient evidence of the facts stated therein
              notwithstanding that such certificate or report and/or any
              engagement letter or other document entered into by the Note
              Trustee in connection therewith contains a monetary or other limit
              on the liability of the Auditors in respect thereof; and

       (CC)   LIMITATION OF LIABILITY: subject to CLAUSE 16 and save as required
              for the purposes of the Trust Indenture Act, the Note Trustee
              shall not be responsible for the genuineness, validity,
              effectiveness or suitability of any of the Transaction Documents
              or any other documents entered into in connection therewith or any
              other document or any obligation or rights created or purported to
              be created thereby or pursuant thereto or any security or the
              priority thereof constituted or purported to be constituted
              thereby or pursuant thereto, nor shall it be responsible or liable
              to any person because of any invalidity of any provision of such
              documents or the unenforceability thereof, whether arising from
              statute, law or decisions of any court and (without prejudice to
              the generality of the foregoing) the Note Trustee shall not have
              any responsibility for or have any duty to make any investigation
              in respect of or in any way be liable whatsoever for:

              (i)    the nature, status, creditworthiness or solvency of the
                     Second Issuer or Funding 1 or any other person or entity
                     who has at any time provided any security or support
                     whether by way of guarantee, charge or otherwise in
                     respect of any advance made to the Second Issuer;

              (ii)   the execution, delivery, legality, validity, adequacy,
                     admissibility in evidence or enforceability of any
                     Transaction Document or any other document entered into in
                     connection therewith;

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

              (iv)   the registration, filing, protection or perfection of any
                     security (howsoever described) relating to the Second
                     Issuer Charged Property or the priority of the security
                     (howsoever described) thereby created whether in respect
                     of any initial advance or any subsequent advance or any
                     other sums or liabilities;

              (v)    the scope or accuracy of any representations, warranties or
                     statements made by or on behalf of the Second Issuer or
                     Funding 1 or any other person or entity who has at any time
                     provided the same in any Transaction Document or in any
                     document entered into in connection therewith;

              (vi)   the performance or observance by the Second Issuer or
                     Funding 1 or any other person of any provisions of any
                     Transaction Document or any document entered into in
                     connection therewith or the fulfilment or satisfaction of
                     any conditions contained therein or relating thereto or as
                     to

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                                       28
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                     the existence or occurrence at any time of any default,
                     event of default or similar event howsoever described
                     contained therein or any waiver or consent which has at any
                     time been granted in relation to any of the foregoing;

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

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

              (ix)   the suitability, adequacy or sufficiency of any applicable
                     criteria for any advances under the Second Issuer
                     Intercompany Loan Agreement or the legality or
                     recoverability or enforceability thereof or the priority of
                     any security (howsoever described) in relation thereto;

              (x)    the failure by the Second Issuer to obtain or comply with
                     any licence, consent or other authority in connection with
                     the Second Issuer Charged Property or the Transaction
                     Documents or the making of any advances in connection
                     therewith or the failure to effect or procure registration
                     of or to give notice to any person in relation to or
                     otherwise protect the security (howsoever described)
                     created or purported to be created by or pursuant to any
                     of the Second Issuer Charged Property or the Transaction
                     Documents or other documents entered into in connection
                     therewith;

              (xi)   the failure to call for delivery of documents of title to
                     or require any transfers, legal mortgages, charges or other
                     further assurances in relation to any of the assets that
                     are the subject matter of any of the Transaction Documents
                     or any other document;

              (xii)  any assets comprised in the security (howsoever described)
                     created by the Second Issuer Deed of Charge, or any deeds
                     or documents of title thereto, being uninsured or
                     inadequately insured or being held by or to the order of
                     other parties to the Transaction Documents, clearing
                     organisations or their operators or by intermediaries such
                     as banks, brokers, depositories, warehousemen or other
                     similar persons whether or not on behalf of the Note
                     Trustee;

              (xiii) any accounts, books, records or files maintained by the
                     Second Issuer or any other person in respect of any of the
                     Second Issuer Charged Property or Transaction Documents; or

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

16.    NOTE TRUSTEE'S LIABILITY

       None of the provisions of these presents shall, in any case in which the
       Note Trustee has failed to show the degree of care and diligence required
       of it as trustee of these presents,

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       having regard to the provisions of these presents and any of the other
       Transaction Documents to which the Note Trustee is a party conferring on
       the Note Trustee any powers, authorities or discretions, relieve or
       indemnify the Note Trustee against any liabilities which by virtue of any
       rule of law would otherwise attach to it in respect of any wilful
       default, wilful misconduct, breach of duty, negligence or breach of trust
       of which it may be guilty in relation to its duties under these presents.

17.    NOTE TRUSTEE CONTRACTING WITH THE SECOND ISSUER

       Neither the Note Trustee nor any director or officer or holding company
       or associated company of a corporation acting as a trustee under these
       presents shall by reason of its or his fiduciary position be in any way
       precluded from:

       (i)    entering into or being interested in any contract or financial or
              other transaction or arrangement with the Second Issuer or any
              other party to the Transaction Documents or any person or body
              corporate associated with the Second Issuer or any other party to
              the Transaction Documents (including without limitation any
              contract, transaction or arrangement of a banking or insurance
              nature or any contract, transaction or arrangement in relation to
              the making of loans or the provision of financial facilities or
              financial advice to, or the purchase, placing or underwriting of
              or the subscribing or procuring subscriptions for or otherwise
              acquiring, holding or dealing with, or acting as paying agent in
              respect of, the Second Issuer Notes or any other notes, bonds,
              stocks, shares, debenture stock, debentures or other securities
              of, the Second Issuer or any other party to the Transaction
              Documents or any person or body corporate associated as
              aforesaid); or

       (ii)   accepting or holding the trusteeship of any other trust deed
              constituting or securing any other notes issued by or relating to
              the Second Issuer or any other party to the Transaction Documents
              or any such person or body corporate so associated or any other
              office of profit under the Second Issuer or any other party to the
              Transaction Documents or any such person or body corporate so
              associated,

       and shall be entitled to exercise and enforce its rights, comply with its
       obligations and perform its duties under or in relation to any such
       contract, transaction or arrangement as is referred to in (i) above or,
       as the case may be, any such trusteeship or office of profit as is
       referred to in (ii) above without regard to the interests of the
       Noteholders and notwithstanding that the same may be contrary or
       prejudicial to the interests of the Noteholders and shall not be
       responsible for any liability occasioned to the Noteholders thereby and
       shall be entitled to retain and shall not be in any way liable to account
       for any profit made or share of brokerage or commission or remuneration
       or other amount or benefit received thereby or in connection therewith.

       Where any holding company, subsidiary or associated company of the Note
       Trustee or any director or officer of the Note Trustee acting other than
       in such capacity as director or officer has any information, the Note
       Trustee shall not thereby be deemed also to have knowledge of such
       information and, unless it shall have express notice pursuant to this
       Deed of such information, shall not be responsible for any loss suffered
       by Noteholders resulting from the Note Trustee's failing to take such
       information into account in acting or refraining from acting under or in
       relation to these presents.
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18.    WAIVER, AUTHORISATION AND DETERMINATION

(A)    The Note Trustee may, without the consent or sanction of the Noteholders
       and without prejudice to its rights in respect of any subsequent breach,
       from time to time and at any time but only if and in so far as in its
       opinion the interests of the Noteholders of each class of Second Issuer
       Notes shall not be materially prejudiced thereby waive or authorise any
       breach or proposed breach by the Second Issuer or any other party thereto
       of any of the covenants or provisions contained in these presents or any
       of the other Transaction Documents or determine that any Note Event of
       Default shall not be treated as such for the purposes of these presents
       PROVIDED ALWAYS THAT the Note Trustee shall not exercise any powers
       conferred on it by this Clause in contravention of any express direction
       given by Extraordinary Resolution of any class of Second Issuer Notes or
       by a request under CONDITION 9 or 10 but so that no such direction or
       request shall affect any waiver, authorisation or determination
       previously given or made. Any such waiver, authorisation or determination
       may be given or made on such terms and subject to such conditions (if
       any) as the Note Trustee may determine, shall be binding on the
       Noteholders and, if, but only if, the Note Trustee shall so require,
       shall be notified by the Second Issuer to the Noteholders in accordance
       with CONDITION 14 as soon as practicable thereafter. The provisions of
       this CLAUSE 18(A) shall be in lieu of section 316(a)(1)(B) of the Trust
       Indenture Act and section 316(a)(1)(B) of the Trust Indenture Act is
       hereby expressly excluded from this Deed and the Second Issuer Notes, as
       permitted by the Trust Indenture Act.

(B)    MODIFICATION

(i)    The Note Trustee may without the consent or sanction of the Noteholders
       at any time and from time to time concur with the Second Issuer in making
       any modification (except a Basic Terms Modification (as defined in
       PARAGRAPH 5 of SCHEDULE 4 hereto)) (i) to these presents or any of the
       other Transaction Documents which in the opinion of the Note Trustee it
       may be proper to make PROVIDED THAT the Note Trustee is of the opinion
       that such modification will not be materially prejudicial to the
       interests of the Noteholders of each class of Second Issuer Notes or (ii)
       to these presents or any of the other Transaction Documents if in the
       opinion of the Note Trustee such modification is of a formal, minor or
       technical nature or is necessary to correct a manifest error. Any such
       modification may be made on such terms and subject to such conditions (if
       any) as the Note Trustee may determine, shall be binding upon the
       Noteholders and, unless the Note Trustee agrees otherwise, shall be
       notified by the Second Issuer to the Noteholders and the Rating Agencies
       in accordance with CONDITION 14 as soon as practicable thereafter.

(ii)   So long as any of the Second Issuer Notes are rated by the Rating
       Agencies, the Second Issuer shall notify the Rating Agencies in writing
       as soon as reasonably practicable thereafter of any modification to the
       provisions of these presents, the Second Issuer Notes or any of the other
       Transaction Documents. The Note Trustee may also agree, without the
       consent of the Noteholders, to a change of the laws governing the Second
       Issuer Notes and/or the Transaction Documents (and to any consequential
       amendments deriving therefrom) PROVIDED THAT such change and
       consequential amendments would not, in the opinion of the Note Trustee,
       be materially prejudicial to the interests of the Noteholders.

(C)    BREACH

Any    breach of or failure to comply with any such terms and conditions as are
       referred to in SUBCLAUSES (A) and (B) of this Clause shall constitute a
       default by the Second Issuer in the

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                                       31
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       performance or observance of a covenant or provision binding on it under
       or pursuant to these presents.

19.    ENTITLEMENT TO TREAT NOTEHOLDER AS ABSOLUTE OWNER

       The Second Issuer, the Note Trustee, the Paying Agents, the Transfer
       Agent and the Registrar may (to the fullest extent permitted by
       applicable laws) deem and treat the registered holder of any Second
       Issuer Note or of a particular principal amount of the Second Issuer
       Notes as the absolute owner of such Second Issuer Note or principal
       amount, as the case may be, for all purposes (whether or not such Second
       Issuer Note or principal amount shall be overdue and notwithstanding any
       notice of ownership thereof or of trust or other interest with regard
       thereto, any notice of loss or theft thereof or any writing thereon), and
       the Second Issuer, the Note Trustee, the Paying Agents, the Transfer
       Agent and the Registrar shall not be affected by any notice to the
       contrary. All payments made to any such registered holder of a Definitive
       Second Issuer Note or Global Second Issuer Note shall be valid and, to
       the extent of the sums so paid, effective to satisfy and discharge the
       liability for the monies payable in respect of such Second Issuer Note or
       principal amount, as the case may be.

20.    CURRENCY INDEMNITY

       The Second Issuer shall indemnify the Note Trustee, every appointee of
       the Note Trustee and the Noteholders and keep them indemnified against:

       (a)    any liability incurred by any of them arising from the non-payment
              by the Second Issuer of any amount due to the Note Trustee or the
              Noteholders under these presents by reason of any variation in the
              rates of exchange between those used for the purposes of
              calculating the amount due under a judgment or order in respect
              thereof and those prevailing at the date of actual payment by the
              Second Issuer; and

       (b)    any deficiency arising or resulting from any variation in rates of
              exchange between (i) the date as of which the local currency
              equivalent of the amounts due or contingently due under these
              presents (other than this Clause) is calculated for the purposes
              of any bankruptcy, insolvency or liquidation of the Second Issuer
              and (ii) the final date for ascertaining the amount of claims in
              such bankruptcy, insolvency or liquidation. The amount of such
              deficiency shall be deemed not to be reduced by any variation in
              rates of exchange occurring between the said final date and the
              date of any distribution of assets in connection with any such
              bankruptcy, insolvency or liquidation.

       The above indemnity (and the indemnities given by the Second Issuer in
       CLAUSE 14(E) and CLAUSE 15(L)) shall constitute obligations of the Second
       Issuer separate and independent from its obligations under the other
       provisions of these presents and the Second Issuer Notes and shall apply
       irrespective of any indulgence granted by the Note Trustee or the
       Noteholders from time to time and shall continue in full force and effect
       notwithstanding the judgment or filing of any proof or proofs in any
       bankruptcy, insolvency or liquidation of the Second Issuer for a
       liquidated sum or sums in respect of amounts due under these presents
       (other than this Clause). Any such deficiency as aforesaid shall be
       deemed to constitute a loss suffered by the Noteholders and no proof or
       evidence of any actual loss shall be required by the Second Issuer or its
       liquidator or liquidators.
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                                       32
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21.    ELIGIBILITY AND DISQUALIFICATION; NEW NOTE TRUSTEE

(A)    ELIGIBILITY AND DISQUALIFICATION

       This Deed shall always have a Note Trustee which shall be eligible to act
       as Note Trustee under Sections 310(a)(1) and 310(a)(2) of the Trust
       Indenture Act. The Note Trustee shall have a combined capital and surplus
       of at least $50,000,000 as set forth in its most recent published annual
       report of condition. If the Note Trustee has or shall acquire any
       "conflicting interest" within the meaning of Section 310(b) of the Trust
       Indenture Act, the Note Trustee and the Second Issuer shall comply with
       the provisions of Section 310(b) of the Trust Indenture Act; provided,
       however, that there shall be excluded from the operation of Section
       310(b)(1) of the Trust Indenture Act any deed or deeds under which other
       securities or certificates of interest or participation in other
       securities of the Second Issuer are outstanding if the requirements for
       such exclusion set forth in Section 310(b)(1) of the Trust Indenture Act
       are met. If at any time the Note Trustee shall cease to be eligible in
       accordance with the provisions of this CLAUSE 21(A), the Note Trustee
       shall resign promptly in the manner and with the effect specified in
       CLAUSE 22.

(B)    NEW NOTE TRUSTEE

(a)    Subject to PARAGRAPH (B) below the power to appoint a new trustee of
       these presents shall be vested in the Second Issuer but no person shall
       be appointed who shall not previously have been approved by an
       Extraordinary Resolution of the Class A Second Issuer Noteholders, the
       Class B Second Issuer Noteholders and the Class C Second Issuer
       Noteholders. One or more persons may hold office as trustee or trustees
       of these presents but such trustee or trustees shall be or include a
       Trust Corporation. Whenever there shall be more than two trustees of
       these presents the majority of such trustees shall be competent to
       execute and exercise all the duties, powers, trusts, authorities and
       discretions vested in the Note Trustee by these presents provided that a
       Trust Corporation shall be included in such majority. Any appointment of
       a new trustee of these presents shall as soon as practicable thereafter
       be notified by the Second Issuer to the Principal Paying Agent, the
       Transfer Agent, the Registrar, the Noteholders and the Rating Agencies.

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

(C)    SEPARATE AND CO-TRUSTEES

       Notwithstanding the provisions of SUB-CLAUSE (B) above, the Note Trustee
       may, upon giving prior notice to the Second Issuer (but without requiring
       the consent of the Second Issuer or the Noteholders), appoint any person
       established or resident in any jurisdiction (whether a Trust Corporation
       or not) to act either as a separate trustee or as a co-trustee jointly
       with the Note Trustee:

       (i)    if the Note Trustee considers such appointment to be in the
              interests of the Noteholders;

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                                       33
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       (ii)   for the purposes of conforming to any legal requirements,
              restrictions or conditions in any jurisdiction in which any
              particular act or acts is or are to be performed; or

       (iii)  for the purposes of obtaining a judgment in any jurisdiction or
              the enforcement in any jurisdiction of either a judgment already
              obtained or any of the provisions of these presents or any of the
              other Transaction Documents against the Second Issuer or any other
              party thereto.

       The Second Issuer irrevocably appoints the Note Trustee to be its
       attorney in its name and on its behalf to execute any such instrument of
       appointment. Such a person shall (subject always to the provisions of
       these presents) have such trusts, powers, authorities and discretions
       (not exceeding those conferred on the Note Trustee by these presents) and
       such duties and obligations as shall be conferred or imposed by the
       instrument of appointment. The Note Trustee shall have power in like
       manner to remove any such person. Such reasonable remuneration as the
       Note Trustee may pay to any such person, together with any attributable
       costs, charges and expenses incurred by it in performing its function as
       such separate trustee or co-trustee, shall for the purposes of this Deed
       be treated as costs, charges and expenses incurred by the Note Trustee.

22.    NOTE TRUSTEE'S RETIREMENT AND REMOVAL

       A trustee of this Deed may retire at any time on giving not less than
       three months' prior written notice to the Second Issuer without giving
       any reason and without being responsible for any costs incurred by reason
       of such retirement. The Noteholders may by Extraordinary Resolution of
       each class of Noteholders remove any trustee or trustees for the time
       being of these presents. The Second Issuer undertakes that in the event
       of the only trustee of these presents which is a Trust Corporation giving
       notice under this Clause or being removed by Extraordinary Resolution of
       each class of Noteholders it will use its best endeavours to procure that
       a new trustee of these presents being a Trust Corporation is appointed as
       soon as reasonably practicable thereafter. The retirement or removal of
       any such trustee shall not become effective until a successor trustee
       being a Trust Corporation is appointed. If a successor trustee being a
       trust corporation has not been appointed within two months after the date
       of the notice of retirement of the Note Trustee, then the retiring Note
       Trustee may appoint its own successor trustee being a trust corporation.

23.    NOTE TRUSTEE'S POWERS TO BE ADDITIONAL

       The powers conferred upon the Note Trustee by these presents shall be in
       addition to any powers which may from time to time be vested in the Note
       Trustee by the general law or as a holder of any of the Second Issuer
       Notes.

24.    NOTICES

(A)    Any notice or demand to the Second Issuer or the Note Trustee to be
       given, made or served for any purposes under these presents shall be in
       writing and shall be given, made or served by sending the same by
       pre-paid post (first class if inland, first class airmail if overseas) or
       facsimile transmission or by delivering it by hand to:
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                                       34
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       (i)      SECOND ISSUER:

                Permanent Financing (No. 2) PLC
                Blackwell House
                Guildhall Yard
                London EC2V 5AE

                For the attention of: the Directors

                Facsimile: +44 (0) 20 7556 0975

                With a copy to:

                HBOS Treasury Services plc
                33 Old Broad Street
                London EC2N 1HZ

                For the attention of: Head of Capital Markets and Securitisation

                Facsimile: +44 (0) 20 7574 8784

       (ii)     NOTE TRUSTEE:

                U.S. Bank National Association
                1 Federal Street
                3rd Floor
                Boston
                Massachusetts 02110

                For the attention of: Corporate Trust Services
                Facsimile: + 1 (617) 603 6638

       or to such other address or facsimile number as shall have been notified
       (in accordance with this Clause) to the other party hereto and any notice
       or demand sent by post as aforesaid shall be deemed to have been given,
       made or served three days in the case of inland post or seven days in the
       case of overseas post after despatch and any notice or demand sent by
       facsimile transmission as aforesaid shall be deemed to have been given,
       made or served on report of successful transmission.

(B)    COMMUNICATIONS BY NOTEHOLDERS WITH OTHER NOTEHOLDERS

       Noteholders may communicate pursuant to Trust Indenture Act Section
       312(b) with other Noteholders with respect to their rights under this
       Deed or the Second Issuer Notes. The Second Issuer, the Note Trustee, the
       Principal Paying Agent, the Registrar and anyone else shall have the
       protection of Trust Indenture Act Section 312(c).

(C)    NOTICES TO NOTEHOLDERS

       Any notice or communication mailed to Noteholders hereunder shall be
       transmitted by mail:
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                                       35
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       (i)    to all Noteholders of Definitive Second Issuer Notes, as the names
              and addresses of such Noteholders appear upon the Register; and

       (ii)   to such other Noteholders as have, within the two years preceding
              such transmission, filed their names and addresses with the Note
              Trustee for that purpose.

25.    RIGHTS OF THIRD PARTIES

       A person who is not a party to this Deed has no right under the Contracts
       (Rights of Third Parties) Act 1999 to enforce any term of this Deed, but
       this does not affect any right or remedy of a third party which exists or
       is available apart from that Act.

26.    TRUST INDENTURE ACT PREVAILS

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

27.    CERTIFICATES AND OPINIONS

(A)    CERTIFICATE AND OPINIONS AS TO CONDITIONS PRECEDENT

       Upon any request or application by the Second Issuer to the Note Trustee
       to take any action under this Deed, the Second Issuer shall furnish to
       the Note Trustee:

       (i)    an Officers' Certificate (which shall include the statements set
              forth in CLAUSE 27(B) below) stating that, in the opinion of the
              signers, all conditions precedent, if any, provided for in this
              Deed or required by the Note Trustee pursuant to the terms of this
              Deed relating to the proposed action have been complied with; and

       (ii)   an Opinion of Counsel (which shall include the statements set
              forth in CLAUSE 27(B) below) stating that, in the opinion of such
              counsel, all such conditions precedent, if any, provided for in
              this Deed or required by the Note Trustee pursuant to the terms of
              this Deed relating to the proposed action have been complied with.

(B)    STATEMENTS REQUIRED IN CERTIFICATE AND OPINION

       Each certificate and opinion with respect to compliance with a condition
       or covenant provided for in this Deed shall include:

       (i)    a statement that the person making such certificate or opinion has
              read such covenant or condition and the definitions relating
              thereto;

       (ii)   a brief statement as to the nature and scope of the examination or
              investigation upon which the statements or opinions contained in
              such certificate or opinion are based;

       (iii)  a statement that, in the opinion of such person, it or he has made
              such examination or investigation as is necessary to enable such
              person to express an informed opinion as to whether or not such
              covenant or condition has been complied with; and
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                                       36
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       (iv)   a statement as to whether or not, in the opinion of such person,
              such covenant or condition has been complied with.

28.    GOVERNING LAW

       These presents and the Second Issuer Notes are governed by, and shall be
       construed in accordance with, English law.

29.    COUNTERPARTS

       This Deed and any trust deed supplemental hereto may be executed and
       delivered in any number of counterparts, all of which, taken together,
       shall constitute one and the same deed and any party to this Deed or any
       trust deed supplemental hereto may enter into the same by executing and
       delivering a counterpart.

30.    SUBMISSION TO JURISDICTION

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

IN WITNESS WHEREOF this Deed has been executed as a deed by the Second Issuer
and the Note Trustee and delivered on the date first stated on page 1.

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                                       37
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THE SECOND ISSUER

EXECUTED and DELIVERED as a DEED by                        )

PERMANENT FINANCING (NO. 2) PLC                            )
acting by two directors/a                                  )
director and the secretary                                 )

Director

Director/Secretary

THE NOTE TRUSTEE

EXECUTED and DELIVERED as a DEED by                        )
U.S. BANK NATIONAL ASSOCIATION

acting by its authorised signatory                         )

Authorised Signatory:

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                                       38
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                                   SCHEDULE 1

                       FORMS OF GLOBAL SECOND ISSUER NOTES

                                     PART A
                                       (1)

                   SERIES 1 CLASS A GLOBAL SECOND ISSUER NOTE

                                   NOTE NO. 1

                         PERMANENT FINANCING (NO. 2) PLC

 (Incorporated with limited liability in England with registered number 4623188)

                   SERIES 1 CLASS A GLOBAL SECOND ISSUER NOTE
                               representing up to

    US$500,000,000 SERIES 1 CLASS A ASSET BACKED FLOATING RATE SECOND ISSUER
                             NOTES DUE [MARCH 2004]

      (Initial aggregate principal amount of Series 1 Class A Global Notes:
                              US$[1,000,000,000])

This Series 1 Class A Global Second Issuer Note is issued without principal or
interest coupons in respect of a duly authorised issue of Series 1 Class A
Second Issuer Notes of PERMANENT FINANCING (NO. 2) PLC (the "SECOND ISSUER"),
designated as specified in the title hereof (the "SECOND ISSUER NOTES"), limited
to the aggregate principal amount of up to five hundred million US dollars
(US$500,000,000) and constituted by a Second Issuer Trust Deed dated [6th
March], 2003 (the "SECOND ISSUER TRUST DEED") between the Second Issuer and U.S.
BANK NATIONAL ASSOCIATION, as trustee (the trustee for the time being thereof
being herein called the "NOTE TRUSTEE"). References herein to the Conditions (or
to any particular numbered Condition) shall be to the Conditions (or that
particular one of them) set out in SCHEDULE 3 to the Second Issuer Trust Deed.
Terms not defined herein have the meanings ascribed to them in the Amended and
Restated Master Definitions and Construction Schedule and the Second Issuer
Master Definitions and Construction Schedule, both dated [5th March], 2003 and
signed for the purposes of identification by Allen & Overy and Sidley Austin
Brown & Wood, and the Second Issuer Trust Deed. The aggregate principal amount
from time to time of this Global Second Issuer Note shall be that amount not
exceeding US$500,000,000 as shall be shown by the latest entry duly made in the
Schedule hereto.

This is to certify that:

         Cede & Co. as nominee on behalf of The Depositary Trust Company

is/are the duly registered holder(s) of one of the Series 1 Class A Global
Second Issuer Notes. This Global Second Issuer Note is evidence of entitlement
only. Title to the Global Second Issuer Notes passes only on due registration in
the Register and only the registered holder is entitled to payment in respect of
this Global Second Issuer Note.
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                                       39
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1.     PROMISE TO PAY

       Subject as provided in this Global Second Issuer Note the Second Issuer
       promises to pay to the registered holder hereof the principal amount of
       this Global Second Issuer Note (being at the date hereof five hundred
       million US dollars (US$500,000,000)) on the Interest Payment Date falling
       in [March 2004] (or on such earlier date as the said principal amount may
       become repayable in accordance with the Conditions or the Second Issuer
       Trust Deed) and to pay interest monthly or quarterly, as the case may be,
       in arrear on each Interest Payment Date on the principal amount from time
       to time of this Global Second Issuer Note at the rates determined in
       accordance with the Conditions together with such other amounts (if any)
       as may be payable, all subject to and in accordance with the Conditions
       and the provisions of the Second Issuer Trust Deed.

2.     EXCHANGE FOR DEFINITIVE SECOND ISSUER NOTES AND PURCHASES

       This Global Second Issuer Note will be exchangeable (free of charge to
       the holder) for Definitive Second Issuer Notes only if (i) The Depositary
       Trust Company ("DTC") has notified the Second Issuer that it is at any
       time unwilling or unable to continue as holder of this Global Second
       Issuer Note or is at any time unwilling or unable to continue as, or
       ceases to be, a clearing agency under the United States Securities
       Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and a successor to
       DTC registered as a clearing agency under the Exchange Act is not able to
       be appointed by the Second Issuer within 90 days of such notification, or
       (ii) as a result of any amendment to, or change in, the laws or
       regulations of the United Kingdom (or of any political subdivision
       thereof), or of any authority therein or thereof having power to tax, or
       in the interpretation or administration by a revenue authority or a court
       or administration of such laws or regulations which becomes effective on
       or after the Second Issuer Closing Date, the Second Issuer or any Paying
       Agent is or will be required to make any deduction or withholding from
       any payment in respect of the Second Issuer Notes which would not be
       required were the relevant Second Issuer Notes in definitive registered
       form. Thereupon the holder of this Global Second Issuer Note (acting on
       the instructions of (a) holder(s) of (a) Book-Entry Interest(s) (as
       defined in SECTION 3 hereof)) may give notice to the Second Issuer, and
       the Second Issuer may give notice to the Note Trustee and the
       Noteholders, of its intention to exchange this Global Second Issuer Note
       for Definitive Second Issuer Notes on or after the Exchange Date (as
       defined below).

       On or after the Exchange Date, the holder of this Global Second Issuer
       Note shall surrender this Global Second Issuer Note to or to the order of
       the Registrar. In exchange for this Global Second Issuer Note the Second
       Issuer will deliver, or procure the delivery of, Definitive Second Issuer
       Notes in registered form in denominations of US$1,000 or US$10,000 each,
       or any integral multiple thereof, or in such other denominations as the
       Note Trustee shall determine and notify to the relevant Noteholders, in
       exchange for the whole of this Global Second Issuer Note.

       "EXCHANGE DATE" means a day specified in the notice requiring exchange
       falling not more than 60 days after that on which such notice is given
       and on which banks are open for business in the city in which the
       specified office of the Registrar is located and in the city in which the
       relevant clearing system is located.

       Upon the cancellation of a part of this Global Second Issuer Note in
       accordance with the Second Issuer Trust Deed, the Conditions and the
       Second Issuer Paying Agent and Agent Bank Agreement, the portion of the
       principal amount hereof so exchanged or so purchased

-------------------------------------------------------------------------------
<PAGE>

                                       40
-------------------------------------------------------------------------------

       and cancelled shall be endorsed by or on behalf of the Registrar on
       behalf of the Second Issuer on Part II of the Schedule hereto, whereupon
       the principal amount hereof shall be increased or, as the case may be,
       reduced for all purposes by the amount so exchanged or so purchased and
       cancelled and endorsed. Upon the exchange of the whole of this Global
       Second Issuer Note for Definitive Second Issuer Notes, this Global Second
       Issuer Note shall be surrendered to or to the order of the Registrar and
       cancelled and, if the holder of this Global Second Issuer Note requests,
       returned to it together with any relevant Definitive Second Issuer Notes.

3.     PAYMENTS

       Until the entire principal amount of this Global Second Issuer Note has
       been extinguished, this Global Second Issuer Note shall be entitled to
       the benefit of and be bound by the Conditions, the Second Issuer Trust
       Deed and the Second Issuer Deed of Charge. Payments of principal and
       interest in respect of Second Issuer Notes represented by this Global
       Second Issuer Note will be made in accordance with the Conditions. Upon
       any payment of principal or interest on this Global Second Issuer Note
       the amount so paid shall be endorsed by or on behalf of the Registrar on
       behalf of the Second Issuer on Part I of the Schedule hereto.

       Upon any payment of principal and endorsement of such payment on Part I
       of the Schedule hereto, the principal amount of this Global Second Issuer
       Note shall be reduced for all purposes by the principal amount so paid
       and endorsed.

       All payments of any amounts payable and paid to the registered holder of
       this Global Second Issuer Note shall be valid and, to the extent of the
       sums so paid, effectual to satisfy and discharge the liability for the
       monies payable hereon.

4.     DTC

       References herein to DTC shall be deemed to include references to any
       other clearing system approved by the Note Trustee.

5.     AUTHENTICATION

       This Global Second Issuer Note shall not be or become valid or obligatory
       for any purpose unless and until authenticated by or on behalf of the
       Registrar.

6.     GOVERNING LAW

       This Global Second Issuer Note is governed by, and shall be construed in
       accordance with, the laws of England.

IN WITNESS WHEREOF the Second Issuer has caused this Global Second Issuer Note
to be signed manually or in facsimile by a person duly authorised on its behalf.

PERMANENT FINANCING (NO. 2) PLC

By:  _____________________________________________
(Duly authorised)

Issued in London, England on [6th March], 2003.

-------------------------------------------------------------------------------
<PAGE>

                                       41
-------------------------------------------------------------------------------

CERTIFICATE OF AUTHENTICATION

This Global Second Issuer Note is duly authenticated without recourse, warranty
or liability.

___________________________________________________

Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

-------------------------------------------------------------------------------
<PAGE>

                                       42
-------------------------------------------------------------------------------

                                  THE SCHEDULE

                                     PART I

                       PAYMENTS OF PRINCIPAL AND INTEREST

The following payments on this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>

DATE MADE            INTEREST PAID        PRINCIPAL PAID        REMAINING PRINCIPAL      NOTATION MADE ON
                                                                AMOUNT OF THIS GLOBAL    BEHALF OF THE SECOND
                                                                SECOND ISSUER NOTE       ISSUER
                                                                FOLLOWING SUCH PAYMENT

                          US$                  US$                   US$

<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>

-------------------------------------------------------------------------------
<PAGE>

                                       43
-------------------------------------------------------------------------------

                                     PART II

                                   EXCHANGES,
                           PURCHASES AND CANCELLATIONS

The following exchanges for Definitive Second Issuer Notes and purchases and
cancellations of a part of this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>

DATE MADE            PART OF PRINCIPAL     PART OF PRINCIPAL      AGGREGATE PRINCIPAL    NOTATION MADE ON
                     AMOUNT EXCHANGED FOR  AMOUNT PURCHASED AND   AMOUNT FOLLOWING       BEHALF OF THE SECOND
                     DEFINITIVE SECOND     CANCELLED              SUCH EXCHANGE OR       ISSUER
                     ISSUER NOTES                                 PURCHASE AND
                                                                  CANCELLATION

                          US$                  US$                   US$

<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>

-------------------------------------------------------------------------------
<PAGE>

                                       44
-------------------------------------------------------------------------------

                                     PART A
                                       (2)

                   SERIES 1 CLASS A GLOBAL SECOND ISSUER NOTE

                                   NOTE NO. 2

                         PERMANENT FINANCING (NO. 2) PLC

 (Incorporated with limited liability in England with registered number 4623188)

                   SERIES 1 CLASS A GLOBAL SECOND ISSUER NOTE
                               representing up to

 US$500,000,000 SERIES 1 CLASS A ASSET BACKED FLOATING RATE SECOND ISSUER NOTES
                                DUE [MARCH 2004]

      (Initial aggregate principal amount of Series 1 Class A Global Notes:
                                US$500,000,000)

This Series 1 Class A Global Second Issuer Note is issued without principal or
interest coupons in respect of a duly authorised issue of Series 1 Class A
Second Issuer Notes of PERMANENT FINANCING (NO. 2) PLC (the "SECOND ISSUER"),
designated as specified in the title hereof (the "SECOND ISSUER NOTES"), limited
to the aggregate principal amount of up to five hundred million US dollars
(US$500,000,000) and constituted by a Second Issuer Trust Deed dated [6th
March], 2003 (the "SECOND ISSUER TRUST DEED") between the Second Issuer and U.S.
BANK NATIONAL ASSOCIATION, as trustee (the trustee for the time being thereof
being herein called the "NOTE TRUSTEE"). References herein to the Conditions (or
to any particular numbered Condition) shall be to the Conditions (or that
particular one of them) set out in SCHEDULE 3 to the Second Issuer Trust Deed.
Terms not defined herein have the meanings ascribed to them in the Amended and
Restated Master Definitions and Construction Schedule and the Second Issuer
Master Definitions and Construction Schedule, both dated [5th March], 2003 and
signed for the purposes of identification by Allen & Overy and Sidley Austin
Brown & Wood, and the Second Issuer Trust Deed. The aggregate principal amount
from time to time of this Global Second Issuer Note shall be that amount not
exceeding US$500,000,000 as shall be shown by the latest entry duly made in the
Schedule hereto.

This is to certify that:

         Cede & Co. as nominee on behalf of The Depositary Trust Company

is/are the duly registered holder(s) of one of the Series 1 Class A Global
Second Issuer Notes. This Global Second Issuer Note is evidence of entitlement
only. Title to the Global Second Issuer Notes passes only on due registration in
the Register and only the registered holder is entitled to payment in respect of
this Global Second Issuer Note.

1.     PROMISE TO PAY

       Subject as provided in this Global Second Issuer Note the Second Issuer
       promises to pay to the registered holder hereof the principal amount of
       this Global Second Issuer Note (being at the date hereof five hundred
       million US dollars (US$500,000,000)) on the Interest Payment Date falling
       in [March 2004] (or on such earlier date as the said principal amount may
       become repayable in accordance with the Conditions or the Second Issuer
       Trust Deed) and to

-------------------------------------------------------------------------------
<PAGE>

                                       45
-------------------------------------------------------------------------------

       pay interest monthly or quarterly, as the case may be, in arrear on each
       Interest Payment Date on the principal amount from time to time of this
       Global Second Issuer Note at the rates determined in accordance with the
       Conditions together with such other amounts (if any) as may be payable,
       all subject to and in accordance with the Conditions and the provisions
       of the Second Issuer Trust Deed.

2.     EXCHANGE FOR DEFINITIVE SECOND ISSUER NOTES AND PURCHASES

       This Global Second Issuer Note will be exchangeable (free of charge to
       the holder) for Definitive Second Issuer Notes only if (i) The Depositary
       Trust Company ("DTC") has notified the Second Issuer that it is at any
       time unwilling or unable to continue as holder of this Global Second
       Issuer Note or is at any time unwilling or unable to continue as, or
       ceases to be, a clearing agency under the United States Securities
       Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and a successor to
       DTC registered as a clearing agency under the Exchange Act is not able to
       be appointed by the Second Issuer within 90 days of such notification, or
       (ii) as a result of any amendment to, or change in, the laws or
       regulations of the United Kingdom (or of any political subdivision
       thereof), or of any authority therein or thereof having power to tax, or
       in the interpretation or administration by a revenue authority or a court
       or administration of such laws or regulations which becomes effective on
       or after the Second Issuer Closing Date, the Second Issuer or any Paying
       Agent is or will be required to make any deduction or withholding from
       any payment in respect of the Second Issuer Notes which would not be
       required were the relevant Second Issuer Notes in definitive registered
       form. Thereupon the holder of this Global Second Issuer Note (acting on
       the instructions of (a) holder(s) of (a) Book-Entry Interest(s) (as
       defined in SECTION 3 hereof)) may give notice to the Second Issuer, and
       the Second Issuer may give notice to the Note Trustee and the
       Noteholders, of its intention to exchange this Global Second Issuer Note
       for Definitive Second Issuer Notes on or after the Exchange Date (as
       defined below).

       On or after the Exchange Date, the holder of this Global Second Issuer
       Note shall surrender this Global Second Issuer Note to or to the order of
       the Registrar. In exchange for this Global Second Issuer Note the Second
       Issuer will deliver, or procure the delivery of, Definitive Second Issuer
       Notes in registered form in denominations of US$1,000 or US$10,000 each,
       or any integral multiple thereof, or in such other denominations as the
       Note Trustee shall determine and notify to the relevant Noteholders, in
       exchange for the whole of this Global Second Issuer Note.

       "EXCHANGE DATE" means a day specified in the notice requiring exchange
       falling not more than 60 days after that on which such notice is given
       and on which banks are open for business in the city in which the
       specified office of the Registrar is located and in the city in which the
       relevant clearing system is located.

       Upon the cancellation of a part of this Global Second Issuer Note in
       accordance with the Second Issuer Trust Deed, the Conditions and the
       Second Issuer Paying Agent and Agent Bank Agreement, the portion of the
       principal amount hereof so exchanged or so purchased and cancelled shall
       be endorsed by or on behalf of the Registrar on behalf of the Second
       Issuer on Part II of the Schedule hereto, whereupon the principal amount
       hereof shall be increased or, as the case may be, reduced for all
       purposes by the amount so exchanged or so purchased and cancelled and
       endorsed. Upon the exchange of the whole of this Global Second Issuer
       Note for Definitive Second Issuer Notes, this Global Second Issuer Note
       shall be surrendered to or to the order of the Registrar and cancelled
       and, if the holder of this

-------------------------------------------------------------------------------
<PAGE>

                                       46
-------------------------------------------------------------------------------

       Global Second Issuer Note requests, returned to it together with any
       relevant Definitive Second Issuer Notes.

3.     PAYMENTS

       Until the entire principal amount of this Global Second Issuer Note has
       been extinguished, this Global Second Issuer Note shall be entitled to
       the benefit of and be bound by the Conditions, the Second Issuer Trust
       Deed and the Second Issuer Deed of Charge. Payments of principal and
       interest in respect of Second Issuer Notes represented by this Global
       Second Issuer Note will be made in accordance with the Conditions. Upon
       any payment of principal or interest on this Global Second Issuer Note
       the amount so paid shall be endorsed by or on behalf of the Registrar on
       behalf of the Second Issuer on Part I of the Schedule hereto.

       Upon any payment of principal and endorsement of such payment on Part I
       of the Schedule hereto, the principal amount of this Global Second Issuer
       Note shall be reduced for all purposes by the principal amount so paid
       and endorsed.

       All payments of any amounts payable and paid to the registered holder of
       this Global Second Issuer Note shall be valid and, to the extent of the
       sums so paid, effectual to satisfy and discharge the liability for the
       monies payable hereon.

4.     DTC

       References herein to DTC shall be deemed to include references to any
       other clearing system approved by the Note Trustee.

5.     AUTHENTICATION

       This Global Second Issuer Note shall not be or become valid or obligatory
       for any purpose unless and until authenticated by or on behalf of the
       Registrar.

6.     GOVERNING LAW

       This Global Second Issuer Note is governed by, and shall be construed in
       accordance with, the laws of England.

IN WITNESS WHEREOF the Second Issuer has caused this Global Second Issuer Note
to be signed manually or in facsimile by a person duly authorised on its behalf.

PERMANENT FINANCING (NO. 2) PLC

By:  ______________________________________
(Duly authorised)

Issued in London, England on [6th March], 2003.

-------------------------------------------------------------------------------
<PAGE>

                                       47
-------------------------------------------------------------------------------

CERTIFICATE OF AUTHENTICATION

This Global Second Issuer Note is duly authenticated without recourse, warranty
or liability.

_________________________________________________

Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

-------------------------------------------------------------------------------
<PAGE>

                                       48
-------------------------------------------------------------------------------

                                  THE SCHEDULE

                                     PART I

                       PAYMENTS OF PRINCIPAL AND INTEREST

The following payments on this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>

DATE MADE            INTEREST PAID        PRINCIPAL PAID        REMAINING PRINCIPAL      NOTATION MADE ON
                                                                AMOUNT OF THIS GLOBAL    BEHALF OF THE SECOND
                                                                SECOND ISSUER NOTE       ISSUER
                                                                FOLLOWING SUCH PAYMENT

                          US$                  US$                   US$

<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>

-------------------------------------------------------------------------------
<PAGE>

                                       49
-------------------------------------------------------------------------------

                                     PART II

                                   EXCHANGES,
                           PURCHASES AND CANCELLATIONS

The following exchanges for Definitive Second Issuer Notes and purchases and
cancellations of a part of this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>

DATE MADE            PART OF PRINCIPAL      PART OF PRINCIPAL      AGGREGATE PRINCIPAL    NOTATION MADE ON
                     AMOUNT EXCHANGED FOR   AMOUNT PURCHASED AND   AMOUNT FOLLOWING       BEHALF OF THE SECOND
                     DEFINITIVE SECOND      CANCELLED              SUCH EXCHANGE OR       ISSUER
                     ISSUER NOTES                                  PURCHASE AND
                                                                   CANCELLATION

                          US$                  US$                   US$

<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>

-------------------------------------------------------------------------------
<PAGE>

                                       50
-------------------------------------------------------------------------------

                                     PART B

                   SERIES 1 CLASS B GLOBAL SECOND ISSUER NOTE

                         PERMANENT FINANCING (NO. 2) PLC

 (Incorporated with limited liability in England with registered number 4623188)

                   SERIES 1 CLASS B GLOBAL SECOND ISSUER NOTE
                               representing up to

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

This Series 1 Class B Global Second Issuer Note is issued without principal or
interest coupons in respect of a duly authorised issue of Series 1 Class B
Second Issuer Notes of PERMANENT FINANCING (NO. 2) PLC (the "SECOND ISSUER"),
designated as specified in the title hereof (the "SECOND ISSUER NOTES"), limited
to the aggregate principal amount of up to [thirty four] million US dollars
(US$[34,000,000]) and constituted by a Second Issuer Trust Deed dated [6th
March], 2003 (the "SECOND ISSUER TRUST DEED") between the Second Issuer and U.S.
BANK NATIONAL ASSOCIATION, as trustee (the trustee for the time being thereof
being herein called the "NOTE TRUSTEE"). References herein to the Conditions (or
to any particular numbered Condition) shall be to the Conditions (or that
particular one of them) set out in SCHEDULE 3 to the Second Issuer Trust Deed.
Terms not defined herein have the meanings ascribed to them in the Amended and
Restated Master Definitions and Construction Schedule and the Second Issuer
Master Definitions and Construction Schedule, both dated [5th March], 2003 and
signed for the purposes of identification by Allen & Overy and Sidley Austin
Brown & Wood, and the Second Issuer Trust Deed. The aggregate principal amount
from time to time of this Global Second Issuer Note shall be that amount not
exceeding US$[34,000,000] as shall be shown by the latest entry duly made in the
Schedule hereto.

This is to certify that:

         Cede & Co. as nominee on behalf of The Depositary Trust Company

is/are the duly registered holder(s) of one of the Series 1 Class B Global
Second Issuer Notes. This Global Second Issuer Note is evidence of entitlement
only. Title to the Global Second Issuer Notes passes only on due registration in
the Register and only the registered holder is entitled to payment in respect of
this Global Second Issuer Note.

1.     PROMISE TO PAY

       Subject as provided in this Global Second Issuer Note the Second Issuer
       promises to pay to the registered holder hereof the principal amount of
       this Global Second Issuer Note (being at the date hereof [thirty four]
       million US dollars (US$[34,000,000])) on the Interest Payment Date
       falling in [June 2042] (or on such earlier date as the said principal
       amount may become repayable in accordance with the Conditions or the
       Second Issuer Trust Deed) and to pay interest quarterly in arrear on each
       Interest Payment Date on the principal amount from time to time of this
       Global Second Issuer Note at the rates determined in accordance with the
       Conditions together with such other amounts (if any) as may be payable,
       all subject to and in accordance with the Conditions and the provisions
       of the Second Issuer Trust Deed.
-------------------------------------------------------------------------------
<PAGE>

                                       51
-------------------------------------------------------------------------------

2.     EXCHANGE FOR DEFINITIVE SECOND ISSUER NOTES AND PURCHASES

       This Global Second Issuer Note will be exchangeable (free of charge to
       the holder) for Definitive Second Issuer Notes only if (i) The Depositary
       Trust Company ("DTC") has notified the Second Issuer that it is at any
       time unwilling or unable to continue as holder of this Global Second
       Issuer Note or is at any time unwilling or unable to continue as, or
       ceases to be, a clearing agency under the United States Securities
       Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and a successor to
       DTC registered as a clearing agency under the Exchange Act is not able to
       be appointed by the Second Issuer within 90 days of such notification, or
       (ii) as a result of any amendment to, or change in, the laws or
       regulations of the United Kingdom (or of any political subdivision
       thereof), or of any authority therein or thereof having power to tax, or
       in the interpretation or administration by a revenue authority or a court
       or administration of such laws or regulations which becomes effective on
       or after the Second Issuer Closing Date, the Second Issuer or any Paying
       Agent is or will be required to make any deduction or withholding from
       any payment in respect of the Second Issuer Notes which would not be
       required were the relevant Second Issuer Notes in definitive registered
       form. Thereupon the holder of this Global Second Issuer Note (acting on
       the instructions of (a) holder(s) of (a) Book-Entry Interest(s) (as
       defined in SECTION 3 hereof)) may give notice to the Second Issuer, and
       the Second Issuer may give notice to the Note Trustee and the
       Noteholders, of its intention to exchange this Global Second Issuer Note
       for Definitive Second Issuer Notes on or after the Exchange Date (as
       defined below).

       On or after the Exchange Date, the holder of this Global Second Issuer
       Note shall surrender this Global Second Issuer Note to or to the order of
       the Registrar. In exchange for this Global Second Issuer Note the Second
       Issuer will deliver, or procure the delivery of, Definitive Second Issuer
       Notes in registered form in denominations of US$1,000 or US$10,000 each,
       or any integral multiple thereof, or in such other denominations as the
       Note Trustee shall determine and notify to the relevant Noteholders, in
       exchange for the whole of this Global Second Issuer Note.

       "EXCHANGE DATE" means a day specified in the notice requiring exchange
       falling not more than 60 days after that on which such notice is given
       and on which banks are open for business in the city in which the
       specified office of the Registrar is located and in the city in which the
       relevant clearing system is located.

       Upon the cancellation of a part of this Global Second Issuer Note in
       accordance with the Second Issuer Trust Deed, the Conditions and the
       Second Issuer Paying Agent and Agent Bank Agreement, the portion of the
       principal amount hereof so exchanged or so purchased and cancelled shall
       be endorsed by or on behalf of the Registrar on behalf of the Second
       Issuer on Part II of the Schedule hereto, whereupon the principal amount
       hereof shall be increased or, as the case may be, reduced for all
       purposes by the amount so exchanged or so purchased and cancelled and
       endorsed. Upon the exchange of the whole of this Global Second Issuer
       Note for Definitive Second Issuer Notes, this Global Second Issuer Note
       shall be surrendered to or to the order of the Registrar and cancelled
       and, if the holder of this Global Second Issuer Note requests, returned
       to it together with any relevant Definitive Second Issuer Notes.

3.     PAYMENTS

       Until the entire principal amount of this Global Second Issuer Note has
       been extinguished, this Global Second Issuer Note shall be entitled to
       the benefit of and be bound by the

-------------------------------------------------------------------------------
<PAGE>

                                       52
-------------------------------------------------------------------------------

       Conditions, the Second Issuer Trust Deed and the Second Issuer Deed of
       Charge. Payments of principal and interest in respect of Second Issuer
       Notes represented by this Global Second Issuer Note will be made in
       accordance with the Conditions. Upon any payment of principal or interest
       on this Global Second Issuer Note the amount so paid shall be endorsed by
       or on behalf of the Registrar on behalf of the Second Issuer on Part I of
       the Schedule hereto.

       Upon any payment of principal and endorsement of such payment on Part I
       of the Schedule hereto, the principal amount of this Global Second Issuer
       Note shall be reduced for all purposes by the principal amount so paid
       and endorsed.

       All payments of any amounts payable and paid to the registered holder of
       this Global Second Issuer Note shall be valid and, to the extent of the
       sums so paid, effectual to satisfy and discharge the liability for the
       monies payable hereon.

4.     DTC

       References herein to DTC shall be deemed to include references to any
       other clearing system approved by the Note Trustee.

5.     AUTHENTICATION

       This Global Second Issuer Note shall not be or become valid or obligatory
       for any purpose unless and until authenticated by or on behalf of the
       Registrar.

6.     GOVERNING LAW

       This Global Second Issuer Note is governed by, and shall be construed in
       accordance with, the laws of England.

IN WITNESS WHEREOF the Second Issuer has caused this Global Second Issuer Note
to be signed manually or in facsimile by a person duly authorised on its behalf.

PERMANENT FINANCING (NO. 2) PLC

By: ______________________________________
(Duly authorised)

Issued in London, England on [6th March], 2003.

-------------------------------------------------------------------------------
<PAGE>

                                       53
-------------------------------------------------------------------------------

CERTIFICATE OF AUTHENTICATION

This Global Second Issuer Note is duly authenticated without recourse, warranty
or liability.

_____________________________________________

Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

-------------------------------------------------------------------------------
<PAGE>

                                       54
-------------------------------------------------------------------------------

                                  THE SCHEDULE

                                     PART I

                       PAYMENTS OF PRINCIPAL AND INTEREST

The following payments on this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>

DATE MADE            INTEREST PAID        PRINCIPAL PAID        REMAINING PRINCIPAL      NOTATION MADE ON
                                                                AMOUNT OF THIS GLOBAL    BEHALF OF THE SECOND
                                                                SECOND ISSUER NOTE       ISSUER
                                                                FOLLOWING SUCH PAYMENT

                          US$                  US$                   US$

<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>

-------------------------------------------------------------------------------
<PAGE>

                                       55
-------------------------------------------------------------------------------

                                     PART II

                                   EXCHANGES,
                           PURCHASES AND CANCELLATIONS

The following exchanges for Definitive Second Issuer Notes and purchases and
cancellations of a part of this Global Second Issuer Note have been made:
<TABLE>
<CAPTION>

DATE MADE            PART OF PRINCIPAL     PART OF PRINCIPAL      AGGREGATE PRINCIPAL    NOTATION MADE ON
                     AMOUNT EXCHANGED FOR  AMOUNT PURCHASED AND   AMOUNT FOLLOWING       BEHALF OF THE SECOND
                     DEFINITIVE SECOND     CANCELLED              SUCH EXCHANGE OR       ISSUER
                     ISSUER NOTES                                 PURCHASE AND
                                                                  CANCELLATION

                          US$                  US$                   US$

<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>

-------------------------------------------------------------------------------
<PAGE>

                                       56
-------------------------------------------------------------------------------

                                     PART C

                   SERIES 1 CLASS C GLOBAL SECOND ISSUER NOTE

                         PERMANENT FINANCING (NO. 2) PLC

 (Incorporated with limited liability in England with registered number 4623188)

                   SERIES 1 CLASS C GLOBAL SECOND ISSUER NOTE
                               representing up to

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

This Series 1 Class C Global Second Issuer Note is issued without principal or
interest coupons in respect of a duly authorised issue of Series 1 Class C
Second Issuer Notes of PERMANENT FINANCING (NO. 2) PLC (the "SECOND ISSUER"),
designated as specified in the title hereof (the "SECOND ISSUER NOTES"), limited
to the aggregate principal amount of up to [thirty four] million US dollars
(US$[34,000,000]) and constituted by a Second Issuer Trust Deed dated [6th
March], 2003 (the "SECOND ISSUER TRUST DEED") between the Second Issuer and U.S.
BANK NATIONAL ASSOCIATION, as trustee (the trustee for the time being thereof
being herein called the "NOTE TRUSTEE"). References herein to the Conditions (or
to any particular numbered Condition) shall be to the Conditions (or that
particular one of them) set out in SCHEDULE 3 to the Second Issuer Trust Deed.
Terms not defined herein have the meanings ascribed to them in the Amended and
Restated Master Definitions and Construction Schedule and the Second Issuer
Master Definitions and Construction Schedule, both dated [5th March], 2003 and
signed for the purposes of identification by Allen & Overy and Sidley Austin
Brown & Wood, and the Second Issuer Trust Deed. The aggregate principal amount
from time to time of this Global Second Issuer Note shall be that amount not
exceeding US$[34,000,000] as shall be shown by the latest entry duly made in the
Schedule hereto.

This is to certify that:

         Cede & Co. as nominee on behalf of The Depositary Trust Company

is/are the duly registered holder(s) of one of the Series 1 Class C Global
Second Issuer Notes. This Global Second Issuer Note is evidence of entitlement
only. Title to the Global Second Issuer Notes passes only on due registration in
the Register and only the registered holder is entitled to payment in respect of
this Global Second Issuer Note.

1.     PROMISE TO PAY

       Subject as provided in this Global Second Issuer Note the Second Issuer
       promises to pay to the registered holder hereof the principal amount of
       this Global Second Issuer Note (being at the date hereof [thirty four]
       million US dollars (US$[34,000,000]) on the Interest Payment Date falling
       in [June 2042] (or on such earlier date as the said principal amount may
       become repayable in accordance with the Conditions or the Second Issuer
       Trust Deed) and to pay interest quarterly in arrear on each Interest
       Payment Date on the principal amount from time to time of this Global
       Second Issuer Note at the rates determined in accordance with the
       Conditions together with such other amounts (if any) as may be payable,
       all subject to and in accordance with the Conditions and the provisions
       of the Second Issuer Trust Deed.
-------------------------------------------------------------------------------
<PAGE>

                                       57
-------------------------------------------------------------------------------

2.     EXCHANGE FOR DEFINITIVE SECOND ISSUER NOTES AND PURCHASES

       This Global Second Issuer Note will be exchangeable (free of charge to
       the holder) for Definitive Second Issuer Notes only if (i) The Depositary
       Trust Company ("DTC") has notified the Second Issuer that it is at any
       time unwilling or unable to continue as holder of this Global Second
       Issuer Note or is at any time unwilling or unable to continue as, or
       ceases to be, a clearing agency under the United States Securities
       Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and a successor to
       DTC registered as a clearing agency under the Exchange Act is not able to
       be appointed by the Second Issuer within 90 days of such notification, or
       (ii) as a result of any amendment to, or change in, the laws or
       regulations of the United Kingdom (or of any political subdivision
       thereof), or of any authority therein or thereof having power to tax, or
       in the interpretation or administration by a revenue authority or a court
       or administration of such laws or regulations which becomes effective on
       or after the Second Issuer Closing Date, the Second Issuer or any Paying
       Agent is or will be required to make any deduction or withholding from
       any payment in respect of the Second Issuer Notes which would not be
       required were the relevant Second Issuer Notes in definitive registered
       form. Thereupon the holder of this Global Second Issuer Note (acting on
       the instructions of (a) holder(s) of (a) Book-Entry Interest(s) (as
       defined in SECTION 3 hereof)) may give notice to the Second Issuer, and
       the Second Issuer may give notice to the Note Trustee and the
       Noteholders, of its intention to exchange this Global Second Issuer Note
       for Definitive Second Issuer Notes on or after the Exchange Date (as
       defined below).

       On or after the Exchange Date, the holder of this Global Second Issuer
       Note shall surrender this Global Second Issuer Note to or to the order of
       the Registrar. In exchange for this Global Second Issuer Note the Second
       Issuer will deliver, or procure the delivery of, Definitive Second Issuer
       Notes in registered form in denominations of US$1,000 or US$10,000 each,
       or any integral multiple thereof, or in such other denominations as the
       Note Trustee shall determine and notify to the relevant Noteholders, in
       exchange for the whole of this Global Second Issuer Note.

       "EXCHANGE DATE" means a day specified in the notice requiring exchange
       falling not more than 60 days after that on which such notice is given
       and on which banks are open for business in the city in which the
       specified office of the Registrar is located and in the city in which the
       relevant clearing system is located.

       Upon the cancellation of a part of this Global Second Issuer Note in
       accordance with the Second Issuer Trust Deed, the Conditions and the
       Second Issuer Paying and Agent Bank Agreement, the portion of the
       principal amount hereof so exchanged or so purchased and cancelled shall
       be endorsed by or on behalf of the Registrar on behalf of the Second
       Issuer on Part II of the Schedule hereto, whereupon the principal amount
       hereof shall be increased or, as the case may be, reduced for all
       purposes by the amount so exchanged or so purchased and cancelled and
       endorsed. Upon the exchange of the whole of this Global Second Issuer
       Note for Definitive Second Issuer Notes, this Global Second Issuer Note
       shall be surrendered to or to the order of the Registrar and cancelled
       and, if the holder of this Global Second Issuer Note requests, returned
       to it together with any relevant Definitive Second Issuer Notes.

3.     PAYMENTS

       Until the entire principal amount of this Global Second Issuer Note has
       been extinguished, this Global Second Issuer Note shall be entitled to
       the benefit of and be bound by the Conditions, the Second Issuer Trust
       Deed and the Second Issuer Deed of Charge. Payments

-------------------------------------------------------------------------------
<PAGE>

                                       58
-------------------------------------------------------------------------------

       of principal and interest in respect of Second Issuer Notes represented
       by this Global Second Issuer Note will be made in accordance with the
       Conditions. Upon any payment of principal or interest on this Global
       Second Issuer Note the amount so paid shall be endorsed by or on behalf
       of the Registrar on behalf of the Second Issuer on Part I of the Schedule
       hereto.

       Upon any payment of principal and endorsement of such payment on Part I
       of the Schedule hereto, the principal amount of this Global Second Issuer
       Note shall be reduced for all purposes by the principal amount so paid
       and endorsed.

       All payments of any amounts payable and paid to the registered holder of
       this Global Second Issuer Note shall be valid and, to the extent of the
       sums so paid, effectual to satisfy and discharge the liability for the
       monies payable hereon.

4.     DTC

       References herein to DTC shall be deemed to include references to any
       other clearing system approved by the Note Trustee.

5.     AUTHENTICATION

       This Global Second Issuer Note shall not be or become valid or obligatory
       for any purpose unless and until authenticated by or on behalf of the
       Registrar.

6.     GOVERNING LAW

       This Global Second Issuer Note is governed by, and shall be construed in
       accordance with, the laws of England.

IN WITNESS WHEREOF the Second Issuer has caused this Global Second Issuer Note
to be signed manually or in facsimile by a person duly authorised on its behalf.

PERMANENT FINANCING (NO. 2) PLC

By: ______________________________________
(Duly authorised)

Issued in London, England on [6th March], 2003.

-------------------------------------------------------------------------------
<PAGE>

                                       59
-------------------------------------------------------------------------------

CERTIFICATE OF AUTHENTICATION

This Global Second Issuer Note is duly authenticated without recourse, warranty
or liability.

____________________________________________

Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

-------------------------------------------------------------------------------
<PAGE>

                                       60
-------------------------------------------------------------------------------

                                  THE SCHEDULE

                                     PART I

                       PAYMENTS OF PRINCIPAL AND INTEREST

The following payments on this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>

DATE MADE            INTEREST PAID        PRINCIPAL PAID        REMAINING PRINCIPAL      NOTATION MADE ON
                                                                AMOUNT OF THIS GLOBAL    BEHALF OF THE SECOND
                                                                SECOND ISSUER NOTE       ISSUER
                                                                FOLLOWING SUCH PAYMENT

                          US$                  US$                   US$

<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>
-------------------------------------------------------------------------------
<PAGE>

                                       61
-------------------------------------------------------------------------------

                                     PART II

                                   EXCHANGES,
                           PURCHASES AND CANCELLATIONS

The following exchanges for Definitive Second Issuer Notes and purchases and
cancellations of a part of this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>
DATE MADE            PART OF PRINCIPAL     PART OF PRINCIPAL      AGGREGATE PRINCIPAL    NOTATION MADE ON
                     AMOUNT EXCHANGED FOR  AMOUNT PURCHASED AND   AMOUNT FOLLOWING       BEHALF OF THE SECOND
                     DEFINITIVE SECOND     CANCELLED              SUCH EXCHANGE OR       ISSUER
                     ISSUER NOTES                                 PURCHASE AND
                                                                  CANCELLATION

                          US$                  US$                   US$

<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>

-------------------------------------------------------------------------------
<PAGE>

                                       62
-------------------------------------------------------------------------------

                                     PART D
                                       (1)

                   SERIES 2 CLASS A GLOBAL SECOND ISSUER NOTE

                                   NOTE NO. 1

                         PERMANENT FINANCING (NO. 2) PLC

 (Incorporated with limited liability in England with registered number 4623188)

                   SERIES 2 CLASS A GLOBAL SECOND ISSUER NOTE
                               representing up to

           US$500,000,000 SERIES 2 CLASS A ASSET BACKED FLOATING RATE
                    SECOND ISSUER NOTES DUE [SEPTEMBER 2007]

      (Initial aggregate principal amount of Series 2 Class A Global Notes:
                              US$[1,250,000,000])

This Series 2 Class A Global Second Issuer Note is issued without principal or
interest coupons in respect of a duly authorised issue of Series 2 Class A
Second Issuer Notes of PERMANENT FINANCING (NO. 2) PLC (the "SECOND ISSUER"),
designated as specified in the title hereof (the "SECOND ISSUER NOTES"), limited
to the aggregate principal amount of up to five hundred million US dollars
(US$500,000,000) and constituted by a Second Issuer Trust Deed dated [6th
March], 2003 (the "SECOND ISSUER TRUST DEED") between the Second Issuer and U.S.
BANK NATIONAL ASSOCIATION, as trustee (the trustee for the time being thereof
being herein called the "NOTE TRUSTEE"). References herein to the Conditions (or
to any particular numbered Condition) shall be to the Conditions (or that
particular one of them) set out in SCHEDULE 3 to the Second Issuer Trust Deed.
Terms not defined herein have the meanings ascribed to them in the Amended and
Restated Master Definitions and Construction Schedule and the Second Issuer
Master Definitions and Construction Schedule, both dated and made on [5th
March], 2003 and signed for the purposes of identification by Allen & Overy and
Sidley Austin Brown & Wood, and the Second Issuer Trust Deed. The aggregate
principal amount from time to time of this Global Second Issuer Note shall be
that amount not exceeding US$500,000,000 as shall be shown by the latest entry
duly made in the Schedule hereto.

This is to certify that:

         Cede & Co. as nominee on behalf of The Depositary Trust Company

is/are the duly registered holder(s) of one of the Series 2 Class A Global
Second Issuer Notes. This Global Second Issuer Note is evidence of entitlement
only. Title to the Global Second Issuer Notes passes only on due registration in
the Register and only the registered holder is entitled to payment in respect of
this Global Second Issuer Note.

1.     PROMISE TO PAY

       Subject as provided in this Global Second Issuer Note the Second Issuer
       promises to pay to the registered holder hereof the principal amount of
       this Global Second Issuer Note (being at the date hereof five hundred
       million US dollars (US$500,000,000) on the Interest Payment Date falling
       in [September 2007] (or on such earlier date as the said principal amount
       may become repayable in accordance with the Conditions or the Second
       Issuer Trust Deed) and to

-------------------------------------------------------------------------------
<PAGE>

                                       63
-------------------------------------------------------------------------------

       pay quarterly in arrear on each Interest Payment Date on the principal
       amount from time to time of this Global Second Issuer Note at the rates
       determined in accordance with the Conditions together with such other
       amounts (if any) as may be payable, all subject to and in accordance with
       the Conditions and the provisions of the Second Issuer Trust Deed.

2.     EXCHANGE FOR DEFINITIVE SECOND ISSUER NOTES AND PURCHASES

       This Global Second Issuer Note will be exchangeable (free of charge to
       the holder) for Definitive Second Issuer Notes only if (i) The Depositary
       Trust Company ("DTC") has notified the Second Issuer that it is at any
       time unwilling or unable to continue as holder of this Global Second
       Issuer Note or is at any time unwilling or unable to continue as, or
       ceases to be, a clearing agency under the United States Securities
       Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and a successor to
       DTC registered as a clearing agency under the Exchange Act is not able to
       be appointed by the Second Issuer within 90 days of such notification, or
       (ii) as a result of any amendment to, or change in, the laws or
       regulations of the United Kingdom (or of any political subdivision
       thereof), or of any authority therein or thereof having power to tax, or
       in the interpretation or administration by a revenue authority or a court
       or administration of such laws or regulations which becomes effective on
       or after the Second Issuer Closing Date, the Second Issuer or any Paying
       Agent is or will be required to make any deduction or withholding from
       any payment in respect of the Second Issuer Notes which would not be
       required were the relevant Second Issuer Notes in definitive registered
       form. Thereupon the holder of this Global Second Issuer Note (acting on
       the instructions of (a) holder(s) of (a) Book-Entry Interest(s) (as
       defined in SECTION 3 hereof)) may give notice to the Second Issuer, and
       the Second Issuer may give notice to the Note Trustee and the
       Noteholders, of its intention to exchange this Global Second Issuer Note
       for Definitive Second Issuer Notes on or after the Exchange Date (as
       defined below).

       On or after the Exchange Date, the holder of this Global Second Issuer
       Note shall surrender this Global Second Issuer Note to or to the order of
       the Registrar. In exchange for this Global Second Issuer Note the Second
       Issuer will deliver, or procure the delivery of, Definitive Second Issuer
       Notes in registered form in denominations of US$1,000 or US$10,000 each,
       or any integral multiple thereof, or in such other denominations as the
       Note Trustee shall determine and notify to the relevant Noteholders, in
       exchange for the whole of this Global Second Issuer Note.

       "EXCHANGE DATE" means a day specified in the notice requiring exchange
       falling not more than 60 days after that on which such notice is given
       and on which banks are open for business in the city in which the
       specified office of the Registrar is located and in the city in which the
       relevant clearing system is located.

       Upon the cancellation of a part of this Global Second Issuer Note in
       accordance with the Second Issuer Trust Deed, the Conditions and the
       Second Issuer Paying and Agent Bank Agreement, the portion of the
       principal amount hereof so exchanged or so purchased and cancelled shall
       be endorsed by or on behalf of the Registrar on behalf of the Second
       Issuer on Part II of the Schedule hereto, whereupon the principal amount
       hereof shall be increased or, as the case may be, reduced for all
       purposes by the amount so exchanged or so purchased and cancelled and
       endorsed. Upon the exchange of the whole of this Global Second Issuer
       Note for Definitive Second Issuer Notes, this Global Second Issuer Note
       shall be surrendered to or to the order of the Registrar and cancelled
       and, if the holder of this Global Second Issuer Note requests, returned
       to it together with any relevant Definitive Second Issuer Notes.
-------------------------------------------------------------------------------
<PAGE>

                                       64
-------------------------------------------------------------------------------

3.     PAYMENTS

       Until the entire principal amount of this Global Second Issuer Note has
       been extinguished, this Global Second Issuer Note shall be entitled to
       the benefit of and be bound by the Conditions, the Second Issuer Trust
       Deed and the Second Issuer Deed of Charge. Payments of principal and
       interest in respect of Second Issuer Notes represented by this Global
       Second Issuer Note will be made in accordance with the Conditions. Upon
       any payment of principal or interest on this Global Second Issuer Note
       the amount so paid shall be endorsed by or on behalf of the Registrar on
       behalf of the Second Issuer on Part I of the Schedule hereto.

       Upon any payment of principal and endorsement of such payment on Part I
       of the Schedule hereto, the principal amount of this Global Second Issuer
       Note shall be reduced for all purposes by the principal amount so paid
       and endorsed.

       All payments of any amounts payable and paid to the registered holder of
       this Global Second Issuer Note shall be valid and, to the extent of the
       sums so paid, effectual to satisfy and discharge the liability for the
       monies payable hereon.

4.     DTC

       References herein to DTC shall be deemed to include references to any
       other clearing system approved by the Note Trustee.

5.     AUTHENTICATION

       This Global Second Issuer Note shall not be or become valid or obligatory
       for any purpose unless and until authenticated by or on behalf of the
       Registrar.

6.     GOVERNING LAW

       This Global Second Issuer Note is governed by, and shall be construed in
       accordance with, the laws of England.

IN WITNESS WHEREOF the Second Issuer has caused this Global Second Issuer Note
to be signed manually or in facsimile by a person duly authorised on its behalf.

PERMANENT FINANCING (NO. 2) PLC

By: ______________________________________
(Duly authorised)

Issued in London, England on [6th March], 2003.

-------------------------------------------------------------------------------
<PAGE>

                                       65
-------------------------------------------------------------------------------

CERTIFICATE OF AUTHENTICATION

This Global Second Issuer Note is duly authenticated without recourse, warranty
or liability.

____________________________________________

Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

-------------------------------------------------------------------------------
<PAGE>

                                       66
-------------------------------------------------------------------------------

                                  THE SCHEDULE

                                     PART I

                       PAYMENTS OF PRINCIPAL AND INTEREST

The following payments on this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>
DATE MADE            INTEREST PAID         PRINCIPAL PAID        REMAINING PRINCIPAL     NOTATION MADE ON
                                                                 AMOUNT OF THIS GLOBAL   BEHALF OF THE SECOND
                                                                 SECOND ISSUER NOTE      ISSUER
                                                                 FOLLOWING SUCH PAYMENT

                          US$                  US$                   US$

<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>
-------------------------------------------------------------------------------
<PAGE>

                                       67
-------------------------------------------------------------------------------

                                     PART II

                                   EXCHANGES,
                           PURCHASES AND CANCELLATIONS

The following exchanges for Definitive Second Issuer Notes and purchases and
cancellations of a part of this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>
DATE MADE            PART OF PRINCIPAL     PART OF PRINCIPAL      AGGREGATE PRINCIPAL    NOTATION MADE ON
                     AMOUNT EXCHANGED FOR  AMOUNT PURCHASED AND   AMOUNT FOLLOWING       BEHALF OF THE SECOND
                     DEFINITIVE SECOND     CANCELLED              SUCH EXCHANGE OR       ISSUER
                     ISSUER NOTES                                 PURCHASE AND
                                                                  CANCELLATION

                          US$                  US$                   US$

<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>

-------------------------------------------------------------------------------
<PAGE>

                                       68
-------------------------------------------------------------------------------

                                     PART D
                                       (2)

                   SERIES 2 CLASS A GLOBAL SECOND ISSUER NOTE

                                   NOTE NO. 2

                         PERMANENT FINANCING (NO. 2) PLC

 (Incorporated with limited liability in England with registered number 4623188)

                   SERIES 2 CLASS A GLOBAL SECOND ISSUER NOTE
                               representing up to

           US$500,000,000 SERIES 2 CLASS A ASSET BACKED FLOATING RATE
                    SECOND ISSUER NOTES DUE [SEPTEMBER 2007]

      (Initial aggregate principal amount of Series 2 Class A Global Notes:
                              US$[1,250,000,000])

This Series 2 Class A Global Second Issuer Note is issued without principal or
interest coupons in respect of a duly authorised issue of Series 2 Class A
Second Issuer Notes of PERMANENT FINANCING (NO. 2) PLC (the "SECOND ISSUER"),
designated as specified in the title hereof (the "SECOND ISSUER NOTES"), limited
to the aggregate principal amount of up to five hundred million US dollars
(US$500,000,000) and constituted by a Second Issuer Trust Deed dated [6th
March], 2003 (the "SECOND ISSUER TRUST DEED") between the Second Issuer and U.S.
BANK NATIONAL ASSOCIATION, as trustee (the trustee for the time being thereof
being herein called the "NOTE TRUSTEE"). References herein to the Conditions (or
to any particular numbered Condition) shall be to the Conditions (or that
particular one of them) set out in SCHEDULE 3 to the Second Issuer Trust Deed.
Terms not defined herein have the meanings ascribed to them in the Amended and
Restated Master Definitions and Construction Schedule and the Second Issuer
Master Definitions and Construction Schedule, both dated and made on [5th
March], 2003 and signed for the purposes of identification by Allen & Overy and
Sidley Austin Brown & Wood, and the Second Issuer Trust Deed. The aggregate
principal amount from time to time of this Global Second Issuer Note shall be
that amount not exceeding US$500,000,000 as shall be shown by the latest entry
duly made in the Schedule hereto.

This is to certify that:

         Cede & Co. as nominee on behalf of The Depositary Trust Company

is/are the duly registered holder(s) of one of the Series 2 Class A Global
Second Issuer Notes. This Global Second Issuer Note is evidence of entitlement
only. Title to the Global Second Issuer Notes passes only on due registration in
the Register and only the registered holder is entitled to payment in respect of
this Global Second Issuer Note.

1.     PROMISE TO PAY

       Subject as provided in this Global Second Issuer Note the Second Issuer
       promises to pay to the registered holder hereof the principal amount of
       this Global Second Issuer Note (being at the date hereof five hundred
       million US dollars (US$500,000,000) on the Interest Payment Date falling
       in [September 2007] (or on such earlier date as the said principal amount
       may become repayable in accordance with the Conditions or the Second
       Issuer Trust Deed) and to

-------------------------------------------------------------------------------
<PAGE>

                                       69
-------------------------------------------------------------------------------

       pay quarterly in arrear on each Interest Payment Date on the principal
       amount from time to time of this Global Second Issuer Note at the rates
       determined in accordance with the Conditions together with such other
       amounts (if any) as may be payable, all subject to and in accordance with
       the Conditions and the provisions of the Second Issuer Trust Deed.

2.     EXCHANGE FOR DEFINITIVE SECOND ISSUER NOTES AND PURCHASES

       This Global Second Issuer Note will be exchangeable (free of charge to
       the holder) for Definitive Second Issuer Notes only if (i) The Depositary
       Trust Company ("DTC") has notified the Second Issuer that it is at any
       time unwilling or unable to continue as holder of this Global Second
       Issuer Note or is at any time unwilling or unable to continue as, or
       ceases to be, a clearing agency under the United States Securities
       Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and a successor to
       DTC registered as a clearing agency under the Exchange Act is not able to
       be appointed by the Second Issuer within 90 days of such notification, or
       (ii) as a result of any amendment to, or change in, the laws or
       regulations of the United Kingdom (or of any political subdivision
       thereof), or of any authority therein or thereof having power to tax, or
       in the interpretation or administration by a revenue authority or a court
       or administration of such laws or regulations which becomes effective on
       or after the Second Issuer Closing Date, the Second Issuer or any Paying
       Agent is or will be required to make any deduction or withholding from
       any payment in respect of the Second Issuer Notes which would not be
       required were the relevant Second Issuer Notes in definitive registered
       form. Thereupon the holder of this Global Second Issuer Note (acting on
       the instructions of (a) holder(s) of (a) Book-Entry Interest(s) (as
       defined in SECTION 3 hereof)) may give notice to the Second Issuer, and
       the Second Issuer may give notice to the Note Trustee and the
       Noteholders, of its intention to exchange this Global Second Issuer Note
       for Definitive Second Issuer Notes on or after the Exchange Date (as
       defined below).

       On or after the Exchange Date, the holder of this Global Second Issuer
       Note shall surrender this Global Second Issuer Note to or to the order of
       the Registrar. In exchange for this Global Second Issuer Note the Second
       Issuer will deliver, or procure the delivery of, Definitive Second Issuer
       Notes in registered form in denominations of US$1,000 or US$10,000 each,
       or any integral multiple thereof, or in such other denominations as the
       Note Trustee shall determine and notify to the relevant Noteholders, in
       exchange for the whole of this Global Second Issuer Note.

       "EXCHANGE DATE" means a day specified in the notice requiring exchange
       falling not more than 60 days after that on which such notice is given
       and on which banks are open for business in the city in which the
       specified office of the Registrar is located and in the city in which the
       relevant clearing system is located.

       Upon the cancellation of a part of this Global Second Issuer Note in
       accordance with the Second Issuer Trust Deed, the Conditions and the
       Second Issuer Paying and Agent Bank Agreement, the portion of the
       principal amount hereof so exchanged or so purchased and cancelled shall
       be endorsed by or on behalf of the Registrar on behalf of the Second
       Issuer on Part II of the Schedule hereto, whereupon the principal amount
       hereof shall be increased or, as the case may be, reduced for all
       purposes by the amount so exchanged or so purchased and cancelled and
       endorsed. Upon the exchange of the whole of this Global Second Issuer
       Note for Definitive Second Issuer Notes, this Global Second Issuer Note
       shall be surrendered to or to the order of the Registrar and cancelled
       and, if the holder of this Global Second Issuer Note requests, returned
       to it together with any relevant Definitive Second Issuer Notes.
-------------------------------------------------------------------------------
<PAGE>

                                       70
-------------------------------------------------------------------------------

3.     PAYMENTS

       Until the entire principal amount of this Global Second Issuer Note has
       been extinguished, this Global Second Issuer Note shall be entitled to
       the benefit of and be bound by the Conditions, the Second Issuer Trust
       Deed and the Second Issuer Deed of Charge. Payments of principal and
       interest in respect of Second Issuer Notes represented by this Global
       Second Issuer Note will be made in accordance with the Conditions. Upon
       any payment of principal or interest on this Global Second Issuer Note
       the amount so paid shall be endorsed by or on behalf of the Registrar on
       behalf of the Second Issuer on Part I of the Schedule hereto.

       Upon any payment of principal and endorsement of such payment on Part I
       of the Schedule hereto, the principal amount of this Global Second Issuer
       Note shall be reduced for all purposes by the principal amount so paid
       and endorsed.

       All payments of any amounts payable and paid to the registered holder of
       this Global Second Issuer Note shall be valid and, to the extent of the
       sums so paid, effectual to satisfy and discharge the liability for the
       monies payable hereon.

4.     DTC

       References herein to DTC shall be deemed to include references to any
       other clearing system approved by the Note Trustee.

5.     AUTHENTICATION

       This Global Second Issuer Note shall not be or become valid or obligatory
       for any purpose unless and until authenticated by or on behalf of the
       Registrar.

6.     GOVERNING LAW

       This Global Second Issuer Note is governed by, and shall be construed in
       accordance with, the laws of England.

IN WITNESS WHEREOF the Second Issuer has caused this Global Second Issuer Note
to be signed manually or in facsimile by a person duly authorised on its behalf.

PERMANENT FINANCING (NO. 2) PLC

By: ______________________________________
(Duly authorised)

Issued in London, England on [6th March], 2003.

-------------------------------------------------------------------------------
<PAGE>

                                       71
-------------------------------------------------------------------------------

CERTIFICATE OF AUTHENTICATION

This Global Second Issuer Note is duly authenticated without recourse, warranty
or liability.

_____________________________________________

Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

-------------------------------------------------------------------------------
<PAGE>

                                       72
-------------------------------------------------------------------------------

                                  THE SCHEDULE

                                     PART I

                       PAYMENTS OF PRINCIPAL AND INTEREST

The following payments on this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>
DATE MADE            INTEREST PAID         PRINCIPAL PAID        REMAINING PRINCIPAL     NOTATION MADE ON
                                                                 AMOUNT OF THIS GLOBAL   BEHALF OF THE SECOND
                                                                 SECOND ISSUER NOTE      ISSUER
                                                                 FOLLOWING SUCH PAYMENT

                          US$                  US$                   US$

<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>

-------------------------------------------------------------------------------
<PAGE>

                                       73
-------------------------------------------------------------------------------

                                     PART II

                                   EXCHANGES,
                           PURCHASES AND CANCELLATIONS

The following exchanges for Definitive Second Issuer Notes and purchases and
cancellations of a part of this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>
DATE MADE            PART OF PRINCIPAL     PART OF PRINCIPAL      AGGREGATE PRINCIPAL    NOTATION MADE ON
                     AMOUNT EXCHANGED FOR  AMOUNT PURCHASED AND   AMOUNT FOLLOWING       BEHALF OF THE SECOND
                     DEFINITIVE SECOND     CANCELLED              SUCH EXCHANGE OR       ISSUER
                     ISSUER NOTES                                 PURCHASE AND
                                                                  CANCELLATION

                          US$                  US$                   US$

<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>

-------------------------------------------------------------------------------
<PAGE>

                                       74
-------------------------------------------------------------------------------

                                     PART D
                                       (3)

                   SERIES 2 CLASS A GLOBAL SECOND ISSUER NOTE

                                   NOTE NO. 3

                         PERMANENT FINANCING (NO. 2) PLC

 (Incorporated with limited liability in England with registered number 4623188)

                   SERIES 2 CLASS A GLOBAL SECOND ISSUER NOTE
                               representing up to

           US$250,000,000 SERIES 2 CLASS A ASSET BACKED FLOATING RATE
                    SECOND ISSUER NOTES DUE [SEPTEMBER 2007]

      (Initial aggregate principal amount of Series 2 Class A Global Notes:
                              US$[1,250,000,000])

This Series 2 Class A Global Second Issuer Note is issued without principal or
interest coupons in respect of a duly authorised issue of Series 2 Class A
Second Issuer Notes of PERMANENT FINANCING (NO. 2) PLC (the "SECOND ISSUER"),
designated as specified in the title hereof (the "SECOND ISSUER NOTES"), limited
to the aggregate principal amount of up to two hundred and fifty million US
dollars (US$250,000,000) and constituted by a Second Issuer Trust Deed dated
[6th March], 2003 (the "SECOND ISSUER TRUST DEED") between the Second Issuer and
U.S. BANK NATIONAL ASSOCIATION, as trustee (the trustee for the time being
thereof being herein called the "NOTE TRUSTEE"). References herein to the
Conditions (or to any particular numbered Condition) shall be to the Conditions
(or that particular one of them) set out in SCHEDULE 3 to the Second Issuer
Trust Deed. Terms not defined herein have the meanings ascribed to them in the
Amended and Restated Master Definitions and Construction Schedule and the Second
Issuer Master Definitions and Construction Schedule, both dated and made on [5th
March], 2003 and signed for the purposes of identification by Allen & Overy and
Sidley Austin Brown & Wood, and the Second Issuer Trust Deed. The aggregate
principal amount from time to time of this Global Second Issuer Note shall be
that amount not exceeding US$250,000,000 as shall be shown by the latest entry
duly made in the Schedule hereto.

This is to certify that:

         Cede & Co. as nominee on behalf of The Depositary Trust Company

is/are the duly registered holder(s) of one of the Series 2 Class A Global
Second Issuer Notes. This Global Second Issuer Note is evidence of entitlement
only. Title to the Global Second Issuer Notes passes only on due registration in
the Register and only the registered holder is entitled to payment in respect of
this Global Second Issuer Note.

1.     PROMISE TO PAY

       Subject as provided in this Global Second Issuer Note the Second Issuer
       promises to pay to the registered holder hereof the principal amount of
       this Global Second Issuer Note (being at the date hereof two hundred and
       fifty million US dollars (US$250,000,000) on the Interest Payment Date
       falling in [September 2007] (or on such earlier date as the said
       principal amount may become repayable in accordance with the Conditions
       or the Second Issuer Trust

-------------------------------------------------------------------------------
<PAGE>

                                       75
-------------------------------------------------------------------------------

       Deed) and to pay quarterly in arrear on each Interest Payment Date on the
       principal amount from time to time of this Global Second Issuer Note at
       the rates determined in accordance with the Conditions together with such
       other amounts (if any) as may be payable, all subject to and in
       accordance with the Conditions and the provisions of the Second Issuer
       Trust Deed.

2.     EXCHANGE FOR DEFINITIVE SECOND ISSUER NOTES AND PURCHASES

       This Global Second Issuer Note will be exchangeable (free of charge to
       the holder) for Definitive Second Issuer Notes only if (i) The Depositary
       Trust Company ("DTC") has notified the Second Issuer that it is at any
       time unwilling or unable to continue as holder of this Global Second
       Issuer Note or is at any time unwilling or unable to continue as, or
       ceases to be, a clearing agency under the United States Securities
       Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and a successor to
       DTC registered as a clearing agency under the Exchange Act is not able to
       be appointed by the Second Issuer within 90 days of such notification, or
       (ii) as a result of any amendment to, or change in, the laws or
       regulations of the United Kingdom (or of any political subdivision
       thereof), or of any authority therein or thereof having power to tax, or
       in the interpretation or administration by a revenue authority or a court
       or administration of such laws or regulations which becomes effective on
       or after the Second Issuer Closing Date, the Second Issuer or any Paying
       Agent is or will be required to make any deduction or withholding from
       any payment in respect of the Second Issuer Notes which would not be
       required were the relevant Second Issuer Notes in definitive registered
       form. Thereupon the holder of this Global Second Issuer Note (acting on
       the instructions of (a) holder(s) of (a) Book-Entry Interest(s) (as
       defined in SECTION 3 hereof)) may give notice to the Second Issuer, and
       the Second Issuer may give notice to the Note Trustee and the
       Noteholders, of its intention to exchange this Global Second Issuer Note
       for Definitive Second Issuer Notes on or after the Exchange Date (as
       defined below).

       On or after the Exchange Date, the holder of this Global Second Issuer
       Note shall surrender this Global Second Issuer Note to or to the order of
       the Registrar. In exchange for this Global Second Issuer Note the Second
       Issuer will deliver, or procure the delivery of, Definitive Second Issuer
       Notes in registered form in denominations of US$1,000 or US$10,000 each,
       or any integral multiple thereof, or in such other denominations as the
       Note Trustee shall determine and notify to the relevant Noteholders, in
       exchange for the whole of this Global Second Issuer Note.

       "EXCHANGE DATE" means a day specified in the notice requiring exchange
       falling not more than 60 days after that on which such notice is given
       and on which banks are open for business in the city in which the
       specified office of the Registrar is located and in the city in which the
       relevant clearing system is located.

       Upon the cancellation of a part of this Global Second Issuer Note in
       accordance with the Second Issuer Trust Deed, the Conditions and the
       Second Issuer Paying and Agent Bank Agreement, the portion of the
       principal amount hereof so exchanged or so purchased and cancelled shall
       be endorsed by or on behalf of the Registrar on behalf of the Second
       Issuer on Part II of the Schedule hereto, whereupon the principal amount
       hereof shall be increased or, as the case may be, reduced for all
       purposes by the amount so exchanged or so purchased and cancelled and
       endorsed. Upon the exchange of the whole of this Global Second Issuer
       Note for Definitive Second Issuer Notes, this Global Second Issuer Note
       shall be surrendered to or to the order of the Registrar and cancelled
       and, if the holder of this Global Second Issuer Note requests, returned
       to it together with any relevant Definitive Second Issuer Notes.
-------------------------------------------------------------------------------
<PAGE>

                                       76
-------------------------------------------------------------------------------

3.     PAYMENTS

       Until the entire principal amount of this Global Second Issuer Note has
       been extinguished, this Global Second Issuer Note shall be entitled to
       the benefit of and be bound by the Conditions, the Second Issuer Trust
       Deed and the Second Issuer Deed of Charge. Payments of principal and
       interest in respect of Second Issuer Notes represented by this Global
       Second Issuer Note will be made in accordance with the Conditions. Upon
       any payment of principal or interest on this Global Second Issuer Note
       the amount so paid shall be endorsed by or on behalf of the Registrar on
       behalf of the Second Issuer on Part I of the Schedule hereto.

       Upon any payment of principal and endorsement of such payment on Part I
       of the Schedule hereto, the principal amount of this Global Second Issuer
       Note shall be reduced for all purposes by the principal amount so paid
       and endorsed.

       All payments of any amounts payable and paid to the registered holder of
       this Global Second Issuer Note shall be valid and, to the extent of the
       sums so paid, effectual to satisfy and discharge the liability for the
       monies payable hereon.

4.     DTC

       References herein to DTC shall be deemed to include references to any
       other clearing system approved by the Note Trustee.

5.     AUTHENTICATION

       This Global Second Issuer Note shall not be or become valid or obligatory
       for any purpose unless and until authenticated by or on behalf of the
       Registrar.

6.     GOVERNING LAW

       This Global Second Issuer Note is governed by, and shall be construed in
       accordance with, the laws of England.

IN WITNESS WHEREOF the Second Issuer has caused this Global Second Issuer Note
to be signed manually or in facsimile by a person duly authorised on its behalf.

PERMANENT FINANCING (NO. 2) PLC

By:  _____________________________________
(Duly authorised)

Issued in London, England on [6th March], 2003.

-------------------------------------------------------------------------------
<PAGE>

                                       77
-------------------------------------------------------------------------------

CERTIFICATE OF AUTHENTICATION

This Global Second Issuer Note is duly authenticated without recourse, warranty
or liability.

____________________________________________

Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

-------------------------------------------------------------------------------
<PAGE>

                                       78
-------------------------------------------------------------------------------

                                  THE SCHEDULE

                                     PART I

                       PAYMENTS OF PRINCIPAL AND INTEREST

The following payments on this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>
DATE MADE            INTEREST PAID         PRINCIPAL PAID        REMAINING PRINCIPAL     NOTATION MADE ON
                                                                 AMOUNT OF THIS GLOBAL   BEHALF OF THE SECOND
                                                                 SECOND ISSUER NOTE      ISSUER
                                                                 FOLLOWING SUCH PAYMENT

                          US$                  US$                   US$

<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>

-------------------------------------------------------------------------------
<PAGE>

                                       79
-------------------------------------------------------------------------------

                                     PART II

                                   EXCHANGES,
                           PURCHASES AND CANCELLATIONS

The following exchanges for Definitive Second Issuer Notes and purchases and
cancellations of a part of this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>
DATE MADE            PART OF PRINCIPAL     PART OF PRINCIPAL      AGGREGATE PRINCIPAL    NOTATION MADE ON
                     AMOUNT EXCHANGED FOR  AMOUNT PURCHASED AND   AMOUNT FOLLOWING       BEHALF OF THE SECOND
                     DEFINITIVE SECOND     CANCELLED              SUCH EXCHANGE OR       ISSUER
                     ISSUER NOTES                                 PURCHASE AND
                                                                  CANCELLATION

                          US$                  US$                   US$

<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>

-------------------------------------------------------------------------------
<PAGE>

                                       80
-------------------------------------------------------------------------------

                                     PART E

                   SERIES 2 CLASS B GLOBAL SECOND ISSUER NOTE

                         PERMANENT FINANCING (NO. 2) PLC

(Incorporated with limited liability in England with registered number 4623188)

                   SERIES 2 CLASS B GLOBAL SECOND ISSUER NOTE
                               representing up to

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

This Series 2 Class B Global Second Issuer Note is issued without principal or
interest coupons in respect of a duly authorised issue of Series 2 Class B
Second Issuer Notes of PERMANENT FINANCING (NO. 2) PLC (the "SECOND ISSUER"),
designated as specified in the title hereof (the "SECOND ISSUER NOTES"), limited
to the aggregate principal amount of up to [forty three] million US dollars
(US$[61,000,000]) and constituted by a Second Issuer Trust Deed dated [6th
March], 2003 (the "SECOND ISSUER TRUST DEED") between the Second Issuer and U.S.
BANK NATIONAL ASSOCIATION, as trustee (the trustee for the time being thereof
being herein called the "NOTE TRUSTEE"). References herein to the Conditions (or
to any particular numbered Condition) shall be to the Conditions (or that
particular one of them) set out in SCHEDULE 3 to the Second Issuer Trust Deed.
Terms not defined herein have the meanings ascribed to them in the Amended and
Restated Master Definitions and Construction Schedule and the Second Issuer
Master Definitions and Construction Schedule, both dated and made on [5th
March], 2003 and signed for the purposes of identification by Allen & Overy and
Sidley Austin Brown & Wood, and the Second Issuer Trust Deed. The aggregate
principal amount from time to time of this Global Second Issuer Note shall be
that amount not exceeding US$[61,000,000] as shall be shown by the latest entry
duly made in the Schedule hereto.

This is to certify that:

         Cede & Co. as nominee on behalf of The Depositary Trust Company

is/are the duly registered holder(s) of one of the Series 2 Class B Global
Second Issuer Notes. This Global Second Issuer Note is evidence of entitlement
only. Title to the Global Second Issuer Notes passes only on due registration in
the Register and only the registered holder is entitled to payment in respect of
this Global Second Issuer Note.

1.     PROMISE TO PAY

       Subject as provided in this Global Second Issuer Note the Second Issuer
       promises to pay to the registered holder hereof the principal amount of
       this Global Second Issuer Note (being at the date hereof [forty three]
       million US dollars (US$[61,000,000]) on the Interest Payment Date falling
       in [June 2042] (or on such earlier date as the said principal amount may
       become repayable in accordance with the Conditions or the Second Issuer
       Trust Deed) and to pay interest quarterly in arrear on each Interest
       Payment Date on the principal amount from time to time of this Global
       Second Issuer Note at the rates determined in accordance with the
       Conditions together with such other amounts (if any) as may be payable,
       all subject to and in accordance with the Conditions and the provisions
       of the Second Issuer Trust Deed.
-------------------------------------------------------------------------------
<PAGE>

                                       81
-------------------------------------------------------------------------------

2.     EXCHANGE FOR DEFINITIVE SECOND ISSUER NOTES AND PURCHASES

       This Global Second Issuer Note will be exchangeable (free of charge to
       the holder) for Definitive Second Issuer Notes only if (i) The Depositary
       Trust Company ("DTC") has notified the Second Issuer that it is at any
       time unwilling or unable to continue as holder of this Global Second
       Issuer Note or is at any time unwilling or unable to continue as, or
       ceases to be, a clearing agency under the United States Securities
       Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and a successor to
       DTC registered as a clearing agency under the Exchange Act is not able to
       be appointed by the Second Issuer within 90 days of such notification, or
       (ii) as a result of any amendment to, or change in, the laws or
       regulations of the United Kingdom (or of any political subdivision
       thereof), or of any authority therein or thereof having power to tax, or
       in the interpretation or administration by a revenue authority or a court
       or administration of such laws or regulations which becomes effective on
       or after the Second Issuer Closing Date, the Second Issuer or any Paying
       Agent is or will be required to make any deduction or withholding from
       any payment in respect of the Second Issuer Notes which would not be
       required were the relevant Second Issuer Notes in definitive registered
       form. Thereupon the holder of this Global Second Issuer Note (acting on
       the instructions of (a) holder(s) of (a) Book-Entry Interest(s) (as
       defined in SECTION 3 hereof)) may give notice to the Second Issuer, and
       the Second Issuer may give notice to the Note Trustee and the
       Noteholders, of its intention to exchange this Global Second Issuer Note
       for Definitive Second Issuer Notes on or after the Exchange Date (as
       defined below).

       On or after the Exchange Date, the holder of this Global Second Issuer
       Note shall surrender this Global Second Issuer Note to or to the order of
       the Registrar. In exchange for this Global Second Issuer Note the Second
       Issuer will deliver, or procure the delivery of, Definitive Second Issuer
       Notes in registered form in denominations of US$1,000 or US$10,000 each,
       or any integral multiple thereof, or in such other denominations as the
       Note Trustee shall determine and notify to the relevant Noteholders, in
       exchange for the whole of this Global Second Issuer Note.

       "EXCHANGE DATE" means a day specified in the notice requiring exchange
       falling not more than 60 days after that on which such notice is given
       and on which banks are open for business in the city in which the
       specified office of the Registrar is located and in the city in which the
       relevant clearing system is located.

       Upon the cancellation of a part of this Global Second Issuer Note in
       accordance with the Second Issuer Trust Deed, the Conditions and the
       Second Issuer Paying and Agent Bank Agreement, the portion of the
       principal amount hereof so exchanged or so purchased and cancelled shall
       be endorsed by or on behalf of the Registrar on behalf of the Second
       Issuer on Part II of the Schedule hereto, whereupon the principal amount
       hereof shall be increased or, as the case may be, reduced for all
       purposes by the amount so exchanged or so purchased and cancelled and
       endorsed. Upon the exchange of the whole of this Global Second Issuer
       Note for Definitive Second Issuer Notes, this Global Second Issuer Note
       shall be surrendered to or to the order of the Registrar and cancelled
       and, if the holder of this Global Second Issuer Note requests, returned
       to it together with any relevant Definitive Second Issuer Notes.

3.     PAYMENTS

       Until the entire principal amount of this Global Second Issuer Note has
       been extinguished, this Global Second Issuer Note shall be entitled to
       the benefit of and be bound by the

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<PAGE>

                                       82
-------------------------------------------------------------------------------

       Conditions, the Second Issuer Trust Deed and the Second Issuer Deed of
       Charge. Payments of principal and interest in respect of Second Issuer
       Notes represented by this Global Second Issuer Note will be made in
       accordance with the Conditions. Upon any payment of principal or interest
       on this Global Second Issuer Note the amount so paid shall be endorsed by
       or on behalf of the Registrar on behalf of the Second Issuer on Part I of
       the Schedule hereto.

       Upon any payment of principal and endorsement of such payment on Part I
       of the Schedule hereto, the principal amount of this Global Second Issuer
       Note shall be reduced for all purposes by the principal amount so paid
       and endorsed.

       All payments of any amounts payable and paid to the registered holder of
       this Global Second Issuer Note shall be valid and, to the extent of the
       sums so paid, effectual to satisfy and discharge the liability for the
       monies payable hereon.

4.     DTC

       References herein to DTC shall be deemed to include references to any
       other clearing system approved by the Note Trustee.

5.     AUTHENTICATION

       This Global Second Issuer Note shall not be or become valid or obligatory
       for any purpose unless and until authenticated by or on behalf of the
       Registrar.

6.     GOVERNING LAW

       This Global Second Issuer Note is governed by, and shall be construed in
       accordance with, the laws of England.

IN WITNESS WHEREOF the Second Issuer has caused this Global Second Issuer Note
to be signed manually or in facsimile by a person duly authorised on its behalf.

PERMANENT FINANCING (NO. 2) PLC

By: ______________________________________
(Duly authorised)

Issued in London, England on [6th March], 2003.

-------------------------------------------------------------------------------
<PAGE>

                                       83
-------------------------------------------------------------------------------

CERTIFICATE OF AUTHENTICATION

This Global Second Issuer Note is duly authenticated without recourse, warranty
or liability.

____________________________________________

Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

-------------------------------------------------------------------------------
<PAGE>

                                       84
-------------------------------------------------------------------------------

                                  THE SCHEDULE

                                     PART I

                       PAYMENTS OF PRINCIPAL AND INTEREST

The following payments on this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>
DATE MADE            INTEREST PAID         PRINCIPAL PAID        REMAINING PRINCIPAL     NOTATION MADE ON
                                                                 AMOUNT OF THIS GLOBAL   BEHALF OF THE SECOND
                                                                 SECOND ISSUER NOTE      ISSUER
                                                                 FOLLOWING SUCH PAYMENT

                          US$                  US$                   US$

<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>

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<PAGE>

                                       85
-------------------------------------------------------------------------------

                                     PART II

                                   EXCHANGES,
                           PURCHASES AND CANCELLATIONS

The following exchanges for Definitive Second Issuer Notes and purchases and
cancellations of a part of this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>
DATE MADE            PART OF PRINCIPAL     PART OF PRINCIPAL      AGGREGATE PRINCIPAL    NOTATION MADE ON
                     AMOUNT EXCHANGED FOR  AMOUNT PURCHASED AND   AMOUNT FOLLOWING       BEHALF OF THE SECOND
                     DEFINITIVE SECOND     CANCELLED              SUCH EXCHANGE OR       ISSUER
                     ISSUER NOTES                                 PURCHASE AND
                                                                  CANCELLATION

                          US$                  US$                   US$

<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>

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<PAGE>

                                       86
-------------------------------------------------------------------------------

                                     PART F

                   SERIES 2 CLASS C GLOBAL SECOND ISSUER NOTE

                         PERMANENT FINANCING (NO. 2) PLC

 (Incorporated with limited liability in England with registered number 4623188)

                   SERIES 2 CLASS C GLOBAL SECOND ISSUER NOTE
                               representing up to

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

This Series 2 Class C Global Second Issuer Note is issued without principal or
interest coupons in respect of a duly authorised issue of Series 2 Class C
Second Issuer Notes of PERMANENT FINANCING (NO. 2) PLC (the "SECOND ISSUER"),
designated as specified in the title hereof (the "SECOND ISSUER NOTES"), limited
to the aggregate principal amount of up to [forty three] million US dollars
(US$[61,000,000]) and constituted by a Second Issuer Trust Deed dated [6th
March], 2003 (the "SECOND ISSUER TRUST DEED") between the Second Issuer and U.S.
BANK NATIONAL ASSOCIATION, as trustee (the trustee for the time being thereof
being herein called the "NOTE TRUSTEE"). References herein to the Conditions (or
to any particular numbered Condition) shall be to the Conditions (or that
particular one of them) set out in SCHEDULE 3 to the Second Issuer Trust Deed.
Terms not defined herein have the meanings ascribed to them in the Amended and
Restated Master Definitions and Construction Schedule and the Second Issuer
Master Definitions and Construction Schedule, both dated and made on [5th
March], 2003 and signed for the purposes of identification by Allen & Overy and
Sidley Austin Brown & Wood, and the Second Issuer Trust Deed. The aggregate
principal amount from time to time of this Global Second Issuer Note shall be
that amount not exceeding US$[61,000,000] as shall be shown by the latest entry
duly made in the Schedule hereto.

This is to certify that:

         Cede & Co. as nominee on behalf of The Depositary Trust Company

is/are the duly registered holder(s) of one of the Series 2 Class C Global
Second Issuer Notes . This Global Second Issuer Note is evidence of entitlement
only. Title to the Global Second Issuer Notes passes only on due registration in
the Register and only the registered holder is entitled to payment in respect of
this Global Second Issuer Note.

1.     PROMISE TO PAY

       Subject as provided in this Global Second Issuer Note the Second Issuer
       promises to pay to the registered holder hereof the principal amount of
       this Global Second Issuer Note (being at the date hereof [forty three]
       million US dollars (US$[61,000,000]) on the Interest Payment Date falling
       in [June 2042] (or on such earlier date as the said principal amount may
       become repayable in accordance with the Conditions or the Second Issuer
       Trust Deed) and to pay interest quarterly in arrear on each Interest
       Payment Date on the principal amount from time to time of this Global
       Second Issuer Note at the rates determined in accordance with the
       Conditions together with such other amounts (if any) as may be payable,
       all subject to and in accordance with the Conditions and the provisions
       of the Second Issuer Trust Deed.
-------------------------------------------------------------------------------
<PAGE>

                                       87
-------------------------------------------------------------------------------

2.     EXCHANGE FOR DEFINITIVE SECOND ISSUER NOTES AND PURCHASES

       This Global Second Issuer Note will be exchangeable (free of charge to
       the holder) for Definitive Second Issuer Notes only if (i) The Depositary
       Trust Company ("DTC") has notified the Second Issuer that it is at any
       time unwilling or unable to continue as holder of this Global Second
       Issuer Note or is at any time unwilling or unable to continue as, or
       ceases to be, a clearing agency under the United States Securities
       Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and a successor to
       DTC registered as a clearing agency under the Exchange Act is not able to
       be appointed by the Second Issuer within 90 days of such notification, or
       (ii) as a result of any amendment to, or change in, the laws or
       regulations of the United Kingdom (or of any political subdivision
       thereof), or of any authority therein or thereof having power to tax, or
       in the interpretation or administration by a revenue authority or a court
       or administration of such laws or regulations which becomes effective on
       or after the Second Issuer Closing Date, the Second Issuer or any Paying
       Agent is or will be required to make any deduction or withholding from
       any payment in respect of the Second Issuer Notes which would not be
       required were the relevant Second Issuer Notes in definitive registered
       form. Thereupon the holder of this Global Second Issuer Note (acting on
       the instructions of (a) holder(s) of (a) Book-Entry Interest(s) (as
       defined in SECTION 3 hereof)) may give notice to the Second Issuer, and
       the Second Issuer may give notice to the Note Trustee and the
       Noteholders, of its intention to exchange this Global Second Issuer Note
       for Definitive Second Issuer Notes on or after the Exchange Date (as
       defined below).

       On or after the Exchange Date, the holder of this Global Second Issuer
       Note shall surrender this Global Second Issuer Note to or to the order of
       the Registrar. In exchange for this Global Second Issuer Note the Second
       Issuer will deliver, or procure the delivery of, Definitive Second Issuer
       Notes in registered form in denominations of US$1,000 or US$10,000 each,
       or any integral multiple thereof, or in such other denominations as the
       Note Trustee shall determine and notify to the relevant Noteholders, in
       exchange for the whole of this Global Second Issuer Note.

       "EXCHANGE DATE" means a day specified in the notice requiring exchange
       falling not more than 60 days after that on which such notice is given
       and on which banks are open for business in the city in which the
       specified office of the Registrar is located and in the city in which the
       relevant clearing system is located.

       Upon the cancellation of a part of this Global Second Issuer Note in
       accordance with the Second Issuer Trust Deed, the Conditions and the
       Second Issuer Paying and Agent Bank Agreement, the portion of the
       principal amount hereof so exchanged or so purchased and cancelled shall
       be endorsed by or on behalf of the Registrar on behalf of the Second
       Issuer on Part II of the Schedule hereto, whereupon the principal amount
       hereof shall be increased or, as the case may be, reduced for all
       purposes by the amount so exchanged or so purchased and cancelled and
       endorsed. Upon the exchange of the whole of this Global Second Issuer
       Note for Definitive Second Issuer Notes, this Global Second Issuer Note
       shall be surrendered to or to the order of the Registrar and cancelled
       and, if the holder of this Global Second Issuer Note requests, returned
       to it together with any relevant Definitive Second Issuer Notes.

3.     PAYMENTS

       Until the entire principal amount of this Global Second Issuer Note has
       been extinguished, this Global Second Issuer Note shall be entitled to
       the benefit of and be bound by the Conditions, the Second Issuer Trust
       Deed and the Second Issuer Deed of Charge. Payments

-------------------------------------------------------------------------------
<PAGE>

                                       88
-------------------------------------------------------------------------------

       of principal and interest in respect of Second Issuer Notes represented
       by this Global Second Issuer Note will be made in accordance with the
       Conditions. Upon any payment of principal or interest on this Global
       Second Issuer Note the amount so paid shall be endorsed by or on behalf
       of the Registrar on behalf of the Second Issuer on Part I of the Schedule
       hereto.

       Upon any payment of principal and endorsement of such payment on Part I
       of the Schedule hereto, the principal amount of this Global Second Issuer
       Note shall be reduced for all purposes by the principal amount so paid
       and endorsed.

       All payments of any amounts payable and paid to the registered holder of
       this Global Second Issuer Note shall be valid and, to the extent of the
       sums so paid, effectual to satisfy and discharge the liability for the
       monies payable hereon.

4.     DTC

       References herein to DTC shall be deemed to include references to any
       other clearing system approved by the Note Trustee.

5.     AUTHENTICATION

       This Global Second Issuer Note shall not be or become valid or obligatory
       for any purpose unless and until authenticated by or on behalf of the
       Registrar.

6.     GOVERNING LAW

       This Global Second Issuer Note is governed by, and shall be construed in
       accordance with, the laws of England.

IN WITNESS WHEREOF the Second Issuer has caused this Global Second Issuer Note
to be signed manually or in facsimile by a person duly authorised on its behalf.

PERMANENT FINANCING (NO. 2) PLC

By:  _____________________________________
(Duly authorised)

Issued in London, England on [6th March], 2003.
-------------------------------------------------------------------------------
<PAGE>

                                       89
-------------------------------------------------------------------------------

CERTIFICATE OF AUTHENTICATION

This Global Second Issuer Note is duly authenticated without recourse, warranty
or liability.

_____________________________________________

Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

-------------------------------------------------------------------------------
<PAGE>

                                       90
-------------------------------------------------------------------------------

                                  THE SCHEDULE

                                     PART I

                       PAYMENTS OF PRINCIPAL AND INTEREST

The following payments on this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>
DATE MADE            INTEREST PAID         PRINCIPAL PAID        REMAINING PRINCIPAL     NOTATION MADE ON
                                                                 AMOUNT OF THIS GLOBAL   BEHALF OF THE SECOND
                                                                 SECOND ISSUER NOTE      ISSUER
                                                                 FOLLOWING SUCH PAYMENT

                          US$                  US$                   US$

<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>

-------------------------------------------------------------------------------
<PAGE>

                                       91
-------------------------------------------------------------------------------

                                     PART II

                                   EXCHANGES,
                           PURCHASES AND CANCELLATIONS

The following exchanges for Definitive Second Issuer Notes and purchases and
cancellations of a part of this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>
DATE MADE             PART OF PRINCIPAL     PART OF PRINCIPAL      AGGREGATE PRINCIPAL    NOTATION MADE ON
                      AMOUNT EXCHANGED FOR  AMOUNT PURCHASED AND   AMOUNT FOLLOWING       BEHALF OF THE SECOND
                      DEFINITIVE SECOND     CANCELLED              SUCH EXCHANGE OR       ISSUER
                      ISSUER NOTES                                 PURCHASE AND
                                                                   CANCELLATION

                          US$                  US$                   US$

<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>
-------------------------------------------------------------------------------
<PAGE>

                                       92
-------------------------------------------------------------------------------

                                     PART G

                   SERIES 3 CLASS A GLOBAL SECOND ISSUER NOTE

THIS SECOND ISSUER NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND, AS A MATTER OF U.S. LAW,
PRIOR TO THE DATE THAT IS 40 DAYS AFTER THE LATER OF THE CLOSING DATE AND THE
COMMENCEMENT OF THE OFFERING OF THE SECOND ISSUER NOTES MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A U.S. PERSON
(AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) EXCEPT PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES.

                         PERMANENT FINANCING (NO. 2) PLC

(Incorporated with limited liability in England with registered number 4623188)

                   SERIES 3 CLASS A GLOBAL SECOND ISSUER NOTE
                               representing up to

 (EURO)[1,250,000,000] SERIES 3 CLASS A ASSET BACKED FLOATING RATE SECOND ISSUER
                           NOTES DUE [DECEMBER 2032]

This Series 3 Class A Global Second Issuer Note is issued without principal or
interest coupons in respect of a duly authorised issue of Series 3 Class A
Second Issuer Notes of PERMANENT FINANCING (NO. 2) PLC (the "SECOND ISSUER"),
designated as specified in the title hereof (the "SECOND ISSUER NOTES"), limited
to the aggregate principal amount of up to [one billion, two hundred and fifty]
million euro ((EURO)[1,250,000,000]) and constituted by a Second Issuer Trust
Deed dated [6th March], 2003 (the "SECOND ISSUER TRUST DEED") between the Second
Issuer and U.S. BANK NATIONAL ASSOCIATION, as trustee (the trustee for the time
being thereof being herein called the "NOTE TRUSTEE"). References herein to the
Conditions (or to any particular numbered Condition) shall be to the Conditions
(or that particular one of them) set out in SCHEDULE 3 to the Second Issuer
Trust Deed. Terms not defined herein have the meanings ascribed to them in the
Amended and Restated Master Definitions and Construction Schedule and the Second
Issuer Master Definitions and Construction Schedule, both dated and made on [5th
March], 2003 and signed for the purposes of identification by Allen & Overy and
Sidley Austin Brown & Wood, and the Second Issuer Trust Deed. The aggregate
principal amount from time to time of this Global Second Issuer Note shall be
that amount not exceeding (EURO)[1,250,000,000] as shall be shown by the latest
entry duly made in the Schedule hereto.

This is to certify that:

     Citivic Nominees Limited as nominee on behalf of the Common Depositary

is/are the duly registered holder(s) of one of the Series 3 Class A Global
Second Issuer Notes. This Global Second Issuer Note is evidence of entitlement
only. Title to the Global Second Issuer Notes passes only on due registration in
the Register and only the registered holder is entitled to payment in respect of
this Global Second Issuer Note.
-------------------------------------------------------------------------------
<PAGE>

                                       93
-------------------------------------------------------------------------------

1.     PROMISE TO PAY

       Subject as provided in this Global Second Issuer Note the Second Issuer
       promises to pay to the registered holder hereof the principal amount of
       this Global Second Issuer Note (being at the date hereof [one billion,
       two hundred and fifty] million euro ((EURO)[1,250,000,000]) on the
       Interest Payment Date falling in [December 2032] (or on such earlier date
       as the said principal amount may become repayable in accordance with the
       Conditions or the Second Issuer Trust Deed) and to pay interest
       quarterly, as the case may be, in arrear on each Interest Payment Date on
       the principal amount from time to time of this Global Second Issuer Note
       at the rates determined in accordance with Conditions together with such
       other amounts (if any) as may be payable, all subject to and in
       accordance with the Conditions and the provisions of the Second Issuer
       Trust Deed.

2.     EXCHANGE FOR DEFINITIVE SECOND ISSUER NOTES AND PURCHASES

       This Global Second Issuer Note will be exchangeable (free of charge to
       the holder) for Definitive Second Issuer Notes only if (i) both Euroclear
       Bank S.A./N.V., as operator of the Euroclear System ("EUROCLEAR") and
       Clearstream Banking, societe anonyme ("CLEARSTREAM, LUXEMBOURG") are
       closed for business for a continuous period of 14 days (other than by
       reason of holiday, statutory or otherwise) or announce an intention
       permanently to cease business or do so and no alternative clearing system
       satisfactory to the Note Trustee is then available, or (ii) as a result
       of any amendment to, or change in, the laws or regulations of the United
       Kingdom (or of any political subdivision thereof), or of any authority
       therein or thereof having power to tax, or in the interpretation or
       administration by a revenue authority or a court or administration of
       such laws or regulations which becomes effective on or after the Second
       Issuer Closing Date, the Second Issuer or any Paying Agent is or will be
       required to make any deduction or withholding from any payment in respect
       of the Second Issuer Notes which would not be required were the relevant
       Second Issuer Notes in definitive registered form. Thereupon the holder
       of this Global Second Issuer Note (acting on the instructions of (a)
       holder(s) of (a) Book-Entry Interest(s) (as defined in SECTION 3 hereof))
       may give notice to the Second Issuer, and the Second Issuer may give
       notice to the Note Trustee and the Noteholders, of its intention to
       exchange this Global Second Issuer Note for Definitive Second Issuer
       Notes on or after the Exchange Date (as defined below).

       On or after the Exchange Date, the holder of this Global Second Issuer
       Note shall surrender this Global Second Issuer Note to or to the order of
       the Registrar. In exchange for this Global Second Issuer Note the Second
       Issuer will deliver, or procure the delivery of, Definitive Second Issuer
       Notes in registered form in denominations of (EURO)500,000 each, or ANy
       integral multiple thereof, or in such other denominations as the Note
       Trustee shall determine and notify to the relevant Noteholders, in
       exchange for the whole of this Global Second Issuer Note.

       "EXCHANGE DATE" means a day specified in the notice requiring exchange
       falling not more than 60 days after that on which such notice is given
       and on which banks are open for business in the city in which the
       specified office of the Registrar is located and in the city in which the
       relevant clearing system is located.

       Upon the cancellation of a part of this Global Second Issuer Note in
       accordance with the Second Issuer Trust Deed, the Conditions and the
       Second Issuer Paying Agent and Agent Bank Agreement, the portion of the
       principal amount hereof so exchanged or so purchased and cancelled shall
       be endorsed by or on behalf of the Registrar on behalf of the Second

-------------------------------------------------------------------------------
<PAGE>

                                       94
-------------------------------------------------------------------------------

       Issuer on Part II of the Schedule hereto, whereupon the principal amount
       hereof shall be increased or, as the case may be, reduced for all
       purposes by the amount so exchanged or so purchased and cancelled and
       endorsed. Upon the exchange of the whole of this Global Second Issuer
       Note for Definitive Second Issuer Notes this Global Second Issuer Note
       shall be surrendered to or to the order of the Registrar and cancelled
       and, if the holder of this Global Second Issuer Note requests, returned
       to it together with any relevant Definitive Second Issuer Notes.

3.     PAYMENTS

       Until the entire principal amount of this Global Second Issuer Note has
       been extinguished, this Global Second Issuer Note shall be entitled to
       the benefit of and be bound by the Conditions, the Second Issuer Trust
       Deed and the Second Issuer Deed of Charge. Payments of principal and
       interest in respect of Second Issuer Notes represented by this Global
       Second Issuer Note will be made in accordance with the Conditions. Upon
       any payment of principal or interest on this Global Second Issuer Note
       the amount so paid shall be endorsed by or on behalf of the Registrar on
       behalf of the Second Issuer on Part I of the Schedule hereto.

       Upon any payment of principal and endorsement of such payment on Part I
       of the Schedule hereto, the principal amount of this Global Second Issuer
       Note shall be reduced for all purposes by the principal amount so paid
       and endorsed.

       All payments of any amounts payable and paid to the registered holder of
       this Global Second Issuer Note shall be valid and, to the extent of the
       sums so paid, effectual to satisfy and discharge the liability for the
       monies payable hereon.

4.     EUROCLEAR AND CLEARSTREAM, LUXEMBOURG

       References herein to Euroclear and/or Clearstream, Luxembourg shall be
       deemed to include references to any other clearing system approved by the
       Note Trustee.

5.     AUTHENTICATION

       This Global Second Issuer Note shall not be or become valid or obligatory
       for any purpose unless and until authenticated by or on behalf of the
       Registrar.

6.     GOVERNING LAW

       This Global Second Issuer Note is governed by, and shall be construed in
       accordance with, the laws of England.
-------------------------------------------------------------------------------
<PAGE>

                                       95
-------------------------------------------------------------------------------

IN WITNESS WHEREOF the Second Issuer has caused this Global Second Issuer Note
to be signed manually or in facsimile by a person duly authorised on its behalf.

PERMANENT FINANCING (NO. 2) PLC

By:  _____________________________________
(Duly authorised)

Issued in London, England on [6th March], 2003.

-------------------------------------------------------------------------------
<PAGE>

                                       96
-------------------------------------------------------------------------------

CERTIFICATE OF AUTHENTICATION

This Global Second Issuer Note is duly authenticated without recourse, warranty
or liability.

____________________________________________
Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

-------------------------------------------------------------------------------
<PAGE>

                                       97
-------------------------------------------------------------------------------

                                  THE SCHEDULE

                                     PART I

                       PAYMENTS OF PRINCIPAL AND INTEREST

The following payments on this Global Second Issuer Note have been made:
<TABLE>
<CAPTION>

DATE MADE             INTEREST PAID        PRINCIPAL PAID        REMAINING PRINCIPAL     NOTATION MADE ON
                                                                 AMOUNT OF THIS GLOBAL   BEHALF OF THE SECOND
                                                                 SECOND ISSUER NOTE      ISSUER
                                                                 FOLLOWING SUCH PAYMENT

                          (EURO)              (EURO)                 (EUR0)

<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>
-------------------------------------------------------------------------------
<PAGE>

                                       98
-------------------------------------------------------------------------------

                                     PART II

                                   EXCHANGES,
                           PURCHASES AND CANCELLATIONS

The following exchanges for Definitive Second Issuer Notes and purchases and
cancellations of a part of this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>
DATE MADE            PART OF PRINCIPAL     PART OF PRINCIPAL      AGGREGATE PRINCIPAL    NOTATION MADE ON
                     AMOUNT EXCHANGED FOR  AMOUNT PURCHASED AND   AMOUNT FOLLOWING       BEHALF OF THE SECOND
                     DEFINITIVE SECOND     CANCELLED              SUCH EXCHANGE OR       ISSUER
                     ISSUER NOTES                                 PURCHASE AND
                                                                  CANCELLATION

                          (EURO)              (EURO)                 (EUR0)

<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>
-------------------------------------------------------------------------------
<PAGE>

                                       99
-------------------------------------------------------------------------------

                                     PART H

                   SERIES 3 CLASS B GLOBAL SECOND ISSUER NOTE

THIS SECOND ISSUER NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND, AS A MATTER OF U.S. LAW,
PRIOR TO THE DATE THAT IS 40 DAYS AFTER THE LATER OF THE CLOSING DATE AND THE
COMMENCEMENT OF THE OFFERING OF THE SECOND ISSUER NOTES MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A U.S. PERSON
(AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) EXCEPT PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES.

                         PERMANENT FINANCING (NO. 2) PLC

 (Incorporated with limited liability in England with registered number 4623188)

                   SERIES 3 CLASS B GLOBAL SECOND ISSUER NOTE
                               representing up to

  (EURO)[43,500,000] SERIES 3 CLASS B ASSET BACKED FLOATING RATE SECOND ISSUER
                             NOTES DUE [JUNE 2042]

This Series 3 Class B Global Second Issuer Note is issued without principal or
interest coupons in respect of a duly authorised issue of Series 3 Class B
Second Issuer Notes of PERMANENT FINANCING (NO. 2) PLC (the "SECOND ISSUER"),
designated as specified in the title hereof (the "SECOND ISSUER NOTES"), limited
to the aggregate principal amount of up to [forty four] million euro
((EURO)[43,500,000]) and constituted by a Second Issuer Trust Deed dated [6th
March], 2003 (the "SECOND ISSUER TRUST DEED") between the Second Issuer and U.S.
BANK NATIONAL ASSOCIATION, as trustee (the trustee for the time being thereof
being herein called the "Note TRUSTEE"). References herein to the Conditions (or
to any particular numbered Condition) shall be to the Conditions (or that
particular one of them) set out in SCHEDULE 3 to the Second Issuer Trust Deed.
Terms not defined herein have the meanings ascribed to them in the Amended and
Restated Master Definitions and Construction Schedule and the Second Issuer
Master Definitions and Construction Schedule, both dated [5th March], 2003 and
signed for the purposes of identification by Allen & Overy and Sidley Austin
Brown & Wood, and the Second Issuer Trust Deed. The aggregate principal amount
from time to time of this Global Second Issuer Note shall be that amount not
exceeding (EURO)[43,500,000] as shall be shown by the latest entry duly made in
the Schedule hereto.

This is to certify that:

     Citivic Nominees Limited as nominee on behalf of the Common Depositary

is/are the duly registered holder(s) of one Series 3 Class B Global Second
Issuer Notes . This Global Second Issuer Note is evidence of entitlement only.
Title to the Global Second Issuer Notes passes only on due registration in the
Register and only the registered holder is entitled to payment in respect of
this Global Second Issuer Note.
-------------------------------------------------------------------------------
<PAGE>

                                       100
-------------------------------------------------------------------------------

1.     PROMISE TO PAY

       Subject as provided in this Global Second Issuer Note the Second Issuer
       promises to pay to the registered holder hereof the principal amount of
       this Global Second Issuer Note (being at the date hereof [forty four]
       million euro ((EURO)[43,500,000]) on the Interest Payment Date falling in
       [June 2042] (or on such earlier date as the said principal amount may
       become repayable in accordance with the Conditions or the Second Issuer
       Trust Deed) and to pay interest quarterly in arrear on each Interest
       Payment Date on the principal amount from time to time of this Global
       Second Issuer Note at the rates determined in accordance with Conditions
       together with such other amounts (if any) as may be payable, all subject
       to and in accordance with the Conditions and the provisions of the Second
       Issuer Trust Deed.

2.     EXCHANGE FOR DEFINITIVE SECOND ISSUER NOTES AND PURCHASES

       This Global Second Issuer Note will be exchangeable (free of charge to
       the holder) for Definitive Second Issuer Notes only if (i) both Euroclear
       Bank S.A./N.V., as operator of the Euroclear System ("EUROCLEAR") and
       Clearstream Banking, societe anonyme ("CLEARSTREAM, LUXEMBOURG") are
       closed for business for a continuous period of 14 days (other than by
       reason of holiday, statutory or otherwise) or announce an intention
       permanently to cease business or do so and no alternative clearing system
       satisfactory to the Note Trustee is then available, or (ii) as a result
       of any amendment to, or change in, the laws or regulations of the United
       Kingdom (or of any political subdivision thereof), or of any authority
       therein or thereof having power to tax, or in the interpretation or
       administration by a revenue authority or a court or administration of
       such laws or regulations which becomes effective on or after the Second
       Issuer Closing Date, the Second Issuer or any Paying Agent is or will be
       required to make any deduction or withholding from any payment in respect
       of the Second Issuer Notes which would not be required were the relevant
       Second Issuer Notes in definitive registered form. Thereupon the holder
       of this Global Second Issuer Note (acting on the instructions of (a)
       holder(s) of (a) Book-Entry Interest(s) (as defined in SECTION 3 hereof))
       may give notice to the Second Issuer, and the Second Issuer may give
       notice to the Note Trustee and the Noteholders, of its intention to
       exchange this Global Second Issuer Note for Definitive Second Issuer
       Notes on or after the Exchange Date (as defined below).

       On or after the Exchange Date, the holder of this Global Second Issuer
       Note shall surrender this Global Second Issuer Note to or to the order of
       the Registrar. In exchange for this Global Second Issuer Note the Second
       Issuer will deliver, or procure the delivery of, Definitive Second Issuer
       Notes in registered form in denominations of (EURO)500,000 each, or any
       integral multiple thereof, or in such other denominations as the Note
       Trustee shall determine and notify to the relevant Noteholders, in
       exchange for the whole of this Global Second Issuer Note.

       "EXCHANGE DATE" means a day specified in the notice requiring exchange
       falling not more than 60 days after that on which such notice is given
       and on which banks are open for business in the city in which the
       specified office of the Registrar is located and in the city in which the
       relevant clearing system is located.

       Upon the cancellation of a part of this Global Second Issuer Note in
       accordance with the Second Issuer Trust Deed, the Conditions and the
       Second Issuer Paying Agent and Agent Bank Agreement, the portion of the
       principal amount hereof so exchanged or so purchased and cancelled shall
       be endorsed by or on behalf of the Registrar on behalf of the Second
       Issuer on Part II of the Schedule hereto, whereupon the principal amount
       hereof shall be

-------------------------------------------------------------------------------
<PAGE>

                                       101
-------------------------------------------------------------------------------

       increased or, as the case may be, reduced for all purposes by the amount
       so exchanged or so purchased and cancelled and endorsed. Upon the
       exchange of the whole of this Global Second Issuer Note for Definitive
       Second Issuer Notes this Global Second Issuer Note, shall be surrendered
       to or to the order of the Registrar and cancelled and, if the holder of
       this Global Second Issuer Note requests, returned to it together with any
       relevant Definitive Second Issuer Notes.

3.     PAYMENTS

       Until the entire principal amount of this Global Second Issuer Note has
       been extinguished, this Global Second Issuer Note shall be entitled to
       the benefit of and be bound by the Conditions, the Second Issuer Trust
       Deed and the Second Issuer Deed of Charge. Payments of principal and
       interest in respect of Second Issuer Notes represented by this Global
       Second Issuer Note will be made in accordance with the Conditions. Upon
       any payment of principal or interest on this Global Second Issuer Note
       the amount so paid shall be endorsed by or on behalf of the Registrar on
       behalf of the Second Issuer on Part I of the Schedule hereto.

       Upon any payment of principal and endorsement of such payment on Part I
       of the Schedule hereto, the principal amount of this Global Second Issuer
       Note shall be reduced for all purposes by the principal amount so paid
       and endorsed.

       All payments of any amounts payable and paid to the registered holder of
       this Global Second Issuer Note shall be valid and, to the extent of the
       sums so paid, effectual to satisfy and discharge the liability for the
       monies payable hereon.

4.     EUROCLEAR AND CLEARSTREAM, LUXEMBOURG

       References herein to Euroclear and/or Clearstream, Luxembourg shall be
       deemed to include references to any other clearing system approved by the
       Note Trustee.

5.     AUTHENTICATION

       This Global Second Issuer Note shall not be or become valid or obligatory
       for any purpose unless and until authenticated by or on behalf of the
       Registrar.

6.     GOVERNING LAW

       This Global Second Issuer Note is governed by, and shall be construed in
       accordance with, the laws of England.
-------------------------------------------------------------------------------
<PAGE>

                                       102
-------------------------------------------------------------------------------

IN WITNESS WHEREOF the Second Issuer has caused this Global Second Issuer Note
to be signed manually or in facsimile by a person duly authorised on its behalf.

PERMANENT FINANCING (NO. 2) PLC

By:  _____________________________________
(Duly authorised)

Issued in London, England on [6th March], 2003.

-------------------------------------------------------------------------------
<PAGE>

                                       103
-------------------------------------------------------------------------------

CERTIFICATE OF AUTHENTICATION

This Global Second Issuer Note is duly authenticated without recourse, warranty
or liability.

____________________________________________
Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

-------------------------------------------------------------------------------
<PAGE>

                                       104
-------------------------------------------------------------------------------

                                  THE SCHEDULE

                                     PART I

                       PAYMENTS OF PRINCIPAL AND INTEREST

The following payments on this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>
DATE MADE            INTEREST PAID         PRINCIPAL PAID        REMAINING PRINCIPAL     NOTATION MADE ON
                                                                 AMOUNT OF THIS GLOBAL   BEHALF OF THE SECOND
                                                                 SECOND ISSUER NOTE      ISSUER
                                                                 FOLLOWING SUCH PAYMENT

                          (EURO)              (EURO)                 (EUR0)

<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>
-------------------------------------------------------------------------------
<PAGE>

                                       105
-------------------------------------------------------------------------------

                                     PART II

                                   EXCHANGES,
                           PURCHASES AND CANCELLATIONS

The following exchanges for Definitive Second Issuer Notes and purchases and
cancellations of a part of this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>
DATE MADE             PART OF PRINCIPAL     PART OF PRINCIPAL      AGGREGATE PRINCIPAL   NOTATION MADE ON
                      AMOUNT EXCHANGED FOR  AMOUNT PURCHASED AND   AMOUNT FOLLOWING      BEHALF OF THE SECOND
                      DEFINITIVE SECOND     CANCELLED              SUCH EXCHANGE OR      ISSUER
                      ISSUER NOTES                                 PURCHASE AND
                                                                   CANCELLATION

                       (EURO)              (EURO)                 (EUR0)

<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>

-------------------------------------------------------------------------------
<PAGE>

                                       106
-------------------------------------------------------------------------------

                                     PART I

                   SERIES 3 CLASS C GLOBAL SECOND ISSUER NOTE

THIS SECOND ISSUER NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND, AS A MATTER OF U.S. LAW,
PRIOR TO THE DATE THAT IS 40 DAYS AFTER THE LATER OF THE CLOSING DATE AND THE
COMMENCEMENT OF THE OFFERING OF THE SECOND ISSUER NOTES MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A U.S. PERSON
(AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) EXCEPT PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES.

                         PERMANENT FINANCING (NO. 2) PLC

 (Incorporated with limited liability in England with registered number 4623188)

                   SERIES 3 CLASS C GLOBAL SECOND ISSUER NOTE
                               representing up to

  (EURO)[43,500,000] SERIES 3 CLASS C ASSET BACKED FLOATING RATE SECOND ISSUER
                             NOTES DUE [JUNE 2042]

This Series 3 Class C Global Second Issuer Note is issued without principal or
interest coupons in respect of a duly authorised issue of Series 3 Class C
Second Issuer Notes of PERMANENT FINANCING (NO. 2) PLC (the "SECOND ISSUER"),
designated as specified in the title hereof (the "SECOND ISSUER NOTES"), limited
to the aggregate principal amount of up to [forty four] million euro
((EURO)[43,500,000]) and constituted by a Second Issuer Trust Deed dated [6th
March], 2003 (the "SECOND ISSUER TRUST DEED") between the Second Issuer and U.S.
BANK NATIONAL ASSOCIATION, as trustee (the trustee for the time being thereof
being herein called the "Note TRUSTEE"). References herein to the Conditions (or
to any particular numbered Condition) shall be to the Conditions (or that
particular one of them) set out in SCHEDULE 3 to the Second Issuer Trust Deed.
Terms not defined herein have the meanings ascribed to them in the Amended and
Restated Master Definitions and Construction Schedule and the Second Issuer
Master Definitions and Construction Schedule, both dated [5th March], 2003 and
signed for the purposes of identification by Allen & Overy and Sidley Austin
Brown & Wood, and the Second Issuer Trust Deed. The aggregate principal amount
from time to time of this Global Second Issuer Note shall be that amount not
exceeding (EURO)[43,500,000] as shall be shown by the latest entry duly made in
the Schedule hereto.

This is to certify that:

     Citivic Nominees Limited as nominee on behalf of the Common Depositary

is/are the duly registered holder(s) of one of the Series 3 Class C Global
Second Issuer Notes. This Global Second Issuer Note is evidence of entitlement
only. Title to the Global Second Issuer Notes passes only on due registration in
the Register and only the registered holder is entitled to payment in respect of
this Global Second Issuer Note.
-------------------------------------------------------------------------------
<PAGE>

                                       107
-------------------------------------------------------------------------------

1.     PROMISE TO PAY

       Subject as provided in this Global Second Issuer Note the Second Issuer
       promises to pay to the registered holder hereof the principal amount of
       this Global Second Issuer Note (being at the date hereof [forty four]
       million euro ((EURO)[43,500,000]) on the Interest Payment Date falling in
       [June 2042] (or on such earlier date as the said principal amount may
       become repayable in accordance with the Conditions or the Second Issuer
       Trust Deed) and to pay interest quarterly in arrear on each Interest
       Payment Date on the principal amount from time to time of this Global
       Second Issuer Note at the rates determined in accordance with Conditions
       together with such other amounts (if any) as may be payable, all subject
       to and in accordance with the Conditions and the provisions of the Second
       Issuer Trust Deed.

2.     EXCHANGE FOR DEFINITIVE SECOND ISSUER NOTES AND PURCHASES

       This Global Second Issuer Note will be exchangeable (free of charge to
       the holder) for Definitive Second Issuer Notes only if (i) both Euroclear
       Bank S.A./N.V., as operator of the Euroclear System ("EUROCLEAR") and
       Clearstream Banking, societe anonyme ("CLEARSTREAM, LUXEMBOURG") are
       closed for business for a continuous period of 14 days (other than by
       reason of holiday, statutory or otherwise) or announce an intention
       permanently to cease business or do so and no alternative clearing system
       satisfactory to the Note Trustee is then available, or (ii) as a result
       of any amendment to, or change in, the laws or regulations of the United
       Kingdom (or of any political subdivision thereof), or of any authority
       therein or thereof having power to tax, or in the interpretation or
       administration by a revenue authority or a court or administration of
       such laws or regulations which becomes effective on or after the Second
       Issuer Closing Date, the Second Issuer or any Paying Agent is or will be
       required to make any deduction or withholding from any payment in respect
       of the Second Issuer Notes which would not be required were the relevant
       Second Issuer Notes in definitive registered form. Thereupon the holder
       of this Global Second Issuer Note (acting on the instructions of (a)
       holder(s) of (a) Book-Entry Interest(s) (as defined in SECTION 3 hereof))
       may give notice to the Second Issuer, and the Second Issuer may give
       notice to the Note Trustee and the Noteholders, of its intention to
       exchange this Global Second Issuer Note for Definitive Second Issuer
       Notes on or after the Exchange Date (as defined below).

       On or after the Exchange Date, the holder of this Global Second Issuer
       Note shall surrender this Global Second Issuer Note to or to the order of
       the Registrar. In exchange for this Global Second Issuer Note the Second
       Issuer will deliver, or procure the delivery of, Definitive Second Issuer
       Notes in registered form in denominations of (EURO)500,000 each, or any
       integral multiple thereof, or in such other denominations as the Note
       Trustee shall determine and notify to the relevant Noteholders, in
       exchange for the whole of this Global Second Issuer Note.

       "EXCHANGE DATE" means a day specified in the notice requiring exchange
       falling not more than 60 days after that on which such notice is given
       and on which banks are open for business in the city in which the
       specified office of the Registrar is located and in the city in which the
       relevant clearing system is located.

       Upon the cancellation of a part of this Global Second Issuer Note in
       accordance with the Second Issuer Trust Deed, the Conditions and the
       Second Issuer Paying Agent and Agent Bank Agreement, the portion of the
       principal amount hereof so exchanged or so purchased and cancelled shall
       be endorsed by or on behalf of the Registrar on behalf of the Second
       Issuer on Part II of the Schedule hereto, whereupon the principal amount
       hereof shall be

-------------------------------------------------------------------------------
<PAGE>

                                       108
-------------------------------------------------------------------------------

       increased or, as the case may be, reduced for all purposes by the amount
       so exchanged or so purchased and cancelled and endorsed. Upon the
       exchange of the whole of this Global Second Issuer Note for Definitive
       Second Issuer Notes this Global Second Issuer Note, shall be surrendered
       to or to the order of the Registrar and cancelled and, if the holder of
       this Global Second Issuer Note requests, returned to it together with any
       relevant Definitive Second Issuer Notes.

3.     PAYMENTS

       Until the entire principal amount of this Global Second Issuer Note has
       been extinguished, this Global Second Issuer Note shall be entitled to
       the benefit of and be bound by the Conditions, the Second Issuer Trust
       Deed and the Second Issuer Deed of Charge. Payments of principal and
       interest in respect of Second Issuer Notes represented by this Global
       Second Issuer Note will be made in accordance with the Conditions. Upon
       any payment of principal or interest on this Global Second Issuer Note
       the amount so paid shall be endorsed by or on behalf of the Registrar on
       behalf of the Second Issuer on Part I of the Schedule hereto.

       Upon any payment of principal and endorsement of such payment on Part I
       of the Schedule hereto, the principal amount of this Global Second Issuer
       Note shall be reduced for all purposes by the principal amount so paid
       and endorsed.

       All payments of any amounts payable and paid to the registered holder of
       this Global Second Issuer Note shall be valid and, to the extent of the
       sums so paid, effectual to satisfy and discharge the liability for the
       monies payable hereon.

4.     EUROCLEAR AND CLEARSTREAM, LUXEMBOURG

       References herein to Euroclear and/or Clearstream, Luxembourg shall be
       deemed to include references to any other clearing system approved by the
       Note Trustee.

5.     AUTHENTICATION

       This Global Second Issuer Note shall not be or become valid or obligatory
       for any purpose unless and until authenticated by or on behalf of the
       Registrar.

6.     GOVERNING LAW

       This Global Second Issuer Note is governed by, and shall be construed in
       accordance with, the laws of England.
-------------------------------------------------------------------------------
<PAGE>

                                       109
-------------------------------------------------------------------------------

IN WITNESS WHEREOF the Second Issuer has caused this Global Second Issuer Note
to be signed manually or in facsimile by a person duly authorised on its behalf.

PERMANENT FINANCING (NO. 2) PLC

By: ______________________________________
(Duly authorised)

Issued in London, England on [6th March], 2003.

-------------------------------------------------------------------------------
<PAGE>

                                       110
-------------------------------------------------------------------------------

CERTIFICATE OF AUTHENTICATION

This Global Second Issuer Note is duly authenticated without recourse, warranty
or liability.

____________________________________________
Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

-------------------------------------------------------------------------------
<PAGE>

                                       111
-------------------------------------------------------------------------------

                                  THE SCHEDULE

                                     PART I

                       PAYMENTS OF PRINCIPAL AND INTEREST

The following payments on this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>
DATE MADE            INTEREST PAID         PRINCIPAL PAID        REMAINING PRINCIPAL     NOTATION MADE ON
                                                                 AMOUNT OF THIS GLOBAL   BEHALF OF THE SECOND
                                                                 SECOND ISSUER NOTE      ISSUER
                                                                 FOLLOWING SUCH PAYMENT

                          (EURO)              (EURO)                 (EUR0)

<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>
-------------------------------------------------------------------------------
<PAGE>

                                      112
-------------------------------------------------------------------------------

                                     PART II

                                   EXCHANGES,
                           PURCHASES AND CANCELLATIONS

The following exchanges for Definitive Second Issuer Notes and purchases and
cancellations of a part of this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>
DATE MADE            PART OF PRINCIPAL     PART OF PRINCIPAL      AGGREGATE PRINCIPAL    NOTATION MADE ON
                     AMOUNT EXCHANGED FOR  AMOUNT PURCHASED AND   AMOUNT FOLLOWING       BEHALF OF THE SECOND
                     DEFINITIVE SECOND     CANCELLED              SUCH EXCHANGE OR       ISSUER
                     ISSUER NOTES                                 PURCHASE AND
                                                                  CANCELLATION

                          (EURO)              (EURO)                 (EUR0)

<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>

-------------------------------------------------------------------------------
<PAGE>

                                       113
-------------------------------------------------------------------------------

                                     PART J
                                       (1)

                   SERIES 4 CLASS A GLOBAL SECOND ISSUER NOTE

                                   NOTE NO. 1

                         PERMANENT FINANCING (NO. 2) PLC

 (Incorporated with limited liability in England with registered number 4623188)

                   SERIES 4 CLASS A GLOBAL SECOND ISSUER NOTE
                               representing up to

    US$500,000,000 SERIES 4 CLASS A ASSET BACKED FLOATING RATE SECOND ISSUER
                           NOTES DUE [DECEMBER 2009]

      (Initial aggregate principal amount of Series 4 Class A Global Notes:
                              US$[1,250,000,000])

This Series 4 Class A Global Second Issuer Note is issued without principal or
interest coupons in respect of a duly authorised issue of Series 4 Class A
Second Issuer Notes of PERMANENT FINANCING (NO. 2) PLC (the "SECOND ISSUER"),
designated as specified in the title hereof (the "SECOND ISSUER NOTES"), limited
to the aggregate principal amount of up to five hundred million US dollars
(US$500,000,000) and constituted by a Second Issuer Trust Deed dated [6th
March], 2003 (the "SECOND ISSUER TRUST DEED") between the Second Issuer and U.S.
BANK NATIONAL ASSOCIATION, as trustee (the trustee for the time being thereof
being herein called the "NOTE TRUSTEE"). References herein to the Conditions (or
to any particular numbered Condition) shall be to the Conditions (or that
particular one of them) set out in SCHEDULE 3 to the Second Issuer Trust Deed.
Terms not defined herein have the meanings ascribed to them in the Amended and
Restated Master Definitions and Construction Schedule and the Second Issuer
Master Definitions and Construction Schedule, both dated [5th March], 2003 and
signed for the purposes of identification by Allen & Overy and Sidley Austin
Brown & Wood, and the Second Issuer Trust Deed. The aggregate principal amount
from time to time of this Global Second Issuer Note shall be that amount not
exceeding US$500,000,000 as shall be shown by the latest entry duly made in the
Schedule hereto.

This is to certify that:

         Cede & Co. as nominee on behalf of The Depositary Trust Company

is/are the duly registered holder(s) of one of the Series 4 Class A Global
Second Issuer Notes. This Global Second Issuer Note is evidence of entitlement
only. Title to the Global Second Issuer Notes passes only on due registration in
the Register and only the registered holder is entitled to payment in respect of
this Global Second Issuer Note.

1.     PROMISE TO PAY

       Subject as provided in this Global Second Issuer Note the Second Issuer
       promises to pay to the registered holder hereof the principal amount of
       this Global Second Issuer Note (being at the date hereof to five hundred
       million US dollars (US$500,000,000) on the Interest Payment Date falling
       in [December 2009] (or on such earlier date as the said principal amount
       may become repayable in accordance with the Conditions or the Second
       Issuer Trust Deed) and to
-------------------------------------------------------------------------------
<PAGE>

                                       114
-------------------------------------------------------------------------------

       pay interest quarterly in arrear on each Interest Payment Date on the
       principal amount from time to time of this Global Second Issuer Note at
       the rates determined in accordance with the Conditions together with such
       other amounts (if any) as may be payable, all subject to and in
       accordance with the Conditions and the provisions of the Second Issuer
       Trust Deed.

2.     EXCHANGE FOR DEFINITIVE SECOND ISSUER NOTES AND PURCHASES

       This Global Second Issuer Note will be exchangeable (free of charge to
       the holder) for Definitive Second Issuer Notes only if (i) The Depositary
       Trust Company ("DTC") has notified the Second Issuer that it is at any
       time unwilling or unable to continue as holder of this Global Second
       Issuer Note or is at any time unwilling or unable to continue as, or
       ceases to be, a clearing agency under the United States Securities
       Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and a successor to
       DTC registered as a clearing agency under the Exchange Act is not able to
       be appointed by the Second Issuer within 90 days of such notification, or
       (ii) as a result of any amendment to, or change in, the laws or
       regulations of the United Kingdom (or of any political subdivision
       thereof), or of any authority therein or thereof having power to tax, or
       in the interpretation or administration by a revenue authority or a court
       or administration of such laws or regulations which becomes effective on
       or after the Second Issuer Closing Date, the Second Issuer or any Paying
       Agent is or will be required to make any deduction or withholding from
       any payment in respect of the Second Issuer Notes which would not be
       required were the relevant Second Issuer Notes in definitive registered
       form. Thereupon the holder of this Global Second Issuer Note (acting on
       the instructions of (a) holder(s) of (a) Book-Entry Interest(s) (as
       defined in SECTION 3 hereof)) may give notice to the Second Issuer, and
       the Second Issuer may give notice to the Note Trustee and the
       Noteholders, of its intention to exchange this Global Second Issuer Note
       for Definitive Second Issuer Notes on or after the Exchange Date (as
       defined below).

       On or after the Exchange Date, the holder of this Global Second Issuer
       Note shall surrender this Global Second Issuer Note to or to the order of
       the Registrar. In exchange for this Global Second Issuer Note the Second
       Issuer will deliver, or procure the delivery of, Definitive Second Issuer
       Notes in registered form in denominations of US$1,000 or US$10,000 each,
       or any integral multiple thereof, or in such other denominations as the
       Note Trustee shall determine and notify to the relevant Noteholders, in
       exchange for the whole of this Global Second Issuer Note.

       "EXCHANGE DATE" means a day specified in the notice requiring exchange
       falling not more than 60 days after that on which such notice is given
       and on which banks are open for business in the city in which the
       specified office of the Registrar is located and in the city in which the
       relevant clearing system is located.

       Upon the cancellation of a part of this Global Second Issuer Note in
       accordance with the Second Issuer Trust Deed, the Conditions and the
       Second Issuer Paying and Agent Bank Agreement, the portion of the
       principal amount hereof so exchanged or so purchased and cancelled shall
       be endorsed by or on behalf of the Registrar on behalf of the Second
       Issuer on Part II of the Schedule hereto, whereupon the principal amount
       hereof shall be increased or, as the case may be, reduced for all
       purposes by the amount so exchanged or so purchased and cancelled and
       endorsed. Upon the exchange of the whole of this Global Second Issuer
       Note for Definitive Second Issuer Notes, this Global Second Issuer Note
       shall be surrendered to or to the order of the Registrar and cancelled
       and, if the holder of this Global Second Issuer Note requests, returned
       to it together with any relevant Definitive Second Issuer Notes.
-------------------------------------------------------------------------------
<PAGE>

                                       115
-------------------------------------------------------------------------------

3.     PAYMENTS

       Until the entire principal amount of this Global Second Issuer Note has
       been extinguished, this Global Second Issuer Note shall be entitled to
       the benefit of and be bound by the Conditions, the Second Issuer Trust
       Deed and the Second Issuer Deed of Charge. Payments of principal and
       interest in respect of Second Issuer Notes represented by this Global
       Second Issuer Note will be made in accordance with the Conditions. Upon
       any payment of principal or interest on this Global Second Issuer Note
       the amount so paid shall be endorsed by or on behalf of the Registrar on
       behalf of the Second Issuer on Part I of the Schedule hereto.

       Upon any payment of principal and endorsement of such payment on Part I
       of the Schedule hereto, the principal amount of this Global Second Issuer
       Note shall be reduced for all purposes by the principal amount so paid
       and endorsed.

       All payments of any amounts payable and paid to the registered holder of
       this Global Second Issuer Note shall be valid and, to the extent of the
       sums so paid, effectual to satisfy and discharge the liability for the
       monies payable hereon.

4.     DTC

       References herein to DTC shall be deemed to include references to any
       other clearing system approved by the Note Trustee.

5.     AUTHENTICATION

       This Global Second Issuer Note shall not be or become valid or obligatory
       for any purpose unless and until authenticated by or on behalf of the
       Registrar.

6.     GOVERNING LAW

       This Global Second Issuer Note is governed by, and shall be construed in
       accordance with, the laws of England.

IN WITNESS WHEREOF the Second Issuer has caused this Global Second Issuer Note
to be signed manually or in facsimile by a person duly authorised on its behalf.

PERMANENT FINANCING (NO. 2) PLC

By:  _____________________________________
(Duly authorised)

Issued in London, England on [6th March], 2003.

-------------------------------------------------------------------------------
<PAGE>

                                       116
-------------------------------------------------------------------------------

CERTIFICATE OF AUTHENTICATION

This Global Second Issuer Note is duly authenticated without recourse, warranty
or liability.

_____________________________________________

Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

-------------------------------------------------------------------------------
<PAGE>

                                       117
-------------------------------------------------------------------------------

                                  THE SCHEDULE

                                     PART I

                       PAYMENTS OF PRINCIPAL AND INTEREST

The following payments on this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>
DATE MADE            INTEREST PAID         PRINCIPAL PAID        REMAINING PRINCIPAL     NOTATION MADE ON
                                                                 AMOUNT OF THIS GLOBAL   BEHALF OF THE SECOND
                                                                 SECOND ISSUER NOTE      ISSUER
                                                                 FOLLOWING SUCH PAYMENT

                          US$                    US$                   US$
<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>

-------------------------------------------------------------------------------
<PAGE>

                                       118
-------------------------------------------------------------------------------

                                     PART II

                                   EXCHANGES,
                           PURCHASES AND CANCELLATIONS

The following exchanges for Definitive Second Issuer Notes and purchases and
cancellations of a part of this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>
DATE MADE            PART OF PRINCIPAL     PART OF PRINCIPAL      AGGREGATE PRINCIPAL    NOTATION MADE ON
                     AMOUNT EXCHANGED FOR  AMOUNT PURCHASED AND   AMOUNT FOLLOWING       BEHALF OF THE SECOND
                     DEFINITIVE SECOND     CANCELLED              SUCH EXCHANGE OR       ISSUER
                     ISSUER NOTES                                 PURCHASE AND
                                                                  CANCELLATION

                          US$                    US$                   US$
<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>

-------------------------------------------------------------------------------
<PAGE>

                                       119
-------------------------------------------------------------------------------

                                     PART J
                                       (2)

                   SERIES 4 CLASS A GLOBAL SECOND ISSUER NOTE

                                   NOTE NO. 2

                         PERMANENT FINANCING (NO. 2) PLC

 (Incorporated with limited liability in England with registered number 4623188)

                   SERIES 4 CLASS A GLOBAL SECOND ISSUER NOTE
                               representing up to

    US$500,000,000 SERIES 4 CLASS A ASSET BACKED FLOATING RATE SECOND ISSUER
                           NOTES DUE [DECEMBER 2009]

      (Initial aggregate principal amount of Series 4 Class A Global Notes:
                              US$[1,250,000,000])

This Series 4 Class A Global Second Issuer Note is issued without principal or
interest coupons in respect of a duly authorised issue of Series 4 Class A
Second Issuer Notes of PERMANENT FINANCING (NO. 2) PLC (the "SECOND ISSUER"),
designated as specified in the title hereof (the "SECOND ISSUER NOTES"), limited
to the aggregate principal amount of up to five hundred million US dollars
(US$500,000,000) and constituted by a Second Issuer Trust Deed dated [6th
March], 2003 (the "SECOND ISSUER TRUST DEED") between the Second Issuer and U.S.
BANK NATIONAL ASSOCIATION, as trustee (the trustee for the time being thereof
being herein called the "NOTE TRUSTEE"). References herein to the Conditions (or
to any particular numbered Condition) shall be to the Conditions (or that
particular one of them) set out in SCHEDULE 3 to the Second Issuer Trust Deed.
Terms not defined herein have the meanings ascribed to them in the Amended and
Restated Master Definitions and Construction Schedule and the Second Issuer
Master Definitions and Construction Schedule, both dated [5th March], 2003 and
signed for the purposes of identification by Allen & Overy and Sidley Austin
Brown & Wood, and the Second Issuer Trust Deed. The aggregate principal amount
from time to time of this Global Second Issuer Note shall be that amount not
exceeding US$500,000,000 as shall be shown by the latest entry duly made in the
Schedule hereto.

This is to certify that:

         Cede & Co. as nominee on behalf of The Depositary Trust Company

is/are the duly registered holder(s) of one of the Series 4 Class A Global
Second Issuer Notes. This Global Second Issuer Note is evidence of entitlement
only. Title to the Global Second Issuer Notes passes only on due registration in
the Register and only the registered holder is entitled to payment in respect of
this Global Second Issuer Note.

1.     PROMISE TO PAY

       Subject as provided in this Global Second Issuer Note the Second Issuer
       promises to pay to the registered holder hereof the principal amount of
       this Global Second Issuer Note (being at the date hereof to five hundred
       million US dollars (US$500,000,000) on the Interest Payment Date falling
       in [December 2009] (or on such earlier date as the said principal amount
       may become repayable in accordance with the Conditions or the Second
       Issuer Trust Deed) and to

-------------------------------------------------------------------------------
<PAGE>

                                       120
-------------------------------------------------------------------------------

       pay interest quarterly in arrear on each Interest Payment Date on the
       principal amount from time to time of this Global Second Issuer Note at
       the rates determined in accordance with the Conditions together with such
       other amounts (if any) as may be payable, all subject to and in
       accordance with the Conditions and the provisions of the Second Issuer
       Trust Deed.

2.     EXCHANGE FOR DEFINITIVE SECOND ISSUER NOTES AND PURCHASES

       This Global Second Issuer Note will be exchangeable (free of charge to
       the holder) for Definitive Second Issuer Notes only if (i) The Depositary
       Trust Company ("DTC") has notified the Second Issuer that it is at any
       time unwilling or unable to continue as holder of this Global Second
       Issuer Note or is at any time unwilling or unable to continue as, or
       ceases to be, a clearing agency under the United States Securities
       Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and a successor to
       DTC registered as a clearing agency under the Exchange Act is not able to
       be appointed by the Second Issuer within 90 days of such notification, or
       (ii) as a result of any amendment to, or change in, the laws or
       regulations of the United Kingdom (or of any political subdivision
       thereof), or of any authority therein or thereof having power to tax, or
       in the interpretation or administration by a revenue authority or a court
       or administration of such laws or regulations which becomes effective on
       or after the Second Issuer Closing Date, the Second Issuer or any Paying
       Agent is or will be required to make any deduction or withholding from
       any payment in respect of the Second Issuer Notes which would not be
       required were the relevant Second Issuer Notes in definitive registered
       form. Thereupon the holder of this Global Second Issuer Note (acting on
       the instructions of (a) holder(s) of (a) Book-Entry Interest(s) (as
       defined in SECTION 3 hereof)) may give notice to the Second Issuer, and
       the Second Issuer may give notice to the Note Trustee and the
       Noteholders, of its intention to exchange this Global Second Issuer Note
       for Definitive Second Issuer Notes on or after the Exchange Date (as
       defined below).

       On or after the Exchange Date, the holder of this Global Second Issuer
       Note shall surrender this Global Second Issuer Note to or to the order of
       the Registrar. In exchange for this Global Second Issuer Note the Second
       Issuer will deliver, or procure the delivery of, Definitive Second Issuer
       Notes in registered form in denominations of US$1,000 or US$10,000 each,
       or any integral multiple thereof, or in such other denominations as the
       Note Trustee shall determine and notify to the relevant Noteholders, in
       exchange for the whole of this Global Second Issuer Note.

       "EXCHANGE DATE" means a day specified in the notice requiring exchange
       falling not more than 60 days after that on which such notice is given
       and on which banks are open for business in the city in which the
       specified office of the Registrar is located and in the city in which the
       relevant clearing system is located.

       Upon the cancellation of a part of this Global Second Issuer Note in
       accordance with the Second Issuer Trust Deed, the Conditions and the
       Second Issuer Paying and Agent Bank Agreement, the portion of the
       principal amount hereof so exchanged or so purchased and cancelled shall
       be endorsed by or on behalf of the Registrar on behalf of the Second
       Issuer on Part II of the Schedule hereto, whereupon the principal amount
       hereof shall be increased or, as the case may be, reduced for all
       purposes by the amount so exchanged or so purchased and cancelled and
       endorsed. Upon the exchange of the whole of this Global Second Issuer
       Note for Definitive Second Issuer Notes, this Global Second Issuer Note
       shall be surrendered to or to the order of the Registrar and cancelled
       and, if the holder of this Global Second Issuer Note requests, returned
       to it together with any relevant Definitive Second Issuer Notes.
-------------------------------------------------------------------------------
<PAGE>

                                       121
-------------------------------------------------------------------------------

3.     PAYMENTS

       Until the entire principal amount of this Global Second Issuer Note has
       been extinguished, this Global Second Issuer Note shall be entitled to
       the benefit of and be bound by the Conditions, the Second Issuer Trust
       Deed and the Second Issuer Deed of Charge. Payments of principal and
       interest in respect of Second Issuer Notes represented by this Global
       Second Issuer Note will be made in accordance with the Conditions. Upon
       any payment of principal or interest on this Global Second Issuer Note
       the amount so paid shall be endorsed by or on behalf of the Registrar on
       behalf of the Second Issuer on Part I of the Schedule hereto.

       Upon any payment of principal and endorsement of such payment on Part I
       of the Schedule hereto, the principal amount of this Global Second Issuer
       Note shall be reduced for all purposes by the principal amount so paid
       and endorsed.

       All payments of any amounts payable and paid to the registered holder of
       this Global Second Issuer Note shall be valid and, to the extent of the
       sums so paid, effectual to satisfy and discharge the liability for the
       monies payable hereon.

4.     DTC

       References herein to DTC shall be deemed to include references to any
       other clearing system approved by the Note Trustee.

5.     AUTHENTICATION

       This Global Second Issuer Note shall not be or become valid or obligatory
       for any purpose unless and until authenticated by or on behalf of the
       Registrar.

6.     GOVERNING LAW

       This Global Second Issuer Note is governed by, and shall be construed in
       accordance with, the laws of England.

IN WITNESS WHEREOF the Second Issuer has caused this Global Second Issuer Note
to be signed manually or in facsimile by a person duly authorised on its behalf.

PERMANENT FINANCING (NO. 2) PLC

By:  _____________________________________
(Duly authorised)

Issued in London, England on [6th March], 2003.
-------------------------------------------------------------------------------
<PAGE>

                                       122
-------------------------------------------------------------------------------

CERTIFICATE OF AUTHENTICATION

This Global Second Issuer Note is duly authenticated without recourse, warranty
or liability.

____________________________________________

Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

-------------------------------------------------------------------------------
<PAGE>

                                       123
-------------------------------------------------------------------------------

                                  THE SCHEDULE

                                     PART I

                       PAYMENTS OF PRINCIPAL AND INTEREST

The following payments on this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>
DATE MADE            INTEREST PAID         PRINCIPAL PAID        REMAINING PRINCIPAL     NOTATION MADE ON
                                                                 AMOUNT OF THIS GLOBAL   BEHALF OF THE SECOND
                                                                 SECOND ISSUER NOTE      ISSUER
                                                                 FOLLOWING SUCH PAYMENT

                          US$                    US$                   US$
<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>

-------------------------------------------------------------------------------
<PAGE>

                                      124
-------------------------------------------------------------------------------

                                     PART II

                                   EXCHANGES,
                           PURCHASES AND CANCELLATIONS

The following exchanges for Definitive Second Issuer Notes and purchases and
cancellations of a part of this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>
DATE MADE            PART OF PRINCIPAL     PART OF PRINCIPAL      AGGREGATE PRINCIPAL    NOTATION MADE ON
                     AMOUNT EXCHANGED FOR  AMOUNT PURCHASED AND   AMOUNT FOLLOWING       BEHALF OF THE SECOND
                     DEFINITIVE SECOND     CANCELLED              SUCH EXCHANGE OR       ISSUER
                     ISSUER NOTES                                 PURCHASE AND
                                                                  CANCELLATION

                          US$                    US$                   US$
<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>

-------------------------------------------------------------------------------
<PAGE>

                                       125
-------------------------------------------------------------------------------

                                     PART J
                                       (3)

                   SERIES 4 CLASS A GLOBAL SECOND ISSUER NOTE

                                   NOTE NO. 3

                         PERMANENT FINANCING (NO. 2) PLC

 (Incorporated with limited liability in England with registered number 4623188)

                   SERIES 4 CLASS A GLOBAL SECOND ISSUER NOTE
                               representing up to

           US$250,000,000 SERIES 4 CLASS A ASSET BACKED FLOATING RATE
                    SECOND ISSUER NOTES DUE [DECEMBER 2009]

      (Initial aggregate principal amount of Series 4 Class A Global Notes:
                              US$[1,250,000,000])

This Series 4 Class A Global Second Issuer Note is issued without principal or
interest coupons in respect of a duly authorised issue of Series 4 Class A
Second Issuer Notes of PERMANENT FINANCING (NO. 2) PLC (the "SECOND ISSUER"),
designated as specified in the title hereof (the "SECOND ISSUER NOTES"), limited
to the aggregate principal amount of up to two hundred and fifty million US
dollars (US$250,000,000) and constituted by a Second Issuer Trust Deed dated
[6th March], 2003 (the "SECOND ISSUER TRUST DEED") between the Second Issuer and
U.S. BANK NATIONAL ASSOCIATION, as trustee (the trustee for the time being
thereof being herein called the "NOTE TRUSTEE"). References herein to the
Conditions (or to any particular numbered Condition) shall be to the Conditions
(or that particular one of them) set out in SCHEDULE 3 to the Second Issuer
Trust Deed. Terms not defined herein have the meanings ascribed to them in the
Amended and Restated Master Definitions and Construction Schedule and the Second
Issuer Master Definitions and Construction Schedule, both dated [5th March],
2003 and signed for the purposes of identification by Allen & Overy and Sidley
Austin Brown & Wood, and the Second Issuer Trust Deed. The aggregate principal
amount from time to time of this Global Second Issuer Note shall be that amount
not exceeding US$250,000,000 as shall be shown by the latest entry duly made in
the Schedule hereto.

This is to certify that:

         Cede & Co. as nominee on behalf of The Depositary Trust Company

is/are the duly registered holder(s) of one of the Series 4 Class A Global
Second Issuer Notes. This Global Second Issuer Note is evidence of entitlement
only. Title to the Global Second Issuer Notes passes only on due registration in
the Register and only the registered holder is entitled to payment in respect of
this Global Second Issuer Note.

1.     PROMISE TO PAY

       Subject as provided in this Global Second Issuer Note the Second Issuer
       promises to pay to the registered holder hereof the principal amount of
       this Global Second Issuer Note (being at the date hereof to two hundred
       and fifty million US dollars (US$250,000,000) on the Interest Payment
       Date falling in [December 2009] (or on such earlier date as the said
       principal amount may become repayable in accordance with the Conditions
       or the Second Issuer Trust

-------------------------------------------------------------------------------
<PAGE>

                                       126
-------------------------------------------------------------------------------

       Deed) and to pay interest quarterly in arrear on each Interest Payment
       Date on the principal amount from time to time of this Global Second
       Issuer Note at the rates determined in accordance with the Conditions
       together with such other amounts (if any) as may be payable, all subject
       to and in accordance with the Conditions and the provisions of the Second
       Issuer Trust Deed.

2.     EXCHANGE FOR DEFINITIVE SECOND ISSUER NOTES AND PURCHASES

       This Global Second Issuer Note will be exchangeable (free of charge to
       the holder) for Definitive Second Issuer Notes only if (i) The Depositary
       Trust Company ("DTC") has notified the Second Issuer that it is at any
       time unwilling or unable to continue as holder of this Global Second
       Issuer Note or is at any time unwilling or unable to continue as, or
       ceases to be, a clearing agency under the United States Securities
       Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and a successor to
       DTC registered as a clearing agency under the Exchange Act is not able to
       be appointed by the Second Issuer within 90 days of such notification, or
       (ii) as a result of any amendment to, or change in, the laws or
       regulations of the United Kingdom (or of any political subdivision
       thereof), or of any authority therein or thereof having power to tax, or
       in the interpretation or administration by a revenue authority or a court
       or administration of such laws or regulations which becomes effective on
       or after the Second Issuer Closing Date, the Second Issuer or any Paying
       Agent is or will be required to make any deduction or withholding from
       any payment in respect of the Second Issuer Notes which would not be
       required were the relevant Second Issuer Notes in definitive registered
       form. Thereupon the holder of this Global Second Issuer Note (acting on
       the instructions of (a) holder(s) of (a) Book-Entry Interest(s) (as
       defined in SECTION 3 hereof)) may give notice to the Second Issuer, and
       the Second Issuer may give notice to the Note Trustee and the
       Noteholders, of its intention to exchange this Global Second Issuer Note
       for Definitive Second Issuer Notes on or after the Exchange Date (as
       defined below).

       On or after the Exchange Date, the holder of this Global Second Issuer
       Note shall surrender this Global Second Issuer Note to or to the order of
       the Registrar. In exchange for this Global Second Issuer Note the Second
       Issuer will deliver, or procure the delivery of, Definitive Second Issuer
       Notes in registered form in denominations of US$1,000 or US$10,000 each,
       or any integral multiple thereof, or in such other denominations as the
       Note Trustee shall determine and notify to the relevant Noteholders, in
       exchange for the whole of this Global Second Issuer Note.

       "EXCHANGE DATE" means a day specified in the notice requiring exchange
       falling not more than 60 days after that on which such notice is given
       and on which banks are open for business in the city in which the
       specified office of the Registrar is located and in the city in which the
       relevant clearing system is located.

       Upon the cancellation of a part of this Global Second Issuer Note in
       accordance with the Second Issuer Trust Deed, the Conditions and the
       Second Issuer Paying and Agent Bank Agreement, the portion of the
       principal amount hereof so exchanged or so purchased and cancelled shall
       be endorsed by or on behalf of the Registrar on behalf of the Second
       Issuer on Part II of the Schedule hereto, whereupon the principal amount
       hereof shall be increased or, as the case may be, reduced for all
       purposes by the amount so exchanged or so purchased and cancelled and
       endorsed. Upon the exchange of the whole of this Global Second Issuer
       Note for Definitive Second Issuer Notes, this Global Second Issuer Note
       shall be surrendered to or to the order of the Registrar and cancelled
       and, if the holder of this Global Second Issuer Note requests, returned
       to it together with any relevant Definitive Second Issuer Notes.
-------------------------------------------------------------------------------
<PAGE>

                                       127
-------------------------------------------------------------------------------

3.     PAYMENTS

       Until the entire principal amount of this Global Second Issuer Note has
       been extinguished, this Global Second Issuer Note shall be entitled to
       the benefit of and be bound by the Conditions, the Second Issuer Trust
       Deed and the Second Issuer Deed of Charge. Payments of principal and
       interest in respect of Second Issuer Notes represented by this Global
       Second Issuer Note will be made in accordance with the Conditions. Upon
       any payment of principal or interest on this Global Second Issuer Note
       the amount so paid shall be endorsed by or on behalf of the Registrar on
       behalf of the Second Issuer on Part I of the Schedule hereto.

       Upon any payment of principal and endorsement of such payment on Part I
       of the Schedule hereto, the principal amount of this Global Second Issuer
       Note shall be reduced for all purposes by the principal amount so paid
       and endorsed.

       All payments of any amounts payable and paid to the registered holder of
       this Global Second Issuer Note shall be valid and, to the extent of the
       sums so paid, effectual to satisfy and discharge the liability for the
       monies payable hereon.

4.     DTC

       References herein to DTC shall be deemed to include references to any
       other clearing system approved by the Note Trustee.

5.     AUTHENTICATION

       This Global Second Issuer Note shall not be or become valid or obligatory
       for any purpose unless and until authenticated by or on behalf of the
       Registrar.

6.     GOVERNING LAW

       This Global Second Issuer Note is governed by, and shall be construed in
       accordance with, the laws of England.

IN WITNESS WHEREOF the Second Issuer has caused this Global Second Issuer Note
to be signed manually or in facsimile by a person duly authorised on its behalf.

PERMANENT FINANCING (NO. 2) PLC

By:  _____________________________________
(Duly authorised)

Issued in London, England on [6th March ], 2003.
-------------------------------------------------------------------------------
<PAGE>

                                       128
-------------------------------------------------------------------------------

CERTIFICATE OF AUTHENTICATION

This Global Second Issuer Note is duly authenticated without recourse, warranty
or liability.

______________________________________________

Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

-------------------------------------------------------------------------------
<PAGE>

                                       129
-------------------------------------------------------------------------------

                                  THE SCHEDULE

                                     PART I

                       PAYMENTS OF PRINCIPAL AND INTEREST

The following payments on this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>
DATE MADE            INTEREST PAID         PRINCIPAL PAID        REMAINING PRINCIPAL     NOTATION MADE ON
                                                                 AMOUNT OF THIS GLOBAL   BEHALF OF THE SECOND
                                                                 SECOND ISSUER NOTE      ISSUER
                                                                 FOLLOWING SUCH PAYMENT

                          US$                    US$                   US$
<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>

-------------------------------------------------------------------------------
<PAGE>

                                       130
-------------------------------------------------------------------------------

                                     PART II

                                   EXCHANGES,
                           PURCHASES AND CANCELLATIONS

The following exchanges for Definitive Second Issuer Notes and purchases and
cancellations of a part of this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>
DATE MADE            PART OF PRINCIPAL     PART OF PRINCIPAL      AGGREGATE PRINCIPAL    NOTATION MADE ON
                     AMOUNT EXCHANGED FOR  AMOUNT PURCHASED AND   AMOUNT FOLLOWING       BEHALF OF THE SECOND
                     DEFINITIVE SECOND     CANCELLED              SUCH EXCHANGE OR       ISSUER
                     ISSUER NOTES                                 PURCHASE AND
                                                                  CANCELLATION

                          US$                    US$                   US$
<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>

-------------------------------------------------------------------------------
<PAGE>

                                       131
-------------------------------------------------------------------------------

                                     PART K

                   SERIES 4 CLASS B GLOBAL SECOND ISSUER NOTE

THIS SECOND ISSUER NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND, AS A MATTER OF U.S. LAW,
PRIOR TO THE DATE THAT IS 40 DAYS AFTER THE LATER OF THE CLOSING DATE AND THE
COMMENCEMENT OF THE OFFERING OF THE SECOND ISSUER NOTES MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A U.S. PERSON
(AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) EXCEPT PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES.

                         PERMANENT FINANCING (NO. 2) PLC

 (Incorporated with limited liability in England with registered number 4623188)

                   SERIES 4 CLASS B GLOBAL SECOND ISSUER NOTE
                               representing up to

  (EURO)[56,500,000] SERIES 4 CLASS B ASSET BACKED FLOATING RATE SECOND ISSUER
                             NOTES DUE [JUNE 2042]

This Series 4 Class B Global Second Issuer Note is issued without principal or
interest coupons in respect of a duly authorised issue of Series 4 Class B
Second Issuer Notes of PERMANENT FINANCING (NO. 2) PLC (the "SECOND ISSUER"),
designated as specified in the title hereof (the "SECOND ISSUER NOTES"), limited
to the aggregate principal amount of up to [forty] million euro
((EURO)[56,500,000]) and constituted by a Second Issuer Trust Deed dated [6th
March], 2003 (the "SECOND ISSUER TRUST DEED") between the Second Issuer and U.S.
BANK NATIONAL ASSOCIATION, as trustee (the trustee for the time being thereof
being herein called the "Note TRUSTEE"). References herein to the Conditions (or
to any particular numbered Condition) shall be to the Conditions (or that
particular one of them) set out in SCHEDULE 3 to the Second Issuer Trust Deed.
Terms not defined herein have the meanings ascribed to them in the Amended and
Restated Master Definitions and Construction Schedule and the Second Issuer
Master Definitions and Construction Schedule, both dated [5th March], 2003 and
signed for the purposes of identification by Allen & Overy and Sidley Austin
Brown & Wood, and the Second Issuer Trust Deed. The aggregate principal amount
from time to time of this Global Second Issuer Note shall be that amount not
exceeding (EURO)[56,500,000] as shall be shown by the latest entry duly made in
the Schedule hereto.

This is to certify that:

     Citivic Nominees Limited as nominee on behalf of the Common Depositary

is/are the duly registered holder(s) of one Series 4 Class B Global Second
Issuer Notes . This Global Second Issuer Note is evidence of entitlement only.
Title to the Global Second Issuer Notes passes only on due registration in the
Register and only the registered holder is entitled to payment in respect of
this Global Second Issuer Note.
-------------------------------------------------------------------------------
<PAGE>

                                       132
-------------------------------------------------------------------------------

1.     PROMISE TO PAY

       Subject as provided in this Global Second Issuer Note the Second Issuer
       promises to pay to the registered holder hereof the principal amount of
       this Global Second Issuer Note (being at the date hereof [forty] million
       euro ((EURO)[56,500,000]) on the Interest Payment Date falling in [June
       2042] (or on such earlier date as the said principal amount may become
       repayable in accordance with the Conditions or the Second Issuer Trust
       Deed) and to pay interest quarterly in arrear on each Interest Payment
       Date on the principal amount from time to time of this Global Second
       Issuer Note at the rates determined in accordance with Conditions
       together with such other amounts (if any) as may be payable, all subject
       to and in accordance with the Conditions and the provisions of the Second
       Issuer Trust Deed.

2.     EXCHANGE FOR DEFINITIVE SECOND ISSUER NOTES AND PURCHASES

       This Global Second Issuer Note will be exchangeable (free of charge to
       the holder) for Definitive Second Issuer Notes only if (i) both Euroclear
       Bank S.A./N.V., as operator of the Euroclear System ("EUROCLEAR") and
       Clearstream Banking, societe anonyme ("CLEARSTREAM, LUXEMBOURG") are
       closed for business for a continuous period of 14 days (other than by
       reason of holiday, statutory or otherwise) or announce an intention
       permanently to cease business or do so and no alternative clearing system
       satisfactory to the Note Trustee is then available, or (ii) as a result
       of any amendment to, or change in, the laws or regulations of the United
       Kingdom (or of any political subdivision thereof), or of any authority
       therein or thereof having power to tax, or in the interpretation or
       administration by a revenue authority or a court or administration of
       such laws or regulations which becomes effective on or after the Second
       Issuer Closing Date, the Second Issuer or any Paying Agent is or will be
       required to make any deduction or withholding from any payment in respect
       of the Second Issuer Notes which would not be required were the relevant
       Second Issuer Notes in definitive registered form. Thereupon the holder
       of this Global Second Issuer Note (acting on the instructions of (a)
       holder(s) of (a) Book-Entry Interest(s) (as defined in SECTION 3 hereof))
       may give notice to the Second Issuer, and the Second Issuer may give
       notice to the Note Trustee and the Noteholders, of its intention to
       exchange this Global Second Issuer Note for Definitive Second Issuer
       Notes on or after the Exchange Date (as defined below).

       On or after the Exchange Date, the holder of this Global Second Issuer
       Note shall surrender this Global Second Issuer Note to or to the order of
       the Registrar. In exchange for this Global Second Issuer Note the Second
       Issuer will deliver, or procure the delivery of, Definitive Second Issuer
       Notes in registered form in denominations of (EURO)500,000 each, or any
       integral multiple thereof, or in such other denominations as the Note
       Trustee shall determine and notify to the relevant Noteholders, in
       exchange for the whole of this Global Second Issuer Note.

       "EXCHANGE DATE" means a day specified in the notice requiring exchange
       falling not more than 60 days after that on which such notice is given
       and on which banks are open for business in the city in which the
       specified office of the Registrar is located and in the city in which the
       relevant clearing system is located.

       Upon the cancellation of a part of this Global Second Issuer Note in
       accordance with the Second Issuer Trust Deed, the Conditions and the
       Second Issuer Paying Agent and Agent Bank Agreement, the portion of the
       principal amount hereof so exchanged or so purchased and cancelled shall
       be endorsed by or on behalf of the Registrar on behalf of the Second
       Issuer on Part II of the Schedule hereto, whereupon the principal amount
       hereof shall be

-------------------------------------------------------------------------------
<PAGE>

                                       133
-------------------------------------------------------------------------------

       increased or, as the case may be, reduced for all purposes by the amount
       so exchanged or so purchased and cancelled and endorsed. Upon the
       exchange of the whole of this Global Second Issuer Note for Definitive
       Second Issuer Notes this Global Second Issuer Note, shall be surrendered
       to or to the order of the Registrar and cancelled and, if the holder of
       this Global Second Issuer Note requests, returned to it together with any
       relevant Definitive Second Issuer Notes.

3.     PAYMENTS

       Until the entire principal amount of this Global Second Issuer Note has
       been extinguished, this Global Second Issuer Note shall be entitled to
       the benefit of and be bound by the Conditions, the Second Issuer Trust
       Deed and the Second Issuer Deed of Charge. Payments of principal and
       interest in respect of Second Issuer Notes represented by this Global
       Second Issuer Note will be made in accordance with the Conditions. Upon
       any payment of principal or interest on this Global Second Issuer Note
       the amount so paid shall be endorsed by or on behalf of the Registrar on
       behalf of the Second Issuer on Part I of the Schedule hereto.

       Upon any payment of principal and endorsement of such payment on Part I
       of the Schedule hereto, the principal amount of this Global Second Issuer
       Note shall be reduced for all purposes by the principal amount so paid
       and endorsed.

       All payments of any amounts payable and paid to the registered holder of
       this Global Second Issuer Note shall be valid and, to the extent of the
       sums so paid, effectual to satisfy and discharge the liability for the
       monies payable hereon.

4.     EUROCLEAR AND CLEARSTREAM, LUXEMBOURG

       References herein to Euroclear and/or Clearstream, Luxembourg shall be
       deemed to include references to any other clearing system approved by the
       Note Trustee.

5.     AUTHENTICATION

       This Global Second Issuer Note shall not be or become valid or obligatory
       for any purpose unless and until authenticated by or on behalf of the
       Registrar.

6.     GOVERNING LAW

       This Global Second Issuer Note is governed by, and shall be construed in
       accordance with, the laws of England.
-------------------------------------------------------------------------------
<PAGE>

                                       134
-------------------------------------------------------------------------------

IN WITNESS WHEREOF the Second Issuer has caused this Global Second Issuer Note
to be signed manually or in facsimile by a person duly authorised on its behalf.

PERMANENT FINANCING (NO. 2) PLC

By: ______________________________________
(Duly authorised)

Issued in London, England on [6th March], 2003.

-------------------------------------------------------------------------------
<PAGE>

                                       135
-------------------------------------------------------------------------------

CERTIFICATE OF AUTHENTICATION

This Global Second Issuer Note is duly authenticated without recourse, warranty
or liability.

_____________________________________________
Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

-------------------------------------------------------------------------------
<PAGE>

                                       136
-------------------------------------------------------------------------------

                                  THE SCHEDULE

                                     PART I

                       PAYMENTS OF PRINCIPAL AND INTEREST

The following payments on this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>
DATE MADE            INTEREST PAID         PRINCIPAL PAID        REMAINING PRINCIPAL     NOTATION MADE ON
                                                                 AMOUNT OF THIS GLOBAL   BEHALF OF THE SECOND
                                                                 SECOND ISSUER NOTE      ISSUER
                                                                 FOLLOWING SUCH PAYMENT

                          (EURO)              (EURO)                  (EURO)
<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>
-------------------------------------------------------------------------------
<PAGE>

                                       137
-------------------------------------------------------------------------------

                                     PART II

                                   EXCHANGES,
                           PURCHASES AND CANCELLATIONS

The following exchanges for Definitive Second Issuer Notes and purchases and
cancellations of a part of this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>
DATE MADE            PART OF PRINCIPAL     PART OF PRINCIPAL      AGGREGATE PRINCIPAL    NOTATION MADE ON
                     AMOUNT EXCHANGED FOR  AMOUNT PURCHASED AND   AMOUNT FOLLOWING       BEHALF OF THE SECOND
                     DEFINITIVE SECOND     CANCELLED              SUCH EXCHANGE OR       ISSUER
                     ISSUER NOTES                                 PURCHASE AND
                                                                  CANCELLATION

                          (EURO)              (EURO)                  (EURO)
<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>

-------------------------------------------------------------------------------
<PAGE>

                                       138
-------------------------------------------------------------------------------

                                     PART L

                   SERIES 4 CLASS C GLOBAL SECOND ISSUER NOTE

THIS SECOND ISSUER NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND, AS A MATTER OF U.S. LAW,
PRIOR TO THE DATE THAT IS 40 DAYS AFTER THE LATER OF THE CLOSING DATE AND THE
COMMENCEMENT OF THE OFFERING OF THE SECOND ISSUER NOTES MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A U.S. PERSON
(AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) EXCEPT PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES.

                         PERMANENT FINANCING (NO. 2) PLC

 (Incorporated with limited liability in England with registered number 4623188)

                   SERIES 4 CLASS C GLOBAL SECOND ISSUER NOTE
                               representing up to

  (EURO)[56,500,000] SERIES 4 CLASS C ASSET BACKED FLOATING RATE SECOND ISSUER
                             NOTES DUE [JUNE 2042]

This Series 4 Class C Global Second Issuer Note is issued without principal or
interest coupons in respect of a duly authorised issue of Series 4 Class C
Second Issuer Notes of PERMANENT FINANCING (NO. 2) PLC (the "SECOND ISSUER"),
designated as specified in the title hereof (the "SECOND ISSUER NOTES"), limited
to the aggregate principal amount of up to [forty] million euro
((EURO)[56,500,000]) and constituted by a Second Issuer Trust Deed dated [6th
March], 2003 (the "SECOND ISSUER TRUST DEED") between the Second Issuer and U.S.
BANK NATIONAL ASSOCIATION, as trustee (the trustee for the time being thereof
being herein called the "Note TRUSTEE"). References herein to the Conditions (or
to any particular numbered Condition) shall be to the Conditions (or that
particular one of them) set out in SCHEDULE 3 to the Second Issuer Trust Deed.
Terms not defined herein have the meanings ascribed to them in the Amended and
Restated Master Definitions and Construction Schedule and the Second Issuer
Master Definitions and Construction Schedule, both dated [5th March], 2003 and
signed for the purposes of identification by Allen & Overy and Sidley Austin
Brown & Wood, and the Second Issuer Trust Deed. The aggregate principal amount
from time to time of this Global Second Issuer Note shall be that amount not
exceeding (EURO)[56,500,000] as shall be shown by the latest entry duly made in
the Schedule hereto.

This is to certify that:

     Citivic Nominees Limited as nominee on behalf of the Common Depositary

is/are the duly registered holder(s) of one of the Series 4 Class C Global
Second Issuer Notes. This Global Second Issuer Note is evidence of entitlement
only. Title to the Global Second Issuer Notes passes only on due registration in
the Register and only the registered holder is entitled to payment in respect of
this Global Second Issuer Note.
-------------------------------------------------------------------------------
<PAGE>

                                       139
-------------------------------------------------------------------------------

1.     PROMISE TO PAY

       Subject as provided in this Global Second Issuer Note the Second Issuer
       promises to pay to the registered holder hereof the principal amount of
       this Global Second Issuer Note (being at the date hereof [forty] million
       euro ((EURO)[56,500,000]) on the Interest Payment Date falling in [June
       2042] (or on such earlier date as the said principal amount may become
       repayable in accordance with the Conditions or the Second Issuer Trust
       Deed) and to pay interest quarterly in arrear on each Interest Payment
       Date on the principal amount from time to time of this Global Second
       Issuer Note at the rates determined in accordance with Conditions
       together with such other amounts (if any) as may be payable, all subject
       to and in accordance with the Conditions and the provisions of the Second
       Issuer Trust Deed.

2.     EXCHANGE FOR DEFINITIVE SECOND ISSUER NOTES AND PURCHASES

       This Global Second Issuer Note will be exchangeable (free of charge to
       the holder) for Definitive Second Issuer Notes only if (i) both Euroclear
       Bank S.A./N.V., as operator of the Euroclear System ("EUROCLEAR") and
       Clearstream Banking, societe anonyme ("CLEARSTREAM, LUXEMBOURG") are
       closed for business for a continuous period of 14 days (other than by
       reason of holiday, statutory or otherwise) or announce an intention
       permanently to cease business or do so and no alternative clearing system
       satisfactory to the Note Trustee is then available, or (ii) as a result
       of any amendment to, or change in, the laws or regulations of the United
       Kingdom (or of any political subdivision thereof), or of any authority
       therein or thereof having power to tax, or in the interpretation or
       administration by a revenue authority or a court or administration of
       such laws or regulations which becomes effective on or after the Second
       Issuer Closing Date, the Second Issuer or any Paying Agent is or will be
       required to make any deduction or withholding from any payment in respect
       of the Second Issuer Notes which would not be required were the relevant
       Second Issuer Notes in definitive registered form. Thereupon the holder
       of this Global Second Issuer Note (acting on the instructions of (a)
       holder(s) of (a) Book-Entry Interest(s) (as defined in SECTION 3 hereof))
       may give notice to the Second Issuer, and the Second Issuer may give
       notice to the Note Trustee and the Noteholders, of its intention to
       exchange this Global Second Issuer Note for Definitive Second Issuer
       Notes on or after the Exchange Date (as defined below).

       On or after the Exchange Date, the holder of this Global Second Issuer
       Note shall surrender this Global Second Issuer Note to or to the order of
       the Registrar. In exchange for this Global Second Issuer Note the Second
       Issuer will deliver, or procure the delivery of, Definitive Second Issuer
       Notes in registered form in denominations of (EURO)500,000 each, or any
       integral multiple thereof, or in such other denominations as the Note
       Trustee shall determine and notify to the relevant Noteholders, in
       exchange for the whole of this Global Second Issuer Note.

       "EXCHANGE DATE" means a day specified in the notice requiring exchange
       falling not more than 60 days after that on which such notice is given
       and on which banks are open for business in the city in which the
       specified office of the Registrar is located and in the city in which the
       relevant clearing system is located.

       Upon the cancellation of a part of this Global Second Issuer Note in
       accordance with the Second Issuer Trust Deed, the Conditions and the
       Second Issuer Paying Agent and Agent Bank Agreement, the portion of the
       principal amount hereof so exchanged or so purchased and cancelled shall
       be endorsed by or on behalf of the Registrar on behalf of the Second
       Issuer on Part II of the Schedule hereto, whereupon the principal amount
       hereof shall be

-------------------------------------------------------------------------------
<PAGE>

                                       140
-------------------------------------------------------------------------------

       increased or, as the case may be, reduced for all purposes by the amount
       so exchanged or so purchased and cancelled and endorsed. Upon the
       exchange of the whole of this Global Second Issuer Note for Definitive
       Second Issuer Notes this Global Second Issuer Note, shall be surrendered
       to or to the order of the Registrar and cancelled and, if the holder of
       this Global Second Issuer Note requests, returned to it together with any
       relevant Definitive Second Issuer Notes.

3.     PAYMENTS

       Until the entire principal amount of this Global Second Issuer Note has
       been extinguished, this Global Second Issuer Note shall be entitled to
       the benefit of and be bound by the Conditions, the Second Issuer Trust
       Deed and the Second Issuer Deed of Charge. Payments of principal and
       interest in respect of Second Issuer Notes represented by this Global
       Second Issuer Note will be made in accordance with the Conditions. Upon
       any payment of principal or interest on this Global Second Issuer Note
       the amount so paid shall be endorsed by or on behalf of the Registrar on
       behalf of the Second Issuer on Part I of the Schedule hereto.

       Upon any payment of principal and endorsement of such payment on Part I
       of the Schedule hereto, the principal amount of this Global Second Issuer
       Note shall be reduced for all purposes by the principal amount so paid
       and endorsed.

       All payments of any amounts payable and paid to the registered holder of
       this Global Second Issuer Note shall be valid and, to the extent of the
       sums so paid, effectual to satisfy and discharge the liability for the
       monies payable hereon.

4.     EUROCLEAR AND CLEARSTREAM, LUXEMBOURG

       References herein to Euroclear and/or Clearstream, Luxembourg shall be
       deemed to include references to any other clearing system approved by the
       Note Trustee.

5.     AUTHENTICATION

       This Global Second Issuer Note shall not be or become valid or obligatory
       for any purpose unless and until authenticated by or on behalf of the
       Registrar.

6.     GOVERNING LAW

       This Global Second Issuer Note is governed by, and shall be construed in
       accordance with, the laws of England.
-------------------------------------------------------------------------------
<PAGE>

                                       141
-------------------------------------------------------------------------------

IN WITNESS WHEREOF the Second Issuer has caused this Global Second Issuer Note
to be signed manually or in facsimile by a person duly authorised on its behalf.

PERMANENT FINANCING (NO. 2) PLC

By: ______________________________________
(Duly authorised)

Issued in London, England on [6th March], 2003.

-------------------------------------------------------------------------------
<PAGE>

                                       142
-------------------------------------------------------------------------------

CERTIFICATE OF AUTHENTICATION

This Global Second Issuer Note is duly authenticated without recourse, warranty
or liability.

_____________________________________________
Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

-------------------------------------------------------------------------------
<PAGE>

                                      143
-------------------------------------------------------------------------------

                                  THE SCHEDULE

                                     PART I

                       PAYMENTS OF PRINCIPAL AND INTEREST

The following payments on this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>
DATE MADE            INTEREST PAID         PRINCIPAL PAID        REMAINING PRINCIPAL     NOTATION MADE ON
                                                                 AMOUNT OF THIS GLOBAL   BEHALF OF THE SECOND
                                                                 SECOND ISSUER NOTE      ISSUER
                                                                 FOLLOWING SUCH PAYMENT

                          (EURO)              (EURO)                  (EURO)
<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>
-------------------------------------------------------------------------------
<PAGE>

                                       144
-------------------------------------------------------------------------------

                                     PART II

                                   EXCHANGES,
                           PURCHASES AND CANCELLATIONS

The following exchanges for Definitive Second Issuer Notes and purchases and
cancellations of a part of this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>
DATE MADE            PART OF PRINCIPAL     PART OF PRINCIPAL      AGGREGATE PRINCIPAL    NOTATION MADE ON
                     AMOUNT EXCHANGED FOR  AMOUNT PURCHASED AND   AMOUNT FOLLOWING       BEHALF OF THE SECOND
                     DEFINITIVE SECOND     CANCELLED              SUCH EXCHANGE OR       ISSUER
                     ISSUER NOTES                                 PURCHASE AND
                                                                  CANCELLATION

                          (EURO)              (EURO)                  (EURO)
<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>

-------------------------------------------------------------------------------
<PAGE>

                                       145
-------------------------------------------------------------------------------

                                     PART M

                   SERIES 5 CLASS A GLOBAL SECOND ISSUER NOTE

THIS SECOND ISSUER NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND, AS A MATTER OF U.S. LAW,
PRIOR TO THE DATE THAT IS 40 DAYS AFTER THE LATER OF THE CLOSING DATE AND THE
COMMENCEMENT OF THE OFFERING OF THE SECOND ISSUER NOTES MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A U.S. PERSON
(AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) EXCEPT PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES.

      PERMANENT FINANCING (NO.2) PLC(Incorporated with limited liability in
                    England with registered number 4623188)

                   SERIES 5 CLASS A GLOBAL SECOND ISSUER NOTE
                               representing up to

    (POUND)[750,000,000] SERIES 5 CLASS A ASSET BACKED FLOATING RATE SECOND
                          ISSUER NOTES DUE [JUNE 2042]

This Series 5 Class A Global Second Issuer Note is issued without principal or
interest coupons in respect of a duly authorised issue of Series 5 Class A
Second Issuer Notes of PERMANENT FINANCING (NO. 2) PLC (the "SECOND ISSUER"),
designated as specified in the title hereof (the "SECOND ISSUER NOTES"), limited
to the aggregate principal amount of up to [one billion] pounds sterling
((pound)[750,000,000]) and constituted by a Second Issuer Trust Deed dated
[6th March], 2003 (the "SECOND ISSUER TRUST DEED") between the Second Issuer and
U.S. BANK NATIONAL ASSOCIATION, as trustee (the trustee for the time being
thereof being herein called the "NOTE TRUSTEE"). References herein to the
Conditions (or to any particular numbered Condition) shall be to the Conditions
(or that particular one of them) set out in SCHEDULE 3 to the Second Issuer
Trust Deed. Terms not defined herein have the meanings ascribed to them in the
Amended and Restated Master Definitions and Construction Schedule and the Second
Issuer Master Definitions and Construction Schedule, both dated [5th March],
2003 and signed for the purposes of identification by Allen & Overy and Sidley
Austin Brown & Wood, and the Second Issuer Trust Deed. The aggregate principal
amount from time to time of this Global Second Issuer Note shall be that amount
not exceeding (pound)[750,000,000] as shall be shown by the latest entry duly
made in the Schedule hereto.

This is to certify that:

     Citivic Nominees Limited as nominee on behalf of the Common Depositary

is/are the duly registered holder(s) of one of the Series 5 Class A Global
Second Issuer Notes. This Global Second Issuer Note is evidence of entitlement
only. Title to the Global Second Issuer Notes passes only on due registration in
the Register and only the registered holder is entitled to payment in respect of
this Global Second Issuer Note.
-------------------------------------------------------------------------------
<PAGE>

                                       146
-------------------------------------------------------------------------------

1.     PROMISE TO PAY

       Subject as provided in this Global Second Issuer Note the Second Issuer
       promises to pay to the registered holder hereof the principal amount of
       this Global Second Issuer Note (being at the date hereof [one billion]
       pounds sterling ((pound)[750,000,000]) on the Interest Payment Date
       falling in [June 2042] (or on such earlier date as the said principal
       amount may become repayable in accordance with the Conditions or the
       Second Issuer Trust Deed) and to pay interest quarterly in arrear on each
       Interest Payment Date on the principal amount from time to time of this
       Global Second Issuer Note at the rates determined in accordance with
       Conditions together with such other amounts (if any) as may be payable,
       all subject to and in accordance with the Conditions and the provisions
       of the Second Issuer Trust Deed.

2.     EXCHANGE FOR DEFINITIVE SECOND ISSUER NOTES AND PURCHASES

       This Global Second Issuer Note will be exchangeable (free of charge to
       the holder) for Definitive Second Issuer Notes only if (i) both Euroclear
       Bank S.A./N.V., as operator of the Euroclear System ("EUROCLEAR") and
       Clearstream Banking, societe anonyme ("CLEARSTREAM, LUXEMBOURG") are
       closed for business for a continuous period of 14 days (other than by
       reason of holiday, statutory or otherwise) or announce an intention
       permanently to cease business or do so and no alternative clearing system
       satisfactory to the Note Trustee is then available, or (ii) as a result
       of any amendment to, or change in, the laws or regulations of the United
       Kingdom (or of any political subdivision thereof), or of any authority
       therein or thereof having power to tax, or in the interpretation or
       administration by a revenue authority or a court or administration of
       such laws or regulations which becomes effective on or after the Second
       Issuer Closing Date, the Second Issuer or any Paying Agent is or will be
       required to make any deduction or withholding from any payment in respect
       of the Second Issuer Notes which would not be required were the relevant
       Second Issuer Notes in definitive registered form. Thereupon the holder
       of this Global Second Issuer Note (acting on the instructions of (a)
       holder(s) of (a) Book-Entry Interest(s) (as defined in SECTION 3 hereof))
       may give notice to the Second Issuer, and the Second Issuer may give
       notice to the Note Trustee and the Noteholders, of its intention to
       exchange this Global Second Issuer Note for Definitive Second Issuer
       Notes on or after the Exchange Date (as defined below).

       On or after the Exchange Date, the holder of this Global Second Issuer
       Note shall surrender this Global Second Issuer Note to or to the order of
       the Registrar. In exchange for this Global Second Issuer Note the Second
       Issuer will deliver, or procure the delivery of, Definitive Second Issuer
       Notes in registered form in denominations of (pound)1,000 or
       (pound)10,000 each, or any integral multiple thereof, or in such other
       denominations as the Note Trustee shall determine and notify to the
       relevant Noteholders, in exchange for the whole of this Global Second
       Issuer Note.

       "EXCHANGE DATE" means a day specified in the notice requiring exchange
       falling not more than 60 days after that on which such notice is given
       and on which banks are open for business in the city in which the
       specified office of the Registrar is located and in the city in which the
       relevant clearing system is located.

       Upon the cancellation of a part of this Global Second Issuer Note in
       accordance with the Second Issuer Trust Deed, the Conditions and the
       Second Issuer Paying Agent and Agent Bank Agreement, the portion of the
       principal amount hereof so exchanged or so purchased and cancelled shall
       be endorsed by or on behalf of the Registrar on behalf of the Second
       Issuer on Part II of the Schedule hereto, whereupon the principal amount
       hereof shall be

-------------------------------------------------------------------------------
<PAGE>

                                       147
-------------------------------------------------------------------------------

       increased or, as the case may be, reduced for all purposes by the amount
       so exchanged or so purchased and cancelled and endorsed. Upon the
       exchange of the whole of this Global Second Issuer Note for Definitive
       Second Issuer Notes this Global Second Issuer Note, shall be surrendered
       to or to the order of the Registrar and cancelled and, if the holder of
       this Global Second Issuer Note requests, returned to it together with any
       relevant Definitive Second Issuer Notes.

3.     PAYMENTS

       Until the entire principal amount of this Global Second Issuer Note has
       been extinguished, this Global Second Issuer Note shall be entitled to
       the benefit of and be bound by the Conditions, the Second Issuer Trust
       Deed and the Second Issuer Deed of Charge. Payments of principal and
       interest in respect of Second Issuer Notes represented by this Global
       Second Issuer Note will be made in accordance with the Conditions. Upon
       any payment of principal or interest on this Global Second Issuer Note
       the amount so paid shall be endorsed by or on behalf of the Registrar on
       behalf of the Second Issuer on Part I of the Schedule hereto.

       Upon any payment of principal and endorsement of such payment on Part I
       of the Schedule hereto, the principal amount of this Global Second Issuer
       Note shall be reduced for all purposes by the principal amount so paid
       and endorsed.

       All payments of any amounts payable and paid to the registered holder of
       this Global Second Issuer Note shall be valid and, to the extent of the
       sums so paid, effectual to satisfy and discharge the liability for the
       monies payable hereon.

4.     EUROCLEAR AND CLEARSTREAM, LUXEMBOURG

       References herein to Euroclear and/or Clearstream, Luxembourg shall be
       deemed to include references to any other clearing system approved by the
       Note Trustee.

5.     AUTHENTICATION

       This Global Second Issuer Note shall not be or become valid or obligatory
       for any purpose unless and until authenticated by or on behalf of the
       Registrar.

6.     GOVERNING LAW

       This Global Second Issuer Note is governed by, and shall be construed in
       accordance with, the laws of England.
-------------------------------------------------------------------------------
<PAGE>

                                       148
-------------------------------------------------------------------------------

IN WITNESS WHEREOF the Second Issuer has caused this Global Second Issuer Note
to be signed manually or in facsimile by a person duly authorised on its behalf.

PERMANENT FINANCING (NO. 2) PLC

By: ______________________________________

(Duly authorised)

Issued in London, England on [6th March], 2003.

CERTIFICATE OF AUTHENTICATION

This Global Second Issuer Note is duly authenticated without recourse, warranty
or liability.

______________________________________________
Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

-------------------------------------------------------------------------------
<PAGE>

                                       149
-------------------------------------------------------------------------------

                                  THE SCHEDULE

                                     PART I

                       PAYMENTS OF PRINCIPAL AND INTEREST

The following payments on this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>
DATE MADE            INTEREST PAID         PRINCIPAL PAID        REMAINING PRINCIPAL     NOTATION MADE ON
                                                                 AMOUNT OF THIS GLOBAL   BEHALF OF THE SECOND
                                                                 SECOND ISSUER NOTE      ISSUER
                                                                 FOLLOWING SUCH PAYMENT

                          (POUND)             (POUND)                (POUND)
<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>

-------------------------------------------------------------------------------
<PAGE>

                                       150
-------------------------------------------------------------------------------

                                     PART II

                                   EXCHANGES,
                           PURCHASES AND CANCELLATIONS

The following exchanges for Definitive Second Issuer Notes and purchases and
cancellations of a part of this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>
DATE MADE            PART OF PRINCIPAL     PART OF PRINCIPAL      AGGREGATE PRINCIPAL    NOTATION MADE ON
                     AMOUNT EXCHANGED FOR  AMOUNT PURCHASED AND   AMOUNT FOLLOWING       BEHALF OF THE SECOND
                     DEFINITIVE SECOND     CANCELLED              SUCH EXCHANGE OR       ISSUER
                     ISSUER NOTES                                 PURCHASE AND
                                                                  CANCELLATION

                          (POUND)             (POUND)                (POUND)
<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>

-------------------------------------------------------------------------------
<PAGE>

                                       151
-------------------------------------------------------------------------------

                                     PART N

                   SERIES 5 CLASS B GLOBAL SECOND ISSUER NOTE

THIS SECOND ISSUER NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND, AS A MATTER OF U.S. LAW,
PRIOR TO THE DATE THAT IS 40 DAYS AFTER THE LATER OF THE CLOSING DATE AND THE
COMMENCEMENT OF THE OFFERING OF THE SECOND ISSUER NOTES MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A U.S. PERSON
(AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) EXCEPT PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES.

                         PERMANENT FINANCING (NO. 2) PLC

 (Incorporated with limited liability in England with registered number 4623188)

                   SERIES 5 CLASS B GLOBAL SECOND ISSUER NOTE
                               representing up to

  (POUND)[26,000,000] SERIES 5 CLASS B ASSET BACKED FLOATING RATE SECOND ISSUER
                             NOTES DUE [JUNE 2042]

This Series 5 Class B Global Second Issuer Note is issued without principal or
interest coupons in respect of a duly authorised issue of Series 5 Class B
Second Issuer Notes of PERMANENT FINANCING (NO. 2) PLC (the "SECOND ISSUER"),
designated as specified in the title hereof (the "SECOND ISSUER NOTES"), limited
to the aggregate principal amount of up to [thirty five] million pounds sterling
((pound)[26,000,000]) and constituted by a Second Issuer Trust Deed dated [6th
March], 2003 (the "SECOND ISSUER TRUST DEED") between the Second Issuer and U.S.
BANK NATIONAL ASSOCIATION, as trustee (the trustee for the time being thereof
being herein called the "NOTE TRUSTEE"). References herein to the Conditions (or
to any particular numbered Condition) shall be to the Conditions (or that
particular one of them) set out in SCHEDULE 3 to the Second Issuer Trust Deed.
Terms not defined herein have the meanings ascribed to them in the Amended and
Restated Master Definitions and Construction Schedule and the Second Issuer
Master Definitions and Construction Schedule, both dated [5th March], 2003 and
signed for the purposes of identification by Allen & Overy and Sidley Austin
Brown & Wood, and the Second Issuer Trust Deed. The aggregate principal amount
from time to time of this Global Second Issuer Note shall be that amount not
exceeding (pound)[26,000,000] as shall be shown by the latest entry duly made in
the Schedule hereto.

This is to certify that:

     Citivic Nominees Limited as nominee on behalf of the Common Depositary

is/are the duly registered holder(s) of one Series 5 Class B Global Second
Issuer Notes . This Global Second Issuer Note is evidence of entitlement only.
Title to the Global Second Issuer Notes passes only on due registration in the
Register and only the registered holder is entitled to payment in respect of
this Global Second Issuer Note.
-------------------------------------------------------------------------------
<PAGE>

                                       152
-------------------------------------------------------------------------------

1.     PROMISE TO PAY

       Subject as provided in this Global Second Issuer Note the Second Issuer
       promises to pay to the registered holder hereof the principal amount of
       this Global Second Issuer Note (being at the date hereof [thirty five]
       million pounds sterling ((pound)[26,000,000])) on the Interest Payment
       Date falling in [June 2042] (or on such earlier date as the said
       principal amount may become repayable in accordance with the Conditions
       or the Second Issuer Trust Deed) and to pay interest quarterly in arrear
       on each Interest Payment Date on the principal amount from time to time
       of this Global Second Issuer Note at the rates determined in accordance
       with Conditions together with such other amounts (if any) as may be
       payable, all subject to and in accordance with the Conditions and the
       provisions of the Second Issuer Trust Deed.

2.     EXCHANGE FOR DEFINITIVE SECOND ISSUER NOTES AND PURCHASES

       This Global Second Issuer Note will be exchangeable (free of charge to
       the holder) for Definitive Second Issuer Notes only if (i) both Euroclear
       Bank S.A./N.V., as operator of the Euroclear System ("EUROCLEAR") and
       Clearstream Banking, societe anonyme ("CLEARSTREAM, LUXEMBOURG") are
       closed for business for a continuous period of 14 days (other than by
       reason of holiday, statutory or otherwise) or announce an intention
       permanently to cease business or do so and no alternative clearing system
       satisfactory to the Note Trustee is then available, or (ii) as a result
       of any amendment to, or change in, the laws or regulations of the United
       Kingdom (or of any political subdivision thereof), or of any authority
       therein or thereof having power to tax, or in the interpretation or
       administration by a revenue authority or a court or administration of
       such laws or regulations which becomes effective on or after the Second
       Issuer Closing Date, the Second Issuer or any Paying Agent is or will be
       required to make any deduction or withholding from any payment in respect
       of the Second Issuer Notes which would not be required were the relevant
       Second Issuer Notes in definitive registered form. Thereupon the holder
       of this Global Second Issuer Note (acting on the instructions of (a)
       holder(s) of (a) Book-Entry Interest(s) (as defined in SECTION 3 hereof))
       may give notice to the Second Issuer, and the Second Issuer may give
       notice to the Note Trustee and the Noteholders, of its intention to
       exchange this Global Second Issuer Note for Definitive Second Issuer
       Notes on or after the Exchange Date (as defined below).

       On or after the Exchange Date, the holder of this Global Second Issuer
       Note shall surrender this Global Second Issuer Note to or to the order of
       the Registrar. In exchange for this Global Second Issuer Note the Second
       Issuer will deliver, or procure the delivery of, Definitive Second Issuer
       Notes in registered form in denominations of (pound)1,000 or
       (pound)10,000 each, or any integral multiple thereof, or in such other
       denominations as the Note Trustee shall determine and notify to the
       relevant Noteholders, in exchange for the whole of this Global Second
       Issuer Note.

       "EXCHANGE DATE" means a day specified in the notice requiring exchange
       falling not more than 60 days after that on which such notice is given
       and on which banks are open for business in the city in which the
       specified office of the Registrar is located and in the city in which the
       relevant clearing system is located.

       Upon the cancellation of a part of this Global Second Issuer Note in
       accordance with the Second Issuer Trust Deed, the Conditions and the
       Second Issuer Paying Agent and Agent Bank Agreement, the portion of the
       principal amount hereof so exchanged or so purchased and cancelled shall
       be endorsed by or on behalf of the Registrar on behalf of the Second
       Issuer on Part II of the Schedule hereto, whereupon the principal amount
       hereof shall be

-------------------------------------------------------------------------------
<PAGE>

                                       153
-------------------------------------------------------------------------------

       increased or, as the case may be, reduced for all purposes by the amount
       so exchanged or so purchased and cancelled and endorsed. Upon the
       exchange of the whole of this Global Second Issuer Note for Definitive
       Second Issuer Notes this Global Second Issuer Note, shall be surrendered
       to or to the order of the Registrar and cancelled and, if the holder of
       this Global Second Issuer Note requests, returned to it together with any
       relevant Definitive Second Issuer Notes.

3.     PAYMENTS

       Until the entire principal amount of this Global Second Issuer Note has
       been extinguished, this Global Second Issuer Note shall be entitled to
       the benefit of and be bound by the Conditions, the Second Issuer Trust
       Deed and the Second Issuer Deed of Charge. Payments of principal and
       interest in respect of Second Issuer Notes represented by this Global
       Second Issuer Note will be made in accordance with the Conditions. Upon
       any payment of principal or interest on this Global Second Issuer Note
       the amount so paid shall be endorsed by or on behalf of the Registrar on
       behalf of the Second Issuer on Part I of the Schedule hereto.

       Upon any payment of principal and endorsement of such payment on Part I
       of the Schedule hereto, the principal amount of this Global Second Issuer
       Note shall be reduced for all purposes by the principal amount so paid
       and endorsed.

       All payments of any amounts payable and paid to the registered holder of
       this Global Second Issuer Note shall be valid and, to the extent of the
       sums so paid, effectual to satisfy and discharge the liability for the
       monies payable hereon.

4.     EUROCLEAR AND CLEARSTREAM, LUXEMBOURG

       References herein to Euroclear and/or Clearstream, Luxembourg shall be
       deemed to include references to any other clearing system approved by the
       Note Trustee.

5.     AUTHENTICATION

       This Global Second Issuer Note shall not be or become valid or obligatory
       for any purpose unless and until authenticated by or on behalf of the
       Registrar.

6.     GOVERNING LAW

       This Global Second Issuer Note is governed by, and shall be construed in
       accordance with, the laws of England.

-------------------------------------------------------------------------------
<PAGE>

                                       154
-------------------------------------------------------------------------------

IN WITNESS WHEREOF the Second Issuer has caused this Global Second Issuer Note
to be signed manually or in facsimile by a person duly authorised on its behalf.

PERMANENT FINANCING (NO. 2) PLC

By: ______________________________________
(Duly authorised)

Issued in London, England on [6th March], 2003.

-------------------------------------------------------------------------------
<PAGE>

                                       155
-------------------------------------------------------------------------------

CERTIFICATE OF AUTHENTICATION

This Global Second Issuer Note is duly authenticated without recourse, warranty
or liability.

____________________________________________
Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

-------------------------------------------------------------------------------
<PAGE>

                                       156
-------------------------------------------------------------------------------

                                  THE SCHEDULE

                                     PART I

                       PAYMENTS OF PRINCIPAL AND INTEREST

The following payments on this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>
DATE MADE            INTEREST PAID         PRINCIPAL PAID        REMAINING PRINCIPAL     NOTATION MADE ON
                                                                 AMOUNT OF THIS GLOBAL   BEHALF OF THE SECOND
                                                                 SECOND ISSUER NOTE      ISSUER
                                                                 FOLLOWING SUCH PAYMENT

                          (POUND)             (POUND)                (POUND)
<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>
-------------------------------------------------------------------------------
<PAGE>

                                       157
-------------------------------------------------------------------------------

                                     PART II

                                   EXCHANGES,
                           PURCHASES AND CANCELLATIONS

The following exchanges for Definitive Second Issuer Notes and purchases and
cancellations of a part of this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>
DATE MADE            PART OF PRINCIPAL     PART OF PRINCIPAL      AGGREGATE PRINCIPAL    NOTATION MADE ON
                     AMOUNT EXCHANGED FOR  AMOUNT PURCHASED AND   AMOUNT FOLLOWING       BEHALF OF THE SECOND
                     DEFINITIVE SECOND     CANCELLED              SUCH EXCHANGE OR       ISSUER
                     ISSUER NOTES                                 PURCHASE  AND
                                                                  CANCELLATION

                          (POUND)             (POUND)                (POUND)
<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>

-------------------------------------------------------------------------------
<PAGE>

                                       158
-------------------------------------------------------------------------------

                                     PART O

                   SERIES 5 CLASS C GLOBAL SECOND ISSUER NOTE

THIS SECOND ISSUER NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND, AS A MATTER OF U.S. LAW,
PRIOR TO THE DATE THAT IS 40 DAYS AFTER THE LATER OF THE CLOSING DATE AND THE
COMMENCEMENT OF THE OFFERING OF THE SECOND ISSUER NOTES MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A U.S. PERSON
(AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) EXCEPT PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES.

                         PERMANENT FINANCING (NO. 2) PLC

 (Incorporated with limited liability in England with registered number 4623188)

                   SERIES 5 CLASS C GLOBAL SECOND ISSUER NOTE
                               representing up to

  (POUND)[26,000,000] SERIES 5 CLASS C ASSET BACKED FLOATING RATE SECOND ISSUER
                             NOTES DUE [JUNE 2042]

This Series 5 Class C Global Second Issuer Note is issued without principal or
interest coupons in respect of a duly authorised issue of Series 5 Class C
Second Issuer Notes of PERMANENT FINANCING (NO. 2) PLC (the "SECOND ISSUER"),
designated as specified in the title hereof (the "SECOND ISSUER NOTES"), limited
to the aggregate principal amount of up to [thirty five] million pounds sterling
((pound)[26,000,000]) and constituted by a Second Issuer Trust Deed dated [6th
March], 2003 (the "SECOND ISSUER TRUST DEED") between the Second Issuer and U.S.
BANK NATIONAL ASSOCIATION, as trustee (the trustee for the time being thereof
being herein called the "NOTE TRUSTEE"). References herein to the Conditions (or
to any particular numbered Condition) shall be to the Conditions (or that
particular one of them) set out in SCHEDULE 3 to the Second Issuer Trust Deed.
Terms not defined herein have the meanings ascribed to them in the Amended and
Restated Master Definitions and Construction Schedule and the Second Issuer
Master Definitions and Construction Schedule, both dated [5th March], 2003 and
signed for the purposes of identification by Allen & Overy and Sidley Austin
Brown & Wood, and the Second Issuer Trust Deed. The aggregate principal amount
from time to time of this Global Second Issuer Note shall be that amount not
exceeding (pound)[26,000,000] as shall be shown by the latest entry duly made in
the Schedule hereto.

This is to certify that:

     Citivic Nominees Limited as nominee on behalf of the Common Depositary

is/are the duly registered holder(s) of one of the Series 5 Class C Global
Second Issuer Notes. This Global Second Issuer Note is evidence of entitlement
only. Title to the Global Second Issuer Notes passes only on due registration in
the Register and only the registered holder is entitled to payment in respect of
this Global Second Issuer Note.
-------------------------------------------------------------------------------
<PAGE>

                                       159
-------------------------------------------------------------------------------

1.     PROMISE TO PAY

       Subject as provided in this Global Second Issuer Note the Second Issuer
       promises to pay to the registered holder hereof the principal amount of
       this Global Second Issuer Note (being at the date hereof [thirty five]
       million pounds sterling ((pound)[26,000,000])) on the Interest Payment
       Date falling in [June 2042] (or on such earlier date as the said
       principal amount may become repayable in accordance with the Conditions
       or the Second Issuer Trust Deed) and to pay interest quarterly in arrear
       on each Interest Payment Date on the principal amount from time to time
       of this Global Second Issuer Note at the rates determined in accordance
       with Conditions together with such other amounts (if any) as may be
       payable, all subject to and in accordance with the Conditions and the
       provisions of the Second Issuer Trust Deed.

2.     EXCHANGE FOR DEFINITIVE SECOND ISSUER NOTES AND PURCHASES

       This Global Second Issuer Note will be exchangeable (free of charge to
       the holder) for Definitive Second Issuer Notes only if (i) both Euroclear
       Bank S.A./N.V., as operator of the Euroclear System ("EUROCLEAR") and
       Clearstream Banking, societe anonyme ("CLEARSTREAM, LUXEMBOURG") are
       closed for business for a continuous period of 14 days (other than by
       reason of holiday, statutory or otherwise) or announce an intention
       permanently to cease business or do so and no alternative clearing system
       satisfactory to the Note Trustee is then available, or (ii) as a result
       of any amendment to, or change in, the laws or regulations of the United
       Kingdom (or of any political subdivision thereof), or of any authority
       therein or thereof having power to tax, or in the interpretation or
       administration by a revenue authority or a court or administration of
       such laws or regulations which becomes effective on or after the Second
       Issuer Closing Date, the Second Issuer or any Paying Agent is or will be
       required to make any deduction or withholding from any payment in respect
       of the Second Issuer Notes which would not be required were the relevant
       Second Issuer Notes in definitive registered form. Thereupon the holder
       of this Global Second Issuer Note (acting on the instructions of (a)
       holder(s) of (a) Book-Entry Interest(s) (as defined in SECTION 3 hereof))
       may give notice to the Second Issuer, and the Second Issuer may give
       notice to the Note Trustee and the Noteholders, of its intention to
       exchange this Global Second Issuer Note for Definitive Second Issuer
       Notes on or after the Exchange Date (as defined below).

       On or after the Exchange Date, the holder of this Global Second Issuer
       Note shall surrender this Global Second Issuer Note to or to the order of
       the Registrar. In exchange for this Global Second Issuer Note the Second
       Issuer will deliver, or procure the delivery of, Definitive Second Issuer
       Notes in registered form in denominations of (pound)1,000 or
       (pound)10,000 each, or any integral multiple thereof, or in such other
       denominations as the Note Trustee shall determine and notify to the
       relevant Noteholders, in exchange for the whole of this Global Second
       Issuer Note.

       "EXCHANGE DATE" means a day specified in the notice requiring exchange
       falling not more than 60 days after that on which such notice is given
       and on which banks are open for business in the city in which the
       specified office of the Registrar is located and in the city in which the
       relevant clearing system is located.

       Upon the cancellation of a part of this Global Second Issuer Note in
       accordance with the Second Issuer Trust Deed, the Conditions and the
       Second Issuer Paying Agent and Agent Bank Agreement, the portion of the
       principal amount hereof so exchanged or so purchased and cancelled shall
       be endorsed by or on behalf of the Registrar on behalf of the Second
       Issuer on Part II of the Schedule hereto, whereupon the principal amount
       hereof shall be

-------------------------------------------------------------------------------
<PAGE>

                                       160
-------------------------------------------------------------------------------

       increased or, as the case may be, reduced for all purposes by the amount
       so exchanged or so purchased and cancelled and endorsed. Upon the
       exchange of the whole of this Global Second Issuer Note for Definitive
       Second Issuer Notes this Global Second Issuer Note, shall be surrendered
       to or to the order of the Registrar and cancelled and, if the holder of
       this Global Second Issuer Note requests, returned to it together with any
       relevant Definitive Second Issuer Notes.

3.     PAYMENTS

       Until the entire principal amount of this Global Second Issuer Note has
       been extinguished, this Global Second Issuer Note shall be entitled to
       the benefit of and be bound by the Conditions, the Second Issuer Trust
       Deed and the Second Issuer Deed of Charge. Payments of principal and
       interest in respect of Second Issuer Notes represented by this Global
       Second Issuer Note will be made in accordance with the Conditions. Upon
       any payment of principal or interest on this Global Second Issuer Note
       the amount so paid shall be endorsed by or on behalf of the Registrar on
       behalf of the Second Issuer on Part I of the Schedule hereto.

       Upon any payment of principal and endorsement of such payment on Part I
       of the Schedule hereto, the principal amount of this Global Second Issuer
       Note shall be reduced for all purposes by the principal amount so paid
       and endorsed.

       All payments of any amounts payable and paid to the registered holder of
       this Global Second Issuer Note shall be valid and, to the extent of the
       sums so paid, effectual to satisfy and discharge the liability for the
       monies payable hereon.

4.     EUROCLEAR AND CLEARSTREAM, LUXEMBOURG

       References herein to Euroclear and/or Clearstream, Luxembourg shall be
       deemed to include references to any other clearing system approved by the
       Note Trustee.

5.     AUTHENTICATION

       This Global Second Issuer Note shall not be or become valid or obligatory
       for any purpose unless and until authenticated by or on behalf of the
       Registrar.

6.     GOVERNING LAW

       This Global Second Issuer Note is governed by, and shall be construed in
       accordance with, the laws of England.

IN WITNESS WHEREOF the Second Issuer has caused this Global Second Issuer Note
to be signed manually or in facsimile by a person duly authorised on its behalf.

PERMANENT FINANCING (NO. 2) PLC

By:  _____________________________________
(Duly authorised)

Issued in London, England on [6th March], 2003.

-------------------------------------------------------------------------------
<PAGE>

                                       161
-------------------------------------------------------------------------------

CERTIFICATE OF AUTHENTICATION

This Global Second Issuer Note is duly authenticated without recourse, warranty
or liability.

____________________________________________
Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

-------------------------------------------------------------------------------
<PAGE>

                                       162
-------------------------------------------------------------------------------

                                  THE SCHEDULE

                                     PART I

                       PAYMENTS OF PRINCIPAL AND INTEREST

The following payments on this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>
DATE MADE            INTEREST PAID         PRINCIPAL PAID        REMAINING PRINCIPAL     NOTATION MADE ON
                                                                 AMOUNT OF THIS GLOBAL   BEHALF OF THE SECOND
                                                                 SECOND ISSUER NOTE      ISSUER
                                                                 FOLLOWING SUCH PAYMENT

                          (POUND)             (POUND)                (POUND)
<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>
-------------------------------------------------------------------------------
<PAGE>

                                       163
-------------------------------------------------------------------------------

                                     PART II

                                   EXCHANGES,
                           PURCHASES AND CANCELLATIONS

The following exchanges for Definitive Second Issuer Notes and purchases and
cancellations of a part of this Global Second Issuer Note have been made:

<TABLE>
<CAPTION>
DATE MADE            PART OF PRINCIPAL     PART OF PRINCIPAL      AGGREGATE PRINCIPAL    NOTATION MADE ON
                     AMOUNT EXCHANGED FOR  AMOUNT PURCHASED AND   AMOUNT FOLLOWING       BEHALF OF THE SECOND
                     DEFINITIVE SECOND     CANCELLED              SUCH EXCHANGE OR       ISSUER
                     ISSUER NOTES                                 PURCHASE  AND
                                                                  CANCELLATION

                          (POUND)             (POUND)                (POUND)
<S>                    <C>                 <C>                    <C>                      <C>
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
------------          ------------         ------------           ------------             ------------
</TABLE>
-------------------------------------------------------------------------------
<PAGE>

                                       164
-------------------------------------------------------------------------------

                                   SCHEDULE 2

                     FORMS OF DEFINITIVE SECOND ISSUER NOTES

                                     PART A
-------------------------------------------------------------------------------

                 SERIES 1 CLASS A DEFINITIVE SECOND ISSUER NOTE

     [1,000/10,000]         [ISIN:o]           [SERIES]           [SERIAL NO.]

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

                         PERMANENT FINANCING (NO. 2) PLC

 (Incorporated with limited liability in England with registered number 4623188)

  US$[1,000,000,000] SERIES 1 CLASS A ASSET BACKED FLOATING RATE SECOND ISSUER
                             NOTES DUE [MARCH 2004]
                  (the "SERIES 1 CLASS A SECOND ISSUER NOTES")

This Series 1 Class A Second Issuer Note forms one of a series of notes
constituted by a second issuer trust deed (the "SECOND ISSUER TRUST DEED") dated
[6th March], 2003 made between PERMANENT FINANCING (NO. 2) PLC (the "SECOND
ISSUER") and U.S. BANK NATIONAL ASSOCIATION, as trustee for the holders of the
Series 1 Class A Second Issuer Notes (the "NOTE TRUSTEE") and issued as
registered Series 1 Class A Second Issuer Notes in denominations of US$1,000 or
US$10,000 each, or integral multiples thereof, or in such other denominations as
the Note Trustee shall determine and notify to the holders of the relevant
Series 1 Class A Second Issuer Notes.

THIS IS TO CERTIFY that

is/are the registered holder(s) of one of the above-mentioned registered Series
1 Class A Second Issuer Notes, such Series 1 Class A Second Issuer Notes being
in the denomination of US$           (           US dollars) and is/are entitled
on the Interest Payment Date falling in [March 2004] (or on such earlier date as
the principal sum hereinafter mentioned may become repayable in accordance with
the terms and conditions of the Series 1 Class A Second Issuer Notes (the
"CONDITIONS") endorsed hereon) to the repayment of such principal sum of:

                 US$              (             US dollars)

together with such other amounts (if any) as may be payable, all subject to and
in accordance with the Conditions and the provisions of the Second Issuer Trust
Deed.

Interest is payable on the Principal Amount Outstanding (as defined in CONDITION
5(C)) endorsed hereon of this Series 1 Class A Second Issuer Note at rates
determined in accordance with the Conditions payable monthly or quarterly, as
the case may be, in arrear on each Interest Payment Date and together with such
other amounts (if any) as may be payable, all subject to and in accordance with
the Conditions and the provisions of the Second Issuer Trust Deed.
-------------------------------------------------------------------------------
<PAGE>

                                       165
-------------------------------------------------------------------------------

IN WITNESS WHEREOF this registered Series 1 Class A Second Issuer Note has been
executed on behalf of the Second Issuer.

PERMANENT FINANCING (NO. 2) PLC

By:   ____________________________________
         Director

By:   ____________________________________
         Director

Dated

CERTIFICATE OF AUTHENTICATION

This Series 1 Class A Second Issuer Note is duly authenticated without recourse,
warranty or liability.

__________________________________________
Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

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

<PAGE>

                                      166
--------------------------------------------------------------------------------

                                (REVERSE OF NOTE)

                                 THE CONDITIONS

[In the form set out in Schedule 3]

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

<PAGE>

                                      167
--------------------------------------------------------------------------------

                FORM OF TRANSFER OF DEFINITIVE SECOND ISSUER NOTE

FOR VALUE RECEIVED the undersigned hereby transfer(s) to

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

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

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

(Please print or type name and address (including postal code) of transferee)

US$______________________________________ principal amount of this Series 1
Class A Second Issuer Note and all rights hereunder, hereby irrevocably
constituting and appointing ___________________________________________________
as attorney to transfer such principal amount of this Series 1 Class A Second
Issuer Note in the register maintained by or on behalf of PERMANENT FINANCING
(NO. 2) PLC with full power of substitution.

Signature(s) ________________________________________________

Date: _______________________________________________

NOTES:

1.   This form of transfer must be accompanied by such documents, evidence and
     information as may be required pursuant to the Second Issuer Trust Deed and
     the Second Issuer Paying Agent and Agent Bank Agreement (as defined in the
     Conditions) and must be executed under the hand of the transferor or, if
     the transferor is a corporation, either under its common seal or under the
     hand of two of its officers duly authorised in writing and, in such latter
     case, the document so authorising such officers must be delivered with this
     form of transfer.

2.   The signature(s) on this form of transfer must correspond with the name(s)
     as it/they appear(s) on the face of this Series 1 Class A Second Issuer
     Note in every particular, without alteration or enlargement or any change
     whatever.

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

<PAGE>

                                      168
--------------------------------------------------------------------------------

                                     PART B

                 SERIES 1 CLASS B DEFINITIVE SECOND ISSUER NOTE

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

[1,000/10,000]              [ISIN:o]           [SERIES]             [SERIAL NO.]

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

                         PERMANENT FINANCING (NO. 2) PLC

 (Incorporated with limited liability in England with registered number 4623188)

 US$[34,000,000] SERIES 1 CLASS B ASSET BACKED FLOATING RATE SECOND ISSUER NOTES
                                 DUE [JUNE 2042]
                  (the "SERIES 1 CLASS B SECOND ISSUER NOTES")

This Series 1 Class B Second Issuer Note forms one of a series of notes
constituted by a second issuer trust deed (the "SECOND ISSUER TRUST DEED") dated
[6th March], 2003 made between PERMANENT FINANCING (NO. 2) PLC (the "SECOND
ISSUER") and U.S. BANK NATIONAL ASSOCIATION, as trustee for the holders of the
Series 1 Class B Second Issuer Notes (the "NOTE Trustee") and issued as
registered Series 1 Class B Second Issuer Notes in denominations of US$1,000 or
US$10,000 each, or integral multiples thereof, or in such other denominations as
the Note Trustee shall determine and notify to the holders of the relevant
Series 1 Class B Second Issuer Notes.

THIS IS TO CERTIFY that

is/are the registered holder(s) of one of the above-mentioned registered Series
1 Class B Second Issuer Notes, such Series 1 Class B Second Issuer Notes being
in the denomination of US$         (         US dollars) and is/are entitled on
the Interest Payment Date falling in [June 2042] (or on such earlier date as the
principal sum hereinafter mentioned may become repayable in accordance with the
terms and conditions of the Series 1 Class B Second Issuer Notes (the
"CONDITIONS") endorsed hereon) to the repayment of such principal sum of:

                          US$           (       US dollars)

together with such other amounts (if any) as may be payable, all subject to and
in accordance with the said Conditions and the provisions of the Second Issuer
Trust Deed.

Interest is payable on the Principal Amount Outstanding (as defined in CONDITION
5(C)) endorsed hereon of this Series 1 Class B Second Issuer Note at rates
determined in accordance with the Conditions payable quarterly in arrear on each
Interest Payment Date and together with such other amounts (if any) as may be
payable, all subject to and in accordance with the Conditions and the provisions
of the Second Issuer Trust Deed.

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

<PAGE>

                                      169
--------------------------------------------------------------------------------

IN WITNESS WHEREOF this registered Series 1 Class B Second Issuer Note has been
executed on behalf of the Second Issuer.

PERMANENT FINANCING (NO. 2) PLC

By:      ___________________________________________
         Director

By:      ___________________________________________
         Director

Dated

CERTIFICATE OF AUTHENTICATION

This Series 1 Class B Second Issuer Note is duly authenticated
without recourse, warranty or liability.

_________________________________________________
Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

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

<PAGE>

                                      170
--------------------------------------------------------------------------------

                                (REVERSE OF NOTE)

                                 THE CONDITIONS

[In the form set out in Schedule 3]

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

<PAGE>

                                      171
--------------------------------------------------------------------------------

                FORM OF TRANSFER OF DEFINITIVE SECOND ISSUER NOTE

FOR VALUE RECEIVED the undersigned hereby transfer(s) to

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

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

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

(Please print or type name and address (including postal code) of transferee)

US$_____________________________________ principal amount of this Series 1 Class
B Second Issuer Note and all rights hereunder, hereby irrevocably constituting
and appointing _________________________________________________________ as
attorney to transfer such principal amount of this Series 1 Class B Second
Issuer Note in the register maintained by or on behalf of PERMANENT FINANCING
(NO. 2) PLC with full power of substitution.

Signature(s) ________________________________________________

Date: _______________________________________________

NOTES:

1.   This form of transfer must be accompanied by such documents, evidence and
     information as may be required pursuant to the Second Issuer Trust Deed and
     the Second Issuer Paying Agent and Agent Bank Agreement (as defined in the
     Conditions) and must be executed under the hand of the transferor or, if
     the transferor is a corporation, either under its common seal or under the
     hand of two of its officers duly authorised in writing and, in such latter
     case, the document so authorising such officers must be delivered with this
     form of transfer.

2.   The signature(s) on this form of transfer must correspond with the name(s)
     as it/they appear(s) on the face of this Series 1 Class B Second Issuer
     Note in every particular, without alteration or enlargement or any change
     whatever.

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

<PAGE>

                                      172
--------------------------------------------------------------------------------

                                     PART C

                 SERIES 1 CLASS C DEFINITIVE SECOND ISSUER NOTE

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

[1,000/10,000]              [ISIN:o]          [SERIES]              [SERIAL NO.]

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

                         PERMANENT FINANCING (NO. 2) PLC

(Incorporated with limited liability in England with registered number 4623188)

 US$[34,000,000] SERIES 1 CLASS C ASSET BACKED FLOATING RATE SECOND ISSUER NOTES
                                 DUE [JUNE 2042]
                  (the "SERIES 1 CLASS C SECOND ISSUER NOTES")

This Series 1 Class C Second Issuer Note forms one of a series of notes
constituted by a second issuer trust deed (the "SECOND ISSUER TRUST DEED") dated
[6th March], 2003 made between PERMANENT FINANCING (NO. 2) PLC (the "SECOND
ISSUER") and U.S. BANK NATIONAL ASSOCIATION, as trustee for the holders of the
Series 1 Class C Second Issuer Notes (the "NOTE Trustee") and issued as
registered Series 1 Class C Second Issuer Notes in denominations of US$1,000 or
US$10,000 each, or integral multiples thereof, or in such other denominations as
the Note Trustee shall determine and notify to the holders of the relevant
Series 1 Class C Second Issuer Notes.

THIS IS TO CERTIFY that

is/are the registered holder(s) of one of the above-mentioned registered Series
1 Class C Second Issuer Notes, such Series 1 Class C Second Issuer Notes being
in the denomination of US$        (           US dollars) and is/are entitled on
the Interest Payment Date falling in [June 2042] (or on such earlier date as the
principal sum hereinafter mentioned may become repayable in accordance with the
terms and conditions (the Series 1 Class C Second Issuer Notes (the
"CONDITIONS") endorsed hereon) to the repayment of such principal sum of:

                          US$           (       US dollars)

together with such other amounts (if any) as may be payable, all subject to and
in accordance with the said Conditions and the provisions of the Second Issuer
Trust Deed.

Interest is payable on the Principal Amount Outstanding (as defined in CONDITION
5(C)) endorsed hereon of this Series 1 Class C Second Issuer Note at rates
determined in accordance with the Conditions payable quarterly in arrear on each
Interest Payment Date and together with such other amounts (if any) as may be
payable, all subject to and in accordance with the Conditions and the provisions
of the Second Issuer Trust Deed.

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

<PAGE>

                                      173
--------------------------------------------------------------------------------

IN WITNESS WHEREOF this registered Series 1 Class C Second Issuer Note has been
executed on behalf of the Second Issuer.

PERMANENT FINANCING (NO. 2) PLC

By:      ___________________________________________
         Director

By:      ___________________________________________
         Director

Dated

CERTIFICATE OF AUTHENTICATION

This Series 1 Class C Second Issuer Note is duly authenticated
without recourse, warranty or liability.

_________________________________________________
Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

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

<PAGE>

                                      174
--------------------------------------------------------------------------------

                                (REVERSE OF NOTE)

                                 THE CONDITIONS

[In the form set out in Schedule 3]

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

<PAGE>

                                      175
--------------------------------------------------------------------------------

                FORM OF TRANSFER OF DEFINITIVE SECOND ISSUER NOTE

FOR VALUE RECEIVED the undersigned hereby transfer(s) to

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

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

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

(Please print or type name and address (including postal code) of transferee)

US$_____________________________________ principal amount of this Series 1 Class
C Second Issuer Note and all rights hereunder, hereby irrevocably constituting
and appointing _________________________________________________________ as
attorney to transfer such principal amount of this Second Issuer Note in the
register maintained by or on behalf of PERMANENT FINANCING (NO. 2) PLC with full
power of substitution.

Signature(s) ________________________________________________

Date: _______________________________________________

NOTES:

1.   This form of transfer must be accompanied by such documents, evidence and
     information as may be required pursuant to the Series 1 Class C Second
     Issuer Trust Deed and the Second Issuer Paying Agent and Agent Bank
     Agreement (as defined in the Conditions) and must be executed under the
     hand of the transferor or, if the transferor is a corporation, either under
     its common seal or under the hand of two of its officers duly authorised in
     writing and, in such latter case, the document so authorising such officers
     must be delivered with this form of transfer.

2.   The signature(s) on this form of transfer must correspond with the name(s)
     as it/they appear(s) on the face of this Series 1 Class C Second Issuer
     Note in every particular, without alteration or enlargement or any change
     whatever.

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

<PAGE>

                                      176
--------------------------------------------------------------------------------

                                     PART D

                 SERIES 2 CLASS A DEFINITIVE SECOND ISSUER NOTE

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

[1,000/10,000]              [ISIN:o]           [SERIES]             [SERIAL NO.]

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

                         PERMANENT FINANCING (NO. 2) PLC

 (Incorporated with limited liability in England with registered number 4623188)

  US$[1,750,000,000] SERIES 2 CLASS A ASSET BACKED FLOATING RATE SECOND ISSUER
                           NOTES DUE [SEPTEMBER 2007]
                  (the "SERIES 2 CLASS A SECOND ISSUER NOTES")

This Series 2 Class A Second Issuer Note forms one of a series of notes
constituted by a second issuer trust deed (the "SECOND ISSUER TRUST DEED") dated
[6th March], 2003 made between PERMANENT FINANCING (NO. 2) PLC (the "SECOND
ISSUER") and U.S. BANK NATIONAL ASSOCIATION, as trustee for the holders of the
Series 2 Class A Second Issuer Notes (the "NOTE Trustee") and issued as
registered Series 2 Class A Second Issuer Notes in denominations of US$1,000 or
US$10,000 each, or integral multiples thereof, or in such other denominations as
the Note Trustee shall determine and notify to the holders of the relevant
Series 2 Class A Second Issuer Notes.

THIS IS TO CERTIFY that

is/are the registered holder(s) of one of the above-mentioned registered Series
2 Class A Second Issuer Notes, such Series 2 Class A Second Issuer Notes being
in the denomination of US$          (         US dollars) and is/are entitled on
the Interest Payment Date falling in [September 2007] (or on such earlier date
as the principal sum hereinafter mentioned may become repayable in accordance
with the terms and conditions of the Series 2 Class A Second Issuer Notes (the
"CONDITIONS") endorsed hereon) to the repayment of such principal sum of:

                           US$          (       US dollars)

together with such other amounts (if any) as may be payable, all subject to and
in accordance with the said Conditions and the provisions of the Second Issuer
Trust Deed.

Interest is payable on the Principal Amount Outstanding (as defined in CONDITION
5(C)) endorsed hereon of this Series 2 Class A Second Issuer Note at rates
determined in accordance with the Conditions payable quarterly in arrear on each
Interest Payment Date and together with such other amounts (if any) as may be
payable, all subject to and in accordance with the Conditions and the provisions
of the Second Issuer Trust Deed.

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

<PAGE>

                                      177
--------------------------------------------------------------------------------

IN WITNESS WHEREOF this registered Series 2 Class A Second Issuer Note has been
executed on behalf of the Second Issuer.

PERMANENT FINANCING (NO. 2) PLC

By:      ___________________________________________
         Director

By:      ___________________________________________
         Director

Dated

CERTIFICATE OF AUTHENTICATION

This Series 2 Class A Second Issuer Note is duly authenticated
without recourse, warranty or liability.

_________________________________________________
Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

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

<PAGE>

                                      178
--------------------------------------------------------------------------------

                                (REVERSE OF NOTE)

                                 THE CONDITIONS

[In the form set out in Schedule 3]

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

<PAGE>

                                      179
--------------------------------------------------------------------------------

                FORM OF TRANSFER OF DEFINITIVE SECOND ISSUER NOTE

FOR VALUE RECEIVED the undersigned hereby transfer(s) to

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

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

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

(Please print or type name and address (including postal code) of transferee)

US$_____________________________________ principal amount of this Series 2 Class
A Second Issuer Note and all rights hereunder, hereby irrevocably constituting
and appointing _________________________________________________________ as
attorney to transfer such principal amount of this Series 2 Class A Second
Issuer Note in the register maintained by or on behalf of PERMANENT FINANCING
(NO. 2) PLC with full power of substitution.

Signature(s) ________________________________________________

Date: _______________________________________________

NOTES:

1.   This form of transfer must be accompanied by such documents, evidence and
     information as may be required pursuant to the Second Issuer Trust Deed and
     the Second Issuer Paying Agent and Agent Bank Agreement (as defined in the
     Conditions) and must be executed under the hand of the transferor or, if
     the transferor is a corporation, either under its common seal or under the
     hand of two of its officers duly authorised in writing and, in such latter
     case, the document so authorising such officers must be delivered with this
     form of transfer.

2.   The signature(s) on this form of transfer must correspond with the name(s)
     as it/they appear(s) on the face of this Series 2 Class A Second Issuer
     Note in every particular, without alteration or enlargement or any change
     whatever.

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

<PAGE>

                                      180
--------------------------------------------------------------------------------

                                     PART E

                 SERIES 2 CLASS B DEFINITIVE SECOND ISSUER NOTE

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

[1,000/10,000]              [ISIN:o]           [SERIES]             [SERIAL NO.]

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

                         PERMANENT FINANCING (NO. 2) PLC

 (Incorporated with limited liability in England with registered number 4623188)

 US$[61,000,000] SERIES 2 CLASS B ASSET BACKED FLOATING RATE SECOND ISSUER NOTES
                                 DUE [JUNE 2042]
                  (the "SERIES 2 CLASS B SECOND ISSUER NOTES")

This Series 2 Class B Second Issuer Note forms one of a series of notes
constituted by a second issuer trust deed (the "SECOND ISSUER TRUST DEED") dated
[6th March], 2003 made between PERMANENT FINANCING (NO. 2) PLC (the "SECOND
ISSUER") and U.S. BANK NATIONAL ASSOCIATION, as trustee for the holders of the
Series 2 Class B Second Issuer Notes (the "NOTE Trustee") and issued as
registered Series 2 Class B Second Issuer Notes in denominations of US$1,000 or
US$10,000 each, or integral multiples thereof, or in such other denominations as
the Note Trustee shall determine and notify to the holders of the relevant
Series 2 Class B Second Issuer Notes.

THIS IS TO CERTIFY that

is/are the registered holder(s) of one of the above-mentioned registered Series
2 Class B Second Issuer Notes, such Series 2 Class B Second Issuer Notes being
in the denomination of US$          (         US dollars) and is/are entitled on
the Interest Payment Date falling in [June 2042] (or on such earlier date as the
principal sum hereinafter mentioned may become repayable in accordance with the
terms and conditions of the Series 2 Class B Second Issuer Notes (the
"CONDITIONS") endorsed hereon) to the repayment of such principal sum of:

                          US$           (        US dollars)

together with such other amounts (if any) as may be payable, all subject to and
in accordance with the said Conditions and the provisions of the Second Issuer
Trust Deed.

Interest is payable on the Principal Amount Outstanding (as defined in CONDITION
5(C)) endorsed hereon of this Series 2 Class B Second Issuer Note at rates
determined in accordance with the Conditions payable quarterly in arrear on each
Interest Payment Date and together with such other amounts (if any) as may be
payable, all subject to and in accordance with the Conditions and the provisions
of the Second Issuer Trust Deed.

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

<PAGE>

                                      181
--------------------------------------------------------------------------------

IN WITNESS WHEREOF this registered Series 2 Class B Second Issuer Note has been
executed on behalf of the Second Issuer.

PERMANENT FINANCING (NO. 2) PLC

By:      ___________________________________________
         Director

By:      ___________________________________________
         Director

Dated

CERTIFICATE OF AUTHENTICATION

This Series 2 Class B Second Issuer Note is duly authenticated
without recourse, warranty or liability.

_________________________________________________
Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

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

<PAGE>

                                      182
--------------------------------------------------------------------------------

                                (REVERSE OF NOTE)

                                 THE CONDITIONS

[In the form set out in Schedule 3]

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

<PAGE>

                                      183
--------------------------------------------------------------------------------

                FORM OF TRANSFER OF DEFINITIVE SECOND ISSUER NOTE

FOR VALUE RECEIVED the undersigned hereby transfer(s) to

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

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

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

(Please print or type name and address (including postal code) of transferee)

US$_____________________________________ principal amount of this Series 2 Class
B Second Issuer Note and all rights hereunder, hereby irrevocably constituting
and appointing _________________________________________________________ as
attorney to transfer such principal amount of this Series 2 Class B Second
Issuer Note in the register maintained by or on behalf of PERMANENT FINANCING
(NO. 2) PLC with full power of substitution.

Signature(s) ________________________________________________

Date: _______________________________________________

NOTES:

1.   This form of transfer must be accompanied by such documents, evidence and
     information as may be required pursuant to the Second Issuer Trust Deed and
     the Second Issuer Paying Agent and Agent Bank Agreement (as defined in the
     Conditions) and must be executed under the hand of the transferor or, if
     the transferor is a corporation, either under its common seal or under the
     hand of two of its officers duly authorised in writing and, in such latter
     case, the document so authorising such officers must be delivered with this
     form of transfer.

2.   The signature(s) on this form of transfer must correspond with the name(s)
     as it/they appear(s) on the face of this Series 2 Class B Second Issuer
     Note in every particular, without alteration or enlargement or any change
     whatever.

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

<PAGE>

                                      184
--------------------------------------------------------------------------------

                                     PART F

                 SERIES 2 CLASS C DEFINITIVE SECOND ISSUER NOTE

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

[1,000/10,000]              [ISIN:o]           [SERIES]             [SERIAL NO.]

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

                         PERMANENT FINANCING (NO. 2) PLC

 (Incorporated with limited liability in England with registered number 4623188)

 US$[61,000,000] SERIES 2 CLASS C ASSET BACKED FLOATING RATE SECOND ISSUER NOTES
                                DUE [JUNE 2042]
                  (the "SERIES 2 CLASS C SECOND ISSUER NOTES")

This Series 2 Class C Second Issuer Note forms one of a series of notes
constituted by a second issuer trust deed (the "SECOND ISSUER TRUST DEED") dated
[6th March], 2003 made between PERMANENT FINANCING (NO. 2) PLC (the "SECOND
ISSUER") and U.S. BANK NATIONAL ASSOCIATION, as trustee for the holders of the
Series 2 Class C Second Issuer Notes (the "NOTE Trustee") and issued as
registered Series 2 Class C Second Issuer Notes in denominations of US$1,000 or
US$10,000 each, or integral multiples thereof, or in such other denominations as
the Note Trustee shall determine and notify to the holders of the relevant
Series 2 Class C Second Issuer Notes.

THIS IS TO CERTIFY that

is/are the registered holder(s) of one of the above-mentioned registered Series
2 Class C Second Issuer Notes, such Series 2 Class C Second Issuer Notes being
in the denomination of US$          (         US dollars) and is/are entitled on
the Interest Payment Date falling in [June 2042] (or on such earlier date as the
principal sum hereinafter mentioned may become repayable in accordance with the
terms and conditions of the Series 2 Class C Second Issuer Notes (the
"CONDITIONS") endorsed hereon) to the repayment of such principal sum of:

                          US$           (       US dollars)

together with such other amounts (if any) as may be payable, all subject to and
in accordance with the said Conditions and the provisions of the Second Issuer
Trust Deed.

Interest is payable on the Principal Amount Outstanding (as defined in CONDITION
5(C)) endorsed hereon of this Series 2 Class C Second Issuer Note at rates
determined in accordance with the Conditions payable quarterly in arrear on each
Interest Payment Date and together with such other amounts (if any) as may be
payable, all subject to and in accordance with the Conditions and the provisions
of the Second Issuer Trust Deed.

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

<PAGE>

                                      185
--------------------------------------------------------------------------------

IN WITNESS WHEREOF this registered Series 2 Class C Second Issuer Note has been
executed on behalf of the Second Issuer.

PERMANENT FINANCING (NO. 2) PLC

By:      ___________________________________________
         Director

By:      ___________________________________________
         Director

Dated

CERTIFICATE OF AUTHENTICATION

This Series 2 Class C Second Issuer Note is duly authenticated
without recourse, warranty or liability.

_________________________________________________
Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

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

<PAGE>

                                      186
--------------------------------------------------------------------------------

                                (REVERSE OF NOTE)

                                 THE CONDITIONS

[In the form set out in Schedule 3]

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

<PAGE>

                                      187
--------------------------------------------------------------------------------

                FORM OF TRANSFER OF DEFINITIVE SECOND ISSUER NOTE

FOR VALUE RECEIVED the undersigned hereby transfer(s) to

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

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

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

(Please print or type name and address (including postal code) of transferee)

US$_____________________________________ principal amount of this Series 2 Class
C Second Issuer Note and all rights hereunder, hereby irrevocably constituting
and appointing _________________________________________________________ as
attorney to transfer such principal amount of this Series 2 Class C Second
Issuer Note in the register maintained by or on behalf of PERMANENT FINANCING
(NO. 2) PLC with full power of substitution.

Signature(s) ________________________________________________

Date: _______________________________________________

NOTES:

1.   This form of transfer must be accompanied by such documents, evidence and
     information as may be required pursuant to the Second Issuer Trust Deed and
     the Second Issuer Paying Agent and Agent Bank Agreement (as defined in the
     Conditions) and must be executed under the hand of the transferor or, if
     the transferor is a corporation, either under its common seal or under the
     hand of two of its officers duly authorised in writing and, in such latter
     case, the document so authorising such officers must be delivered with this
     form of transfer.

2.   The signature(s) on this form of transfer must correspond with the name(s)
     as it/they appear(s) on the face of this Series 2 Class C Second Issuer
     Note in every particular, without alteration or enlargement or any change
     whatever.

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

<PAGE>

                                      188
--------------------------------------------------------------------------------

                                     PART G

                 SERIES 3 CLASS A DEFINITIVE SECOND ISSUER NOTE

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

[500,000]                   [ISIN:o]           [SERIES]             [SERIAL NO.]

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

THIS SECOND ISSUER NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND, AS A MATTER OF U.S. LAW,
PRIOR TO THE DATE THAT IS 40 DAYS AFTER THE LATER OF THE CLOSING DATE AND THE
COMMENCEMENT OF THE OFFERING OF THE SECOND ISSUER NOTES MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A U.S. PERSON
(AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) EXCEPT PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES.

                         PERMANENT FINANCING (NO. 2) PLC

 (Incorporated with limited liability in England with registered number 4623188)

 (EURO)[1,250,000,000] SERIES 3 CLASS A ASSET BACKED FLOATING RATE SECOND ISSUER
                            NOTES DUE [DECEMBER 2032]
                  (the "SERIES 3 CLASS A SECOND ISSUER NOTES")

This Series 3 Class A Second Issuer Note forms one of a series of notes
constituted by a second issuer trust deed (the "SECOND ISSUER TRUST DEED") dated
[6th March], 2003 made between PERMANENT FINANCING (NO. 2) PLC (the "SECOND
ISSUER") and U.S. BANK NATIONAL ASSOCIATION, as trustee for the holders of the
Series 3 Class A Second Issuer Notes (the "NOTE Trustee") and issued as
registered Series 3 Class A Second Issuer Notes in denominations of
(EURO)500,000 each, or integral multiples thereof, or in such other
denominations as the Note Trustee shall determine and notify to the holders of
the relevant Series 3 Class A Second Issuer Notes.

THIS IS TO CERTIFY that

is/are the registered holder(s) of one of the above-mentioned registered Series
3 Class A Second Issuer Notes, such Series 3 Class A Second Issuer Notes being
in the denomination of (EURO)           (           euro) and is/are entitled on
the Interest Payment Date falling in [December 2032] (or on such earlier date as
the principal sum hereinafter mentioned may become repayable in accordance with
the terms and conditions of the Series 3 Class A Second Issuer Notes (the
"CONDITIONS") endorsed hereon) to the repayment of such principal sum of:

                       (EURO)           (           euro)

together with such other amounts (if any) as may be payable, all subject to and
in accordance with the Conditions and the provisions of the Second Issuer Trust
Deed.

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

<PAGE>

                                      189
--------------------------------------------------------------------------------

Interest is payable on the Principal Amount Outstanding (as defined in CONDITION
5(C)) endorsed hereon of this Series 3 Class A Second Issuer Note at rates
determined in accordance with the said Conditions payable quarterly, as the case
may be, in arrear on each Interest Payment Date and together with such other
amounts (if any) as may be payable, all subject to and in accordance with the
said Conditions and the provisions of the Second Issuer Trust Deed.

IN WITNESS WHEREOF this registered Series 3 Class A Second Issuer Note has been
executed on behalf of the Second Issuer.

PERMANENT FINANCING (NO. 2) PLC

By:      ___________________________________________
         Director

By:      ___________________________________________
         Director

Dated

CERTIFICATE OF AUTHENTICATION

This Series 3 Class A Second Issuer Note is duly authenticated
without recourse, warranty or liability.

_________________________________________________

Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

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

<PAGE>

                                      190
--------------------------------------------------------------------------------

                                (REVERSE OF NOTE)

                                 THE CONDITIONS

[In the form set out in Schedule 3]

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

<PAGE>

                                      191
--------------------------------------------------------------------------------

                FORM OF TRANSFER OF DEFINITIVE SECOND ISSUER NOTE

FOR VALUE RECEIVED the undersigned hereby transfer(s) to

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

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

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

(Please print or type name and address (including postal code) of transferee)

(EURO)____________________________________ principal amount of this Series 3
Class A Second Issuer Note and all rights hereunder, hereby irrevocably
constituting and appointing ___________________________________________________
as attorney to transfer such principal amount of this Series 3 Class A Second
Issuer Note in the register maintained by or on behalf of PERMANENT FINANCING
(NO. 2) PLC with full power of substitution.

Signature(s) ________________________________________________

Date: _______________________________________________

NOTES:

1.   This form of transfer must be accompanied by such documents, evidence and
     information as may be required pursuant to the Second Issuer Trust Deed and
     the Second Issuer Paying Agent and Agent Bank Agreement (as defined in the
     Conditions) and must be executed under the hand of the transferor or, if
     the transferor is a corporation, either under its common seal or under the
     hand of two of its officers duly authorised in writing and, in such latter
     case, the document so authorising such officers must be delivered with this
     form of transfer.

2.   The signature(s) on this form of transfer must correspond with the name(s)
     as it/they appear(s) on the face of this Series 3 Class A Second Issuer
     Note in every particular, without alteration or enlargement or any change
     whatever.

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

<PAGE>

                                      192
--------------------------------------------------------------------------------

                                     PART H

                 SERIES 3 CLASS B DEFINITIVE SECOND ISSUER NOTE

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

[500,000]                   [ISIN:o]           [SERIES]             [SERIAL NO.]

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

THIS SECOND ISSUER NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND, AS A MATTER OF U.S. LAW,
PRIOR TO THE DATE THAT IS 40 DAYS AFTER THE LATER OF THE CLOSING DATE AND THE
COMMENCEMENT OF THE OFFERING OF THE SECOND ISSUER NOTES MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A U.S. PERSON
(AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) EXCEPT PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES.

                         PERMANENT FINANCING (NO. 2) PLC

 (Incorporated with limited liability in England with registered number 4623188)

  (EURO)[56,500,000] SERIES 3 CLASS B ASSET BACKED FLOATING RATE SECOND ISSUER
                              NOTES DUE [JUNE 2042]
                  (the "SERIES 3 CLASS B SECOND ISSUER NOTES")

This Series 3 Class B Second Issuer Note forms one of a series of notes
constituted by a second issuer trust deed (the "SECOND ISSUER TRUST DEED") dated
[6th March], 2003 made between PERMANENT FINANCING (NO. 2) PLC (the "SECOND
ISSUER") and U.S. BANK NATIONAL ASSOCIATION, as trustee for the holders of the
Series 3 Class B Second Issuer Notes (the "NOTE Trustee") and issued as
registered Series 3 Class B Second Issuer Notes in denominations of
(EURO)500,000 each, or integral multiples thereof, or in such other
denominations as the Note Trustee shall determine and notify to the holders of
the relevant Series 3 Class B Second Issuer Notes.

THIS IS TO CERTIFY that

is/are the registered holder(s) of one of the above-mentioned registered Series
3 Class B Second Issuer Notes, such Series 3 Class B Second Issuer Notes being
in the denomination of (EURO)           (          euro) and is/are entitled on
the Interest Payment Date falling in [June 2042] (or on such earlier date as the
principal sum hereinafter mentioned may become repayable in accordance with the
terms and conditions of the Series 3 Class B Second Issuer Notes (the
"CONDITIONS") endorsed hereon) to the repayment of such principal sum of:

                       (EURO)          (           euro)

together with such other amounts (if any) as may be payable, all subject to and
in accordance with the Conditions and the provisions of the Second Issuer Trust
Deed.

Interest is payable on the Principal Amount Outstanding (as defined in CONDITION
5(C)) endorsed hereon of this Series 3 Class B Second Issuer Note at rates
determined in accordance with the

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

<PAGE>

                                      193
--------------------------------------------------------------------------------

Conditions payable quarterly in arrear on each Interest Payment Date and
together with such other amounts (if any) as may be payable, all subject to and
in accordance with the Conditions and the provisions of the Second Issuer Trust
Deed.

IN WITNESS WHEREOF this registered Series 3 Class B Second Issuer Note has been
executed on behalf of the Second Issuer.

PERMANENT FINANCING (NO. 2) PLC

By:      ___________________________________________
         Director

By:      ___________________________________________
         Director

Dated

CERTIFICATE OF AUTHENTICATION

This Series 3 Class B Second Issuer Note is duly authenticated
without recourse, warranty or liability.

_________________________________________________

Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

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

<PAGE>

                                      194
--------------------------------------------------------------------------------

                                (REVERSE OF NOTE)

                                 THE CONDITIONS

[In the form set out in Schedule 3]

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

<PAGE>

                                      195
--------------------------------------------------------------------------------

                FORM OF TRANSFER OF DEFINITIVE SECOND ISSUER NOTE

FOR VALUE RECEIVED the undersigned hereby transfer(s) to

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

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

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

(Please print or type name and address (including postal code) of transferee)

Pound Sterling_______________________________ principal amount of this Series 3
Class B Second Issuer Note and all rights hereunder, hereby irrevocably
constituting and appointing ____________________________________________________
as attorney to transfer such principal amount of this Series 3 Class B Second
Issuer Note in the register maintained by or on behalf of PERMANENT FINANCING
(NO. 2) PLC with full power of substitution.

Signature(s) ________________________________________________

Date: _______________________________________________

NOTES:

1.   This form of transfer must be accompanied by such documents, evidence and
     information as may be required pursuant to the Second Issuer Trust Deed and
     the Second Issuer Paying Agent and Agent Bank Agreement (as defined in the
     Conditions) and must be executed under the hand of the transferor or, if
     the transferor is a corporation, either under its common seal or under the
     hand of two of its officers duly authorised in writing and, in such latter
     case, the document so authorising such officers must be delivered with this
     form of transfer.

2.   The signature(s) on this form of transfer must correspond with the name(s)
     as it/they appear(s) on the face of this Series 3 Class B Second Issuer
     Note in every particular, without alteration or enlargement or any change
     whatever.

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

<PAGE>

                                      196
--------------------------------------------------------------------------------

                                     PART I

                 SERIES 3 CLASS C DEFINITIVE SECOND ISSUER NOTE

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

[500,000]                   [ISIN:o]           [SERIES]             [SERIAL NO.]

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

THIS SECOND ISSUER NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND, AS A MATTER OF U.S. LAW,
PRIOR TO THE DATE THAT IS 40 DAYS AFTER THE LATER OF THE CLOSING DATE AND THE
COMMENCEMENT OF THE OFFERING OF THE SECOND ISSUER NOTES MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A U.S. PERSON
(AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) EXCEPT PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES.

                         PERMANENT FINANCING (NO. 2) PLC

 (Incorporated with limited liability in England with registered number 4623188)

  (EURO)[56,500,000] SERIES 3 CLASS C ASSET BACKED FLOATING RATE SECOND ISSUER
                              NOTES DUE [JUNE 2042]
                  (the "SERIES 3 CLASS C SECOND ISSUER NOTES")

This Series 3 Class C Second Issuer Note forms one of a series of notes
constituted by a second issuer trust deed (the "SECOND ISSUER TRUST DEED") dated
[6th March], 2003 made between PERMANENT FINANCING (NO. 2) PLC (the "SECOND
ISSUER") and U.S. BANK NATIONAL ASSOCIATION, as trustee for the holders of the
Series 3 Class C Second Issuer Notes (the "NOTE Trustee") and issued as
registered Series 3 Class C Second Issuer Notes in denominations of
(EURO)500,000 each, or integral multiples thereof, or in such other
denominations as the Note Trustee shall determine and notify to the holders of
the relevant Series 3 Class C.

THIS IS TO CERTIFY that

is/are the registered holder(s) of one of the above-mentioned registered Series
3 Class C Second Issuer Notes, such Series 3 Class C Second Issuer Notes being
in the denomination of (EURO)            (          euro) and is/are entitled on
the Interest Payment Date falling in [June 2042] (or on such earlier date as the
principal sum hereinafter mentioned may become repayable in accordance with the
terms and conditions of the Series 3 Class C Second Issuer Notes (the
"CONDITIONS") endorsed hereon) to the repayment of such principal sum of:

                       (EURO)           (          euro)

together with such other amounts (if any) as may be payable, all subject to and
in accordance with the Conditions and the provisions of the Second Issuer Trust
Deed.

Interest is payable on the Principal Amount Outstanding (as defined in CONDITION
5(C)) endorsed hereon of this Series 3 Class C Second Issuer Note at rates
determined in accordance with the

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

<PAGE>

                                      197
--------------------------------------------------------------------------------

Conditions payable quarterly in arrear on each Interest Payment Date and
together with such other amounts (if any) as may be payable, all subject to and
in accordance with the Conditions and the provisions of the Second Issuer Trust
Deed.

IN WITNESS WHEREOF this registered Series 3 Class C Second Issuer Note has been
executed on behalf of the Second Issuer.

PERMANENT FINANCING (NO. 2) PLC

By:      ___________________________________________
         Director

By:      ___________________________________________
         Director

Dated

CERTIFICATE OF AUTHENTICATION

This Series 3 Class C Second Issuer Note is duly authenticated
without recourse, warranty or liability.

_________________________________________________

Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

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

<PAGE>

                                      198
--------------------------------------------------------------------------------

                                (REVERSE OF NOTE)

                                 THE CONDITIONS

[In the form set out in Schedule 3]

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

<PAGE>

                                      199
--------------------------------------------------------------------------------

                FORM OF TRANSFER OF DEFINITIVE SECOND ISSUER NOTE

FOR VALUE RECEIVED the undersigned hereby transfer(s) to

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

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

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

(Please print or type name and address (including postal code) of transferee)

Pound Sterling_______________________________ principal amount of this Series 3
Class C Second Issuer Note and all rights hereunder, hereby irrevocably
constituting and appointing ____________________________________________________
as attorney to transfer such principal amount of this Series 3 Class C Second
Issuer Note in the register maintained by or on behalf of PERMANENT FINANCING
(NO. 2) PLC with full power of substitution.

Signature(s) ________________________________________________

Date: _______________________________________________

NOTES:

1.   This form of transfer must be accompanied by such documents, evidence and
     information as may be required pursuant to the Second Issuer Trust Deed and
     the Second Issuer Paying Agent and Agent Bank Agreement (as defined in the
     Conditions) and must be executed under the hand of the transferor or, if
     the transferor is a corporation, either under its common seal or under the
     hand of two of its officers duly authorised in writing and, in such latter
     case, the document so authorising such officers must be delivered with this
     form of transfer.

2.   The signature(s) on this form of transfer must correspond with the name(s)
     as it/they appear(s) on the face of this Series 3 Class C Second Issuer
     Note in every particular, without alteration or enlargement or any change
     whatever.

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

<PAGE>

                                      200
--------------------------------------------------------------------------------

                                     PART J

                 SERIES 4 CLASS A DEFINITIVE SECOND ISSUER NOTE

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

[1,000/10,000]              [ISIN:o]           [SERIES]             [SERIAL NO.]

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

                         PERMANENT FINANCING (NO. 2) PLC

 (Incorporated with limited liability in England with registered number 4623188)

  US$[1,750,000,000] SERIES 4 CLASS A ASSET BACKED FLOATING RATE SECOND ISSUER
                           NOTES DUE [DECEMBER 2009]
                  (the "SERIES 4 CLASS A SECOND ISSUER NOTES")

This Series 4 Class A Second Issuer Note forms one of a series of notes
constituted by a second issuer trust deed (the "SECOND ISSUER TRUST DEED") dated
[6th March], 2003 made between PERMANENT FINANCING (NO. 2) PLC (the "SECOND
ISSUER") and U.S. BANK NATIONAL ASSOCIATION, as trustee for the holders of the
Series 4 Class A Second Issuer Notes (the "NOTE Trustee") and issued as
registered Series 4 Class A Second Issuer Notes in denominations of US$1,000 or
US$10,000 each, or integral multiples thereof, or in such other denominations as
the Note Trustee shall determine and notify to the holders of the relevant
Series 4 Class A Second Issuer Notes.

THIS IS TO CERTIFY that

is/are the registered holder(s) of one of the above-mentioned registered Series
4 Class A Second Issuer Notes, such Series 4 Class A Second Issuer Notes being
in the denomination of US$          (         US dollars) and is/are entitled on
the Interest Payment Date falling in [December 2009] (or on such earlier date as
the principal sum hereinafter mentioned may become repayable in accordance with
the terms and conditions of the Series 4 Class A Second Issuer Notes (the
"CONDITIONS") endorsed hereon) to the repayment of such principal sum of:

                          US$           (       US dollars)

together with such other amounts (if any) as may be payable, all subject to and
in accordance with the said Conditions and the provisions of the Second Issuer
Trust Deed.

Interest is payable on the Principal Amount Outstanding (as defined in CONDITION
5(C)) endorsed hereon of this Series 4 Class A Second Issuer Note at rates
determined in accordance with the Conditions payable quarterly in arrear on each
Interest Payment Date and together with such other amounts (if any) as may be
payable, all subject to and in accordance with the Conditions and the provisions
of the Second Issuer Trust Deed.

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

<PAGE>

                                      201
--------------------------------------------------------------------------------

IN WITNESS WHEREOF this registered Series 4 Class A Second Issuer Note has been
executed on behalf of the Second Issuer.

PERMANENT FINANCING (NO. 2) PLC

By:      ___________________________________________
         Director

By:      ___________________________________________
         Director

Dated

CERTIFICATE OF AUTHENTICATION

This Series 4 Class A Second Issuer Note is duly authenticated
without recourse, warranty or liability.

_________________________________________________
Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

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

<PAGE>

                                      202
--------------------------------------------------------------------------------

                                (REVERSE OF NOTE)

                                 THE CONDITIONS

[In the form set out in Schedule 3]

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

<PAGE>

                                      203
--------------------------------------------------------------------------------

                FORM OF TRANSFER OF DEFINITIVE SECOND ISSUER NOTE

FOR VALUE RECEIVED the undersigned hereby transfer(s) to

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

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

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

(Please print or type name and address (including postal code) of transferee)

US$_____________________________________ principal amount of this Series 4 Class
A Second Issuer Note and all rights hereunder, hereby irrevocably constituting
and appointing __________________________________________________ as attorney to
transfer such principal amount of this Series 4 Class A Second Issuer Note in
the register maintained by or on behalf of PERMANENT FINANCING (NO. 2) PLC with
full power of substitution.

Signature(s) ________________________________________________

Date: _______________________________________________

NOTES:

1.   This form of transfer must be accompanied by such documents, evidence and
     information as may be required pursuant to the Second Issuer Trust Deed and
     the Second Issuer Paying Agent and Agent Bank Agreement (as defined in the
     Conditions) and must be executed under the hand of the transferor or, if
     the transferor is a corporation, either under its common seal or under the
     hand of two of its officers duly authorised in writing and, in such latter
     case, the document so authorising such officers must be delivered with this
     form of transfer.

2.   The signature(s) on this form of transfer must correspond with the name(s)
     as it/they appear(s) on the face of this Series 4 Class A Second Issuer
     Note in every particular, without alteration or enlargement or any change
     whatever.

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

<PAGE>

                                      204
--------------------------------------------------------------------------------

                                     PART K

                 SERIES 4 CLASS B DEFINITIVE SECOND ISSUER NOTE

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

[500,000]                   [ISIN:o]           [SERIES]             [SERIAL NO.]

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

THIS SECOND ISSUER NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND, AS A MATTER OF U.S. LAW,
PRIOR TO THE DATE THAT IS 40 DAYS AFTER THE LATER OF THE CLOSING DATE AND THE
COMMENCEMENT OF THE OFFERING OF THE SECOND ISSUER NOTES MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A U.S. PERSON
(AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) EXCEPT PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES.

                         PERMANENT FINANCING (NO. 2) PLC

 (Incorporated with limited liability in England with registered number 4623188)

  (EURO)[56,500,000] SERIES 4 CLASS B ASSET BACKED FLOATING RATE SECOND ISSUER
                              NOTES DUE [JUNE 2042]
                  (the "SERIES 4 CLASS B SECOND ISSUER NOTES")

This Series 4 Class B Second Issuer Note forms one of a series of notes
constituted by a second issuer trust deed (the "SECOND ISSUER TRUST DEED") dated
[6th March], 2003 made between PERMANENT FINANCING (NO. 2) PLC (the "SECOND
ISSUER") and U.S. BANK NATIONAL ASSOCIATION, as trustee for the holders of the
Series 4 Class B Second Issuer Notes (the "NOTE Trustee") and issued as
registered Series 4 Class B Second Issuer Notes in denominations of
(EURO)500,000 each, or integral multiples thereof, or in such other
denominations as the Note Trustee shall determine and notify to the holders of
the relevant Series 4 Class B Second Issuer Notes.

THIS IS TO CERTIFY that

is/are the registered holder(s) of one of the above-mentioned registered Series
4 Class B Second Issuer Notes, such Series 4 Class B Second Issuer Notes being
in the denomination of (EURO)           (           euro) and is/are entitled on
the Interest Payment Date falling in [June 2042] (or on such earlier date as the
principal sum hereinafter mentioned may become repayable in accordance with the
terms and conditions of the Series 4 Class B Second Issuer Notes (the
"CONDITIONS") endorsed hereon) to the repayment of such principal sum of:

                       (EURO)          (           euro)

together with such other amounts (if any) as may be payable, all subject to and
in accordance with the Conditions and the provisions of the Second Issuer Trust
Deed.

Interest is payable on the Principal Amount Outstanding (as defined in CONDITION
5(C)) endorsed hereon of this Series 4 Class B Second Issuer Note at rates
determined in accordance with the

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

<PAGE>

                                      205
--------------------------------------------------------------------------------

Conditions payable quarterly in arrear on each Interest Payment Date and
together with such other amounts (if any) as may be payable, all subject to and
in accordance with the Conditions and the provisions of the Second Issuer Trust
Deed.

IN WITNESS WHEREOF this registered Series 4 Class B Second Issuer Note has been
executed on behalf of the Second Issuer.

PERMANENT FINANCING (NO. 2) PLC

By:      ___________________________________________
         Director

By:      ___________________________________________
         Director

Dated

CERTIFICATE OF AUTHENTICATION

This Series 4 Class B Second Issuer Note is duly authenticated
without recourse, warranty or liability.

_________________________________________________

Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

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

<PAGE>

                                      206
--------------------------------------------------------------------------------

                                (REVERSE OF NOTE)

                                 THE CONDITIONS

[In the form set out in Schedule 3]

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

<PAGE>

                                      207
--------------------------------------------------------------------------------

                FORM OF TRANSFER OF DEFINITIVE SECOND ISSUER NOTE

FOR VALUE RECEIVED the undersigned hereby transfer(s) to

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

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

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

(Please print or type name and address (including postal code) of transferee)

Pound Sterling_______________________________ principal amount of this Series 4
Class B Second Issuer Note and all rights hereunder, hereby irrevocably
constituting and appointing ___________________________________________________
as attorney to transfer such principal amount of this Series 4 Class B Second
Issuer Note in the register maintained by or on behalf of PERMANENT FINANCING
(NO. 2) PLC with full power of substitution.

Signature(s) ________________________________________________

Date: _______________________________________________

NOTES:

1.   This form of transfer must be accompanied by such documents, evidence and
     information as may be required pursuant to the Second Issuer Trust Deed and
     the Second Issuer Paying Agent and Agent Bank Agreement (as defined in the
     Conditions) and must be executed under the hand of the transferor or, if
     the transferor is a corporation, either under its common seal or under the
     hand of two of its officers duly authorised in writing and, in such latter
     case, the document so authorising such officers must be delivered with this
     form of transfer.

2.   The signature(s) on this form of transfer must correspond with the name(s)
     as it/they appear(s) on the face of this Series 4 Class B Second Issuer
     Note in every particular, without alteration or enlargement or any change
     whatever.

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

<PAGE>

                                      208
--------------------------------------------------------------------------------

                                     PART L

                 SERIES 4 CLASS C DEFINITIVE SECOND ISSUER NOTE

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

[500,000]                   [ISIN:o]           [SERIES]             [SERIAL NO.]

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

THIS SECOND ISSUER NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND, AS A MATTER OF U.S. LAW,
PRIOR TO THE DATE THAT IS 40 DAYS AFTER THE LATER OF THE CLOSING DATE AND THE
COMMENCEMENT OF THE OFFERING OF THE SECOND ISSUER NOTES MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A U.S. PERSON
(AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) EXCEPT PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES.

                         PERMANENT FINANCING (NO. 2) PLC

 (Incorporated with limited liability in England with registered number 4623188)

  (EURO)[56,500,000] SERIES 4 CLASS C ASSET BACKED FLOATING RATE SECOND ISSUER
                              NOTES DUE [JUNE 2042]
                  (the "SERIES 4 CLASS C SECOND ISSUER NOTES")

This Series 4 Class C Second Issuer Note forms one of a series of notes
constituted by a second issuer trust deed (the "SECOND ISSUER TRUST DEED") dated
[6th March], 2003 made between PERMANENT FINANCING (NO. 2) PLC (the "SECOND
ISSUER") and U.S. BANK NATIONAL ASSOCIATION, as trustee for the holders of the
Series 4 Class C Second Issuer Notes (the "NOTE Trustee") and issued as
registered Series 4 Class C Second Issuer Notes in denominations of
(EURO)500,000 each, or integral multiples thereof, or in such other
denominations as the Note Trustee shall determine and notify to the holders of
the relevant Series 4 Class C.

THIS IS TO CERTIFY that

is/are the registered holder(s) of one of the above-mentioned registered Series
4 Class C Second Issuer Notes, such Series 4 Class C Second Issuer Notes being
in the denomination of (EURO)          (            euro) and is/are entitled on
the Interest Payment Date falling in [June 2042] (or on such earlier date as the
principal sum hereinafter mentioned may become repayable in accordance with the
terms and conditions of the Series 4 Class C Second Issuer Notes (the
"CONDITIONS") endorsed hereon) to the repayment of such principal sum of:

                       (EURO)          (           euro)

together with such other amounts (if any) as may be payable, all subject to and
in accordance with the Conditions and the provisions of the Second Issuer Trust
Deed.

Interest is payable on the Principal Amount Outstanding (as defined in CONDITION
5(C)) endorsed hereon of this Series 4 Class C Second Issuer Note at rates
determined in accordance with the

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

<PAGE>

                                      209
--------------------------------------------------------------------------------

Conditions payable quarterly in arrear on each Interest Payment Date and
together with such other amounts (if any) as may be payable, all subject to and
in accordance with the Conditions and the provisions of the Second Issuer Trust
Deed.

IN WITNESS WHEREOF this registered Series 4 Class C Second Issuer Note has been
executed on behalf of the Second Issuer.

PERMANENT FINANCING (NO. 2) PLC

By:      ___________________________________________
         Director

By:      ___________________________________________
         Director

Dated

CERTIFICATE OF AUTHENTICATION

This Series 4 Class C Second Issuer Note is duly authenticated
without recourse, warranty or liability.

_________________________________________________

Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

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

<PAGE>

                                      210
--------------------------------------------------------------------------------

                                (REVERSE OF NOTE)

                                 THE CONDITIONS

[In the form set out in Schedule 3]

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

<PAGE>

                                      211
--------------------------------------------------------------------------------

                FORM OF TRANSFER OF DEFINITIVE SECOND ISSUER NOTE

FOR VALUE RECEIVED the undersigned hereby transfer(s) to

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

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

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

(Please print or type name and address (including postal code) of transferee)

Pound Sterling_______________________________ principal amount of this Series 4
Class C Second Issuer Note and all rights hereunder, hereby irrevocably
constituting and appointing ____________________________________________________
as attorney to transfer such principal amount of this Series 4 Class C Second
Issuer Note in the register maintained by or on behalf of PERMANENT FINANCING
(NO. 2) PLC with full power of substitution.

Signature(s) ________________________________________________

Date: _______________________________________________

NOTES:

1.   This form of transfer must be accompanied by such documents, evidence and
     information as may be required pursuant to the Second Issuer Trust Deed and
     the Second Issuer Paying Agent and Agent Bank Agreement (as defined in the
     Conditions) and must be executed under the hand of the transferor or, if
     the transferor is a corporation, either under its common seal or under the
     hand of two of its officers duly authorised in writing and, in such latter
     case, the document so authorising such officers must be delivered with this
     form of transfer.

2.   The signature(s) on this form of transfer must correspond with the name(s)
     as it/they appear(s) on the face of this Series 4 Class C Second Issuer
     Note in every particular, without alteration or enlargement or any change
     whatever.

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

<PAGE>

                                      212
--------------------------------------------------------------------------------

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

<PAGE>

                                      213
--------------------------------------------------------------------------------

                                     PART M

                 SERIES 5 CLASS A DEFINITIVE SECOND ISSUER NOTE

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

[1,000/10,000]              [ISIN:o]           [SERIES]             [SERIAL NO.]

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

THIS SECOND ISSUER NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND, AS A MATTER OF U.S. LAW,
PRIOR TO THE DATE THAT IS 40 DAYS AFTER THE LATER OF THE CLOSING DATE AND THE
COMMENCEMENT OF THE OFFERING OF THE SECOND ISSUER NOTES MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A U.S. PERSON
(AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) EXCEPT PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES.

                         PERMANENT FINANCING (NO. 2) PLC

 (Incorporated with limited liability in England with registered number 4623188)

    POUND STERLING[750,000,000] SERIES 5 CLASS A ASSET BACKED FLOATING RATE
                       SECOND ISSUER NOTES DUE [JUNE 2042]
                  (the "SERIES 5 CLASS A SECOND ISSUER NOTES")

This Series 5 Class A Second Issuer Note forms one of a series of notes
constituted by a second issuer trust deed (the "SECOND ISSUER TRUST DEED") dated
[6th March], 2003 made between PERMANENT FINANCING (NO. 2) PLC (the "SECOND
ISSUER") and U.S. BANK NATIONAL ASSOCIATION, as trustee for the holders of the
Series 5 Class A Second Issuer Notes (the "NOTE Trustee") and issued as
registered Series 5 Class A Second Issuer Notes in denominations of Pound
Sterling1,000 or Pound Sterling10,000 each, or integral multiples thereof, or in
such other denominations as the Note Trustee shall determine and notify to the
holders of the relevant Series 5 Class A Second Issuer Notes.

THIS IS TO CERTIFY that

is/are the registered holder(s) of one of the above-mentioned registered Series
5 Class A Second Issuer Notes, such Series 5 Class A Second Issuer Notes being
in the denomination of Pound Sterling           (            pounds sterling)
and is/are entitled on the Interest Payment Date falling in [June 2042] (or on
such earlier date as the principal sum hereinafter mentioned may become
repayable in accordance with the terms and conditions of the Series 5 Class A
Second Issuer Notes (the "CONDITIONS" endorsed hereon) to the repayment of such
principal sum of:

             Pound Sterling           (            pounds sterling)

together with such other amounts (if any) as may be payable, all subject to and
in accordance with the Conditions and the provisions of the Second Issuer Trust
Deed.

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

<PAGE>

                                      214
--------------------------------------------------------------------------------

Interest is payable on the Principal Amount Outstanding (as defined in CONDITION
5(C)) endorsed hereon of this Series 5 Class A Second Issuer Note at rates
determined in accordance with the Conditions payable quarterly in arrear on each
Interest Payment Date and together with such other amounts (if any) as may be
payable, all subject to and in accordance with the Conditions and the provisions
of the Second Issuer Trust Deed.

IN WITNESS WHEREOF this registered Series 5 Class A Second Issuer Note has been
executed on behalf of the Second Issuer.

PERMANENT FINANCING (NO. 2) PLC

By:      ___________________________________________
         Director

By:      ___________________________________________
         Director

Dated

CERTIFICATE OF AUTHENTICATION

This Series 5 Class A Second Issuer Note is duly authenticated
without recourse, warranty or liability.

_________________________________________________

Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

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

<PAGE>

                                      215
--------------------------------------------------------------------------------

                                (REVERSE OF NOTE)

                                 THE CONDITIONS

[In the form set out in Schedule 3]

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

<PAGE>

                                      216
--------------------------------------------------------------------------------

                FORM OF TRANSFER OF DEFINITIVE SECOND ISSUER NOTE

FOR VALUE RECEIVED the undersigned hereby transfer(s) to

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

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

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

(Please print or type name and address (including postal code) of transferee)

Pound Sterling_______________________________ principal amount of this Series 5
Class A Second Issuer Note and all rights hereunder, hereby irrevocably
constituting and appointing ____________________________________________________
as attorney to transfer such principal amount of this Series 5 Class A Second
Issuer Note in the register maintained by or on behalf of PERMANENT FINANCING
(NO. 2) PLC with full power of substitution.

Signature(s) ________________________________________________

Date: _______________________________________________

NOTES:

1.   This form of transfer must be accompanied by such documents, evidence and
     information as may be required pursuant to the Second Issuer Trust Deed and
     the Second Issuer Paying Agent and Agent Bank Agreement (as defined in the
     Conditions) and must be executed under the hand of the transferor or, if
     the transferor is a corporation, either under its common seal or under the
     hand of two of its officers duly authorised in writing and, in such latter
     case, the document so authorising such officers must be delivered with this
     form of transfer.

2.   The signature(s) on this form of transfer must correspond with the name(s)
     as it/they appear(s) on the face of this Series 5 Class A Second Issuer
     Note in every particular, without alteration or enlargement or any change
     whatever.

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                                     PART N

                 SERIES 5 CLASS B DEFINITIVE SECOND ISSUER NOTE

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

[1,000/10,000]              [ISIN:o]           [SERIES]             [SERIAL NO.]

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THIS SECOND ISSUER NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND, AS A MATTER OF U.S. LAW,
PRIOR TO THE DATE THAT IS 40 DAYS AFTER THE LATER OF THE CLOSING DATE AND THE
COMMENCEMENT OF THE OFFERING OF THE SECOND ISSUER NOTES MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A U.S. PERSON
(AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) EXCEPT PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES.

                         PERMANENT FINANCING (NO. 2) PLC

 (Incorporated with limited liability in England with registered number 4623188)

  POUND STERLING[26,000,000] SERIES 5 CLASS B ASSET BACKED FLOATING RATE SECOND
                          ISSUER NOTES DUE [JUNE 2042]
                  (the "SERIES 5 CLASS B SECOND ISSUER NOTES")

This Series 5 Class B Second Issuer Note forms one of a series of notes
constituted by a second issuer trust deed (the "SECOND ISSUER TRUST DEED") dated
[6th March], 2003 made between PERMANENT FINANCING (NO. 2) PLC (the "SECOND
ISSUER") and U.S. BANK NATIONAL ASSOCIATION, as trustee for the holders of the
Series 5 Class B Second Issuer Notes (the "NOTE Trustee") and issued as
registered Series 5 Class B Second Issuer Notes in denominations of Pound
Sterling1,000 or Pound Sterling10,000 each, or integral multiples thereof, or in
such other denominations as the Note Trustee shall determine and notify to the
holders of the relevant Series 5 Class B Second Issuer Notes.

THIS IS TO CERTIFY that

is/are the registered holder(s) of one of the above-mentioned registered Series
5 Class B Second Issuer Notes, such Series 5 Class B Second Issuer Notes being
in the denomination of Pound Sterling             (            pounds sterling)
and is/are entitled on the Interest Payment Date falling in [June 2042] (or on
such earlier date as the principal sum hereinafter mentioned may become
repayable in accordance with the terms and conditions of the Series 5 Class B
Second Issuer Notes (the "CONDITIONS") endorsed hereon) to the repayment of such
principal sum of:

             Pound Sterling           (            pounds sterling)

together with such other amounts (if any) as may be payable, all subject to and
in accordance with the Conditions and the provisions of the Second Issuer Trust
Deed.

Interest is payable on the Principal Amount Outstanding (as defined in CONDITION
5(C)) endorsed hereon of this Series 5 Class B Second Issuer Note at rates
determined in accordance with the

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Conditions payable quarterly in arrear on each Interest Payment Date and
together with such other amounts (if any) as may be payable, all subject to and
in accordance with the Conditions and the provisions of the Second Issuer Trust
Deed.

IN WITNESS WHEREOF this registered Series 5 Class B Second Issuer Note has been
executed on behalf of the Second Issuer.

PERMANENT FINANCING (NO. 2) PLC

By:      ___________________________________________
         Director

By:      ___________________________________________
         Director

Dated

CERTIFICATE OF AUTHENTICATION

This Series 5 Class B Second Issuer Note is duly authenticated
without recourse, warranty or liability.

_________________________________________________

Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

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<PAGE>

                                      219
--------------------------------------------------------------------------------

                                (REVERSE OF NOTE)

                                 THE CONDITIONS

[In the form set out in Schedule 3]

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<PAGE>

                                      220
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                FORM OF TRANSFER OF DEFINITIVE SECOND ISSUER NOTE

FOR VALUE RECEIVED the undersigned hereby transfer(s) to

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

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

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

(Please print or type name and address (including postal code) of transferee)

Pound Sterling_______________________________ principal amount of this Series 5
Class B Second Issuer Note and all rights hereunder, hereby irrevocably
constituting and appointing ____________________________________________________
as attorney to transfer such principal amount of this Series 5 Class B Second
Issuer Note in the register maintained by or on behalf of PERMANENT FINANCING
(NO. 2) PLC with full power of substitution.

Signature(s) ________________________________________________

Date: _______________________________________________

NOTES:

1.   This form of transfer must be accompanied by such documents, evidence and
     information as may be required pursuant to the Second Issuer Trust Deed and
     the Second Issuer Paying Agent and Agent Bank Agreement (as defined in the
     Conditions) and must be executed under the hand of the transferor or, if
     the transferor is a corporation, either under its common seal or under the
     hand of two of its officers duly authorised in writing and, in such latter
     case, the document so authorising such officers must be delivered with this
     form of transfer.

2.   The signature(s) on this form of transfer must correspond with the name(s)
     as it/they appear(s) on the face of this Series 5 Class B Second Issuer
     Note in every particular, without alteration or enlargement or any change
     whatever.

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<PAGE>

                                      221
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                                     PART O

                 SERIES 5 CLASS C DEFINITIVE SECOND ISSUER NOTE

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

[1,000/10,000]              [ISIN:o]           [SERIES]             [SERIAL NO.]

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

THIS SECOND ISSUER NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND, AS A MATTER OF U.S. LAW,
PRIOR TO THE DATE THAT IS 40 DAYS AFTER THE LATER OF THE CLOSING DATE AND THE
COMMENCEMENT OF THE OFFERING OF THE SECOND ISSUER NOTES MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A U.S. PERSON
(AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) EXCEPT PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES.

                         PERMANENT FINANCING (NO. 2) PLC

 (Incorporated with limited liability in England with registered number 4623188)

  POUND STERLING[26,000,000] SERIES 5 CLASS C ASSET BACKED FLOATING RATE SECOND
                          ISSUER NOTES DUE [JUNE 2042]
                  (the "SERIES 5 CLASS C SECOND ISSUER NOTES")

This Series 5 Class C Second Issuer Note forms one of a series of notes
constituted by a second issuer trust deed (the "SECOND ISSUER TRUST DEED") dated
[6th March], 2003 made between PERMANENT FINANCING (NO. 2) PLC (the "SECOND
ISSUER") and U.S. BANK NATIONAL ASSOCIATION, as trustee for the holders of the
Series 5 Class C Second Issuer Notes (the "NOTE Trustee") and issued as
registered Series 5 Class C Second Issuer Notes in denominations of Pound
Sterling1,000 or Pound Sterling10,000 each, or integral multiples thereof, or in
such other denominations as the Note Trustee shall determine and notify to the
holders of the relevant Series 5 Class C.

THIS IS TO CERTIFY that

is/are the registered holder(s) of one of the above-mentioned registered Series
5 Class C Second Issuer Notes, such Series 5 Class C Second Issuer Notes being
in the denomination of Pound Sterling             (            pounds sterling)
and is/are entitled on the Interest Payment Date falling in [June 2042] (or on
such earlier date as the principal sum hereinafter mentioned may become
repayable in accordance with the terms and conditions of the Series 5 Class C
Second Issuer Notes (the "CONDITIONS") endorsed hereon) to the repayment of such
principal sum of:

             Pound Sterling           (            pounds sterling)

together with such other amounts (if any) as may be payable, all subject to and
in accordance with the Conditions and the provisions of the Second Issuer Trust
Deed.

Interest is payable on the Principal Amount Outstanding (as defined in CONDITION
5(C)) endorsed hereon of this Series 5 Class C Second Issuer Note at rates
determined in accordance with the

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                                      222
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Conditions payable quarterly in arrear on each Interest Payment Date and
together with such other amounts (if any) as may be payable, all subject to and
in accordance with the Conditions and the provisions of the Second Issuer Trust
Deed.

IN WITNESS WHEREOF this registered Series 5 Class C Second Issuer Note has been
executed on behalf of the Second Issuer.

PERMANENT FINANCING (NO. 2) PLC

By:      ___________________________________________
         Director

By:      ___________________________________________
         Director

Dated

CERTIFICATE OF AUTHENTICATION

This Series 5 Class C Second Issuer Note is duly authenticated
without recourse, warranty or liability.

_________________________________________________

Duly authorised
for and on behalf of
CITIBANK, N.A.
as Registrar

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<PAGE>

                                      223
--------------------------------------------------------------------------------

                                (REVERSE OF NOTE)

                                 THE CONDITIONS

[In the form set out in Schedule 3]

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<PAGE>

                                      224
--------------------------------------------------------------------------------

                FORM OF TRANSFER OF DEFINITIVE SECOND ISSUER NOTE

FOR VALUE RECEIVED the undersigned hereby transfer(s) to

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

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

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

(Please print or type name and address (including postal code) of transferee)

Pound Sterling_______________________________ principal amount of this Series 5
Class C Second Issuer Note and all rights hereunder, hereby irrevocably
constituting and appointing ____________________________________________________
as attorney to transfer such principal amount of this Series 5 Class C Second
Issuer Note in the register maintained by or on behalf of PERMANENT FINANCING
(NO. 2) PLC with full power of substitution.

Signature(s) ________________________________________________

Date: _______________________________________________

NOTES:

1.   This form of transfer must be accompanied by such documents, evidence and
     information as may be required pursuant to the Second Issuer Trust Deed and
     the Second Issuer Paying Agent and Agent Bank Agreement (as defined in the
     Conditions) and must be executed under the hand of the transferor or, if
     the transferor is a corporation, either under its common seal or under the
     hand of two of its officers duly authorised in writing and, in such latter
     case, the document so authorising such officers must be delivered with this
     form of transfer.

2.   The signature(s) on this form of transfer must correspond with the name(s)
     as it/they appear(s) on the face of this Series 5 Class C Second Issuer
     Note in every particular, without alteration or enlargement or any change
     whatever.

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<PAGE>

                                      225
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                                   SCHEDULE 3

                 TERMS AND CONDITIONS OF THE SECOND ISSUER NOTES

                                [to be inserted]

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<PAGE>

                                      226
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                                   SCHEDULE 4

                     PROVISIONS FOR MEETINGS OF NOTEHOLDERS

1.   (A)  As used in this Schedule the following expressions shall have the
          following meanings unless the context otherwise requires:

          (i)  "VOTING CERTIFICATE" shall mean an English language certificate
               issued by a Paying Agent and dated in which it is stated:

               (a)  that on the date thereof Second Issuer Notes (represented by
                    a Global Second Issuer Note and not being Second Issuer
                    Notes in respect of which a block voting instruction has
                    been issued and is outstanding in respect of the meeting
                    specified in such voting certificate or any adjourned such
                    meeting) were (to the satisfaction of such Paying Agent)
                    held to its order or under its control and that no such
                    Second Issuer Notes will cease to be so held until the first
                    to occur of:

                    (1)  the conclusion of the meeting specified in such
                         certificate or, if applicable, of any adjourned such
                         meeting; and

                    (2)  the surrender of the certificate to the Paying Agent
                         who issued the same; and

               (b)  that the bearer thereof is entitled to attend and vote at
                    such meeting and any adjourned such meeting in respect of
                    the Second Issuer Notes represented by such certificate;

          (ii) "BLOCK VOTING INSTRUCTION" shall mean an English language
               document issued by a Paying Agent and dated in which:

               (a)  it is certified that Second Issuer Notes (represented by a
                    Global Second Issuer Note and not being Second Issuer Notes
                    in respect of which a voting certificate has been issued and
                    is outstanding in respect of the meeting specified in such
                    block voting instruction and any adjourned such meeting)
                    were (to the satisfaction of such Paying Agent) held to its
                    order or under its control and that no such Second Issuer
                    Notes will cease to be so held until the first to occur of:

                    (1)  the conclusion of the meeting specified in such
                         document or, if applicable, of any adjourned such
                         meeting; and

                    (2)  the surrender to that Paying Agent not less than 48
                         hours before the time for which such meeting or any
                         adjourned such meeting is convened of the receipt
                         issued by such Paying Agent in respect of each such
                         Second Issuer Note which is to be released or (as the
                         case may require) the Second Issuer Note or Second
                         Issuer Notes ceasing with the agreement of that Paying
                         Agent to be held to its order or under its control and
                         the giving of notice by that Paying

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                                      227
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                         Agent to the Second Issuer in accordance with PARAGRAPH
                         17 hereof of the necessary amendment to the block
                         voting instruction;

               (b)  it is certified that each holder of such Second Issuer Notes
                    has instructed such Paying Agent that the vote(s)
                    attributable to the Second Issuer Note or Second Issuer
                    Notes so held should be cast in a particular way in relation
                    to the resolution or resolutions to be put to such meeting
                    or any adjourned such meeting and that all such instructions
                    are during the period commencing 48 hours prior to the time
                    for which such meeting or any adjourned such meeting is
                    convened and ending at the conclusion or adjournment thereof
                    neither revocable nor capable of amendment;

               (c)  the aggregate principal amount of the Second Issuer Notes so
                    held are listed distinguishing with regard to each such
                    resolution between those in respect of which instructions
                    have been given as aforesaid that the votes attributable
                    thereto should be cast in favour of the resolution and those
                    in respect of which instructions have been so given that the
                    votes attributable thereto should be cast against the
                    resolution; and

               (d)  one or more persons named in such document (each hereinafter
                    called a "PROXY") is or are authorised and instructed by
                    such Paying Agent to cast the votes attributable to the
                    Second Issuer Notes so listed in accordance with the
                    instructions referred to in (c) above as set out in such
                    document;

          (iii) "24 HOURS" shall mean a period of 24 hours including all or part
                of a day upon which banks are open for business in both the
                place where the relevant meeting is to be held and in each of
                the places where the Paying Agents have their specified offices
                (disregarding for this purpose the day upon which such meeting
                is to be held) and such period shall be extended by one period
                or, to the extent necessary, more periods of 24 hours until
                there is included as aforesaid all or part of a day upon which
                banks are open for business in all of the places as aforesaid;

          (iv) "48 HOURS" shall mean a period of 48 hours including all or part
               of two days upon which banks are open for business both in the
               place where the relevant meeting is to be held and in each of the
               places where the Paying Agents have their specified offices
               (disregarding for this purpose the day upon which such meeting is
               to be held) and such period shall be extended by one period or,
               to the extent necessary, more periods of 24 hours until there is
               included as aforesaid all or part of two days upon which banks
               are open for business in all of the places as aforesaid; and

          (v)  "SECOND ISSUER NOTES" and "NOTEHOLDERS" shall mean:

               (a)  in connection with a single meeting of Class A Second Issuer
                    Noteholders, Class A Second Issuer Notes and Class A Second
                    Issuer Noteholders, respectively;

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                                      228
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                    (b)  in connection with a meeting of Class B Second Issuer
                         Noteholders, Class B Second Issuer Notes and Class B
                         Second Issuer Noteholders respectively; and

                    (c)  in connection with a meeting of Class C Second Issuer
                         Noteholders, Class C Second Issuer Notes and Class C
                         Second Issuer Noteholders respectively.

     (B)  A holder of a Second Issuer Note represented by a Global Second Issuer
          Note may obtain a voting certificate in respect of such Second Issuer
          Note from a Paying Agent or require a Paying Agent to issue a block
          voting instruction in respect of such Second Issuer Note or by such
          Second Issuer Note (to the satisfaction of such Paying Agent) being
          held to its order or under its control, in each case not less than 48
          hours before the time fixed for the relevant meeting and on the terms
          set out in SUBPARAGRAPH (A)(i)(a) or (A)(ii)(a) above (as the case may
          be), and (in the case of a block voting instruction) instructing such
          Paying Agent to the effect set out in SUBPARAGRAPH (A)(II)(b) above.
          The holder of any voting certificate or the proxies named in any block
          voting instruction shall for all purposes in connection with the
          relevant meeting or adjourned meeting of Noteholders be deemed to be
          the holder of the Second Issuer Notes to which such voting certificate
          or block voting instruction relates and the person holding the same to
          the order or under the control of such Paying Agent shall be deemed
          for such purposes not to be the holder of those Second Issuer Notes.

     (C)  (i)  A holder of Definitive Second Issuer Notes may, by an instrument
               in writing in the English language (a "FORM OF PROXY") signed by
               the holder or, in the case of a corporation, executed under its
               common seal or signed on its behalf by an attorney or a duly
               authorised officer of the corporation and delivered to the
               specified office of the Registrar not less than 48 hours before
               the time fixed for the relevant meeting, appoint any person (a
               "PROXY") to act on his or its behalf in connection with any
               meeting of the Noteholders and any adjourned such meeting.

          (ii) Any holder of Definitive Second Issuer Notes which is a
               corporation may by resolution of its directors or other governing
               body authorise any person to act as its representative (a
               "REPRESENTATIVE") in connection with any meeting of the
               Noteholders and any adjourned such meeting.

          (iii) Any proxy appointed pursuant to subparagraph (i) above or
                representative appointed pursuant to subparagraph (ii) above
                shall so long as such appointment remains in force be deemed,
                for all purposes in connection with the relevant meeting or
                adjourned meeting of the Noteholders, to be the holder of the
                Definitive Second Issuer Notes to which such appointment relates
                and the holder of the Definitive Second Issuer Notes shall be
                deemed for such purposes not to be the holder.

2.   The Second Issuer or the Note Trustee may at any time and the Note Trustee
     shall upon a requisition in writing signed by the holders of not less than
     one-tenth in principal amount of the Second Issuer Notes for the time being
     outstanding convene a meeting of the Noteholders and if the Second Issuer
     makes default for a period of seven days in convening such a

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                                      229
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     meeting the same may be convened by the Note Trustee or the
     requisitionists. Every such meeting shall be held at such time and place as
     the Note Trustee may appoint or approve.

3.   At least 21 days' notice (exclusive of the day on which the notice is given
     and the day on which the meeting is to be held) specifying the place, day
     and hour of meeting shall be given to the Noteholders prior to any meeting
     of the Noteholders. Such notice, which shall be in the English language,
     shall state generally the nature of the business to be transacted at the
     meeting thereby convened but (except for an Extraordinary Resolution) it
     shall not be necessary to specify in such notice the terms of any
     resolution to be proposed. Such notice shall include statements, if
     applicable, to the effect that (i) Second Issuer Notes represented by a
     Global Second Issuer Note may, not less than 48 hours before the time fixed
     for the meeting, be held to the order or under the control of any Paying
     Agent (to its satisfaction) for the purpose of obtaining voting
     certificates or appointing proxies and (ii) the holders of Definitive
     Second Issuer Notes of the relevant class may appoint proxies by executing
     and delivering a form of proxy in the English language to the specified
     office of the Registrar not less than 48 hours before the time fixed for
     the meeting or, in the case of corporations, may appoint representatives by
     resolution of their directors or other governing body. A copy of the notice
     shall be sent by post to the Note Trustee (unless the meeting is convened
     by the Note Trustee) and, to the Second Issuer (unless the meeting is
     convened by the Second Issuer).

4.   A person (who may but need not be a Noteholder) nominated in writing by the
     Note Trustee shall be entitled to take the chair at the relevant meeting or
     adjourned meeting but if no such nomination is made or if at any meeting or
     adjourned meeting the person nominated shall not be present within 15
     minutes after the time appointed for holding the meeting or adjourned
     meeting the Noteholders present shall choose one of their number to be
     Chairman, failing which the Second Issuer may appoint a Chairman. The
     Chairman of an adjourned meeting need not be the same person as was
     Chairman of the meeting from which the adjournment took place.

5.   Subject to this PARAGRAPH 5 being subject to the provisions of Section
     316(b) of the Trust Indenture Act, at any such meeting one or more persons
     present holding Second Issuer Notes or voting certificates or being proxies
     or representatives and holding or representing in the aggregate not less
     than one-twentieth of the principal amount of the Second Issuer Notes for
     the time being outstanding shall (except for the purpose of passing an
     Extraordinary Resolution) form a quorum for the transaction of business and
     no business (other than the choosing of a Chairman) shall be transacted at
     any meeting unless the requisite quorum be present at the commencement of
     the relevant business. The quorum at any such meeting for passing an
     Extraordinary Resolution shall (subject as provided below) be two or more
     persons present holding or representing Second Issuer Notes or voting
     certificates or being proxies or representatives and holding or
     representing in the aggregate not less than 50 per cent. in Principal
     Amount Outstanding of the Second Issuer Notes (or, at any adjourned
     meeting, two or more persons being or representing Noteholders whatever the
     aggregate Principal Amount Outstanding of the Second Issuer Notes so held
     or represented) PROVIDED THAT at any meeting the business of which includes
     the passing of an Extraordinary Resolution to sanction any of the following
     matters (each a "BASIC TERMS MODIFICATION") namely:

     (A)  reduction or cancellation of the amount payable or, where applicable,
          modification, except where such modification is in the opinion of the
          Note Trustee bound to result in an increase, of the method of
          calculating the amount payable or modification of

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                                      230
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          the date of payment or, where applicable, of the method of calculating
          the date of payment in respect of any principal or interest in respect
          of the Second Issuer Notes;

     (B)  alteration of the currency in which payments under the Second Issuer
          Notes are to be made;

     (C)  alteration of the quorum or majority required to pass an Extraordinary
          Resolution in respect of any such Basic Terms Modification; and

     (D)  alteration of this proviso or the proviso to PARAGRAPH 6 below,

     the quorum for passing the requisite Extraordinary Resolution shall be two
     or more persons present holding Second Issuer Notes or voting certificates
     or being proxies or representatives and holding or representing in the
     aggregate not less than three quarters (or, at any adjourned meeting, not
     less than one quarter) of the Principal Amount Outstanding of the Second
     Issuer Notes for the time being outstanding.

6.   If within 15 minutes (or such longer period not exceeding 30 minutes as the
     Chairman may decide) after the time appointed for any such meeting a quorum
     is not present for the transaction of any particular business, then,
     subject and without prejudice to the transaction of the business (if any)
     for which a quorum is present, the meeting shall if convened upon the
     requisition of Noteholders be dissolved. In any other case it shall stand
     adjourned to the same day in the next week (or if such day is a public
     holiday the next succeeding Business Day) at the same time and place
     (except in the case of a meeting at which an Extraordinary Resolution is to
     be proposed in which case it shall stand adjourned for such period, being
     not less than 13 clear days nor more than 42 clear days, and to such place
     as may be appointed by the Chairman either at or subsequent to such meeting
     and approved by the Note Trustee). If within 15 minutes (or such longer
     period not exceeding 30 minutes as the Chairman may decide) after the time
     appointed for any adjourned meeting a quorum is not present for the
     transaction of any particular business, then, subject and without prejudice
     to the transaction of the business (if any) for which a quorum is present,
     the Chairman may either (with the approval of the Note Trustee) dissolve
     such meeting or adjourn the same for such period, being not less than 13
     clear days (but without any maximum number of clear days), and to such
     place as may be appointed by the Chairman either at or subsequent to such
     adjourned meeting and approved by the Note Trustee, and the provisions of
     this sentence shall apply to all further adjourned such meetings. At any
     adjourned meeting one or more persons present holding Definitive Second
     Issuer Notes or voting certificates or being proxies or representatives
     (whatever the principal amount of the Second Issuer Notes so held or
     represented by them) shall (subject as provided below) form a quorum and
     shall (subject as provided below) have power to pass any Extraordinary
     Resolution or other resolution and to decide upon all matters which could
     properly have been dealt with at the meeting from which the adjournment
     took place had the requisite quorum been present PROVIDED THAT at any
     adjourned meeting the quorum for the transaction of business comprising any
     of the matters specified in the proviso to PARAGRAPH 5 above shall be one
     or more persons present holding Definitive Second Issuer Notes or voting
     certificates or being proxies or representatives and holding or
     representing in the aggregate not less than one-third of the principal
     amount of the Second Issuer Notes for the time being outstanding.

7.   Notice of any adjourned meeting at which an Extraordinary Resolution is to
     be submitted shall be given in the same manner as notice of an original
     meeting but as if 10 were

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<PAGE>

                                      231
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     substituted for 21 in PARAGRAPH 3 above and such notice shall state the
     relevant quorum. Subject as aforesaid it shall not be necessary to give any
     notice of an adjourned meeting.

8.   Every question submitted to a meeting shall be decided in the first
     instance by a show of hands and in case of equality of votes the Chairman
     shall both on a show of hands and on a poll have a casting vote in addition
     to the vote or votes (if any) to which he may be entitled as a Noteholder
     or as a holder of a voting certificate or as a proxy or as a
     representative.

9.   At any meeting unless a poll is (before or on the declaration of the result
     of the show of hands) demanded by the Chairman, the Second Issuer, the Note
     Trustee or any person present holding a Definitive Second Issuer Note or a
     voting certificate or being a proxy or representative (whatever the
     principal amount of the Second Issuer Notes so held or represented by him)
     a declaration by the Chairman that a resolution has been carried or carried
     by a particular majority or lost or not carried by a particular majority
     shall be conclusive evidence of the fact without proof of the number or
     proportion of the votes recorded in favour of or against such resolution.

10.  Subject to PARAGRAPH 12 below, if at any such meeting a poll is so demanded
     it shall be taken in such manner and subject as hereinafter provided either
     at once or after an adjournment as the Chairman directs and the result of
     such poll shall be deemed to be the resolution of the meeting at which the
     poll was demanded as at the date of the taking of the poll. The demand for
     a poll shall not prevent the continuance of the meeting for the transaction
     of any business other than the motion on which the poll has been demanded.

11.  The Chairman may with the consent of (and shall if directed by) any such
     meeting adjourn the same from time to time and from place to place but no
     business shall be transacted at any adjourned meeting except business which
     might lawfully (but for lack of required quorum) have been transacted at
     the meeting from which the adjournment took place.

12.  Any poll demanded at any such meeting on the election of a Chairman or on
     any question of adjournment shall be taken at the meeting without
     adjournment.

13.  The Note Trustee and its lawyers and any director, officer or employee of a
     corporation being a trustee of the Second Issuer Trust Deed and any
     director or officer of the Second Issuer and its lawyers and any other
     person authorised so to do by the Note Trustee may attend and speak at any
     meeting. Save as aforesaid, but without prejudice to the definition of
     "Principal Amount Outstanding", no person shall be entitled to attend and
     speak nor shall any person be entitled to vote at any meeting of the
     Noteholders or join with others in requesting the convening of such a
     meeting or to exercise the rights conferred on the Noteholders by CLAUSE 10
     of the Second Issuer Trust Deed unless he either produces Second Issuer
     Note(s) or a voting certificate or is a proxy or a representative or is the
     holder of a Definitive Second Issuer Note or Definitive Second Issuer
     Notes. No person shall be entitled to vote at any meeting in respect of
     Second Issuer Notes held by, for the benefit of, or on behalf of, the
     Second Issuer or the Borrowers. Nothing herein shall prevent any of the
     proxies named in any block voting instruction or form of proxy or any
     representative from being a director, officer or representative of or
     otherwise connected with the Second Issuer.

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14.  Subject as provided in PARAGRAPH 13 hereof at any meeting:

     (A)  on a show of hands every person who is present in person and produces
          a voting certificate or is a holder of Second Issuer Notes or is a
          proxy or representative shall have one vote; and

     (B)  on a poll every person who is so present shall have one vote in
          respect of each Pound Sterling1, US$1 or (EURO)1 (or such other amount
          as the Note Trustee may in its absolute discretion stipulate) in
          principal amount of the Second Issuer Notes represented by the voting
          certificate so produced or in respect of which he is a proxy or
          representative or in respect of which he is the holder.

     Without prejudice to the obligations of the proxies named in any block
     voting instruction or form of proxy any person entitled to more than one
     vote need not use all his votes or cast all the votes to which he is
     entitled in the same way.

15.  The proxies named in any block voting instruction or form of proxy and
     representatives need not be Noteholders.

16.  Each block voting instruction together (if so requested by the Note
     Trustee) with proof satisfactory to the Note Trustee of its due execution
     on behalf of the relevant Paying Agent and each form of proxy shall be
     deposited by the relevant Paying Agent or (as the case may be) by the
     Registrar at such place as the Note Trustee shall approve not less than 24
     hours before the time appointed for holding the meeting or adjourned
     meeting at which the proxies named in the block voting instruction or form
     of proxy propose to vote and in default the block voting instruction or
     form of proxy shall not be treated as valid unless the Chairman of the
     meeting decides otherwise before such meeting or adjourned meeting proceeds
     to business. A notarially certified copy of each block voting instruction
     and form of proxy shall be deposited with the Note Trustee before the
     commencement of the meeting or adjourned meeting but the Note Trustee shall
     not thereby be obliged to investigate or be concerned with the validity of
     or the authority of the proxies named in any such block voting instruction
     or form of proxy.

17.  Any vote given in accordance with the terms of a block voting instruction
     or form of proxy shall be valid notwithstanding the previous revocation or
     amendment of the block voting instruction or form of proxy or of any of the
     Noteholders' instructions pursuant to which it was executed provided that
     no intimation in writing of such revocation or amendment shall have been
     received from the relevant Paying Agent or in the case of a Definitive
     Second Issuer Note from the holder thereof by the Second Issuer at its
     registered office (or such other place as may have been required or
     approved by the Note Trustee for the purpose) by the time being 24 hours
     and 48 hours respectively before the time appointed for holding the meeting
     or adjourned meeting at which the block voting instruction or form of proxy
     is to be used.

18.  Subject always to the provisions of CLAUSE 18 of the Second Issuer Trust
     Deed and Section 316(b) of the Trust Indenture Act, a meeting of the
     Noteholders shall in addition to the powers hereinbefore given have the
     following powers exercisable only by Extraordinary Resolution (subject to
     the provisions relating to quorum contained in PARAGRAPHS 5 and 6 above)
     namely:

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                                      233
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     (A)  power to sanction any compromise or arrangement proposed to be made
          between the Second Issuer, the Note Trustee, any appointee of the Note
          Trustee and the Noteholders or any of them;

     (B)  power to sanction any abrogation, modification, compromise or
          arrangement in respect of the rights of the Note Trustee, any
          appointee of the Note Trustee, the Noteholders or the Second Issuer
          against any other or others of them or against any other party to any
          of the Transaction Documents or against any of their property whether
          such rights shall arise under the Second Issuer Trust Deed, any other
          Transaction Document or otherwise;

     (C)  power to assent to any modification of the provisions of the
          Conditions, the Second Issuer Trust Deed or any other Transaction
          Document which shall be proposed by the Second Issuer, the Note
          Trustee, or any Noteholder or any other person;

     (D)  power to give any authority or sanction which under the provisions of
          the Conditions or the Second Issuer Trust Deed is required to be given
          by Extraordinary Resolution;

     (E)  power to appoint any persons (whether Noteholders or not) as a
          committee or committees to represent the interests of the Noteholders
          and to confer upon such committee or committees any powers or
          discretions which the Noteholders could themselves exercise by
          Extraordinary Resolution;

     (F)  power to approve of a person to be appointed a trustee and power to
          remove any trustee or trustees for the time being of the Second Issuer
          Trust Deed;

     (G)  power to discharge or exonerate the Note Trustee and/or any appointee
          of the Note Trustee from all liability in respect of any act or
          omission for which the Note Trustee and/or such appointee may have
          become responsible under the Second Issuer Trust Deed;

     (H)  power to authorise the Note Trustee and/or any appointee of the Note
          Trustee to concur in and execute and do all such deeds, instruments,
          acts and things as may be necessary to carry out and give effect to
          any Extraordinary Resolution; and

     (I)  power to sanction any scheme or proposal for the exchange or sale of
          the Second Issuer Notes for or the conversion of the Second Issuer
          Notes into or the cancellation of the Second Issuer Notes in
          consideration of shares, stock, notes, bonds, debentures, debenture
          stock and/or other obligations and/or notes of the Second Issuer or
          any other company formed or to be formed, or for or into or in
          consideration of cash, or partly for or into or in consideration of
          such shares, stock, notes, bonds, debentures, debenture stock and/or
          other obligations and/or notes as aforesaid and partly for or into or
          in consideration of cash and for the appointment of some person with
          power on behalf of the Noteholders to execute an instrument of
          transfer of the Definitive Second Issuer Notes held by them in favour
          of the persons with or to whom the Second Issuer Notes are to be
          exchanged or sold respectively,

     PROVIDED THAT:

     (i)  no Extraordinary Resolution of the Class A Second Issuer Noteholders
          or the Class B Second Issuer Noteholders or the Class C Second Issuer
          Noteholders to sanction a

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<PAGE>

                                      234
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          modification of the Conditions, the Second Issuer Trust Deed or any of
          the other Transaction Documents or a waiver or authorisation of any
          breach or proposed breach of any of the provisions of the Conditions,
          the Second Issuer Trust Deed or any of the other Transaction Documents
          shall be effective for any purpose unless either:

          (a)  the Note Trustee is of the opinion that it will not be materially
               prejudicial to the interests of (in the case of an Extraordinary
               Resolution of the Class A Second Issuer Noteholders) the Class B
               Second Issuer Noteholders and the Class C Second Issuer
               Noteholders or (in the case of an Extraordinary Resolution of the
               Class B Second Issuer Noteholders) the Class C Second Issuer
               Noteholders; or

          (b)  it shall have been sanctioned by an Extraordinary Resolution of
               (in the case of an Extraordinary Resolution of the Class A Second
               Issuer Noteholders) the Class B Second Issuer Noteholders and the
               Class C Second Issuer Noteholders or (in the case of an
               Extraordinary Resolution of the Class B Second Issuer
               Noteholders) the Class C Second Issuer Noteholders;

     (ii) no Extraordinary Resolution of the Class B Second Issuer Noteholders
          shall be effective for any purpose while any Class A Second Issuer
          Notes remain outstanding unless either (aa) the Note Trustee is of the
          opinion that it will not be materially prejudicial to the interests of
          the Class A Second Issuer Noteholders or (bb) it is sanctioned by an
          Extraordinary Resolution of the Class A Second Issuer Noteholders; and

     (iii) no Extraordinary Resolution of the Class C Second Issuer Noteholders
           shall be effective for any purpose while any Class A Second Issuer
           Notes or Class B Second Issuer Notes remain outstanding unless either
           (aa) the Note Trustee is of the opinion that it will not be
           materially prejudicial to the interests of the Class A Second Issuer
           Noteholders and/or the Class B Second Issuer Noteholders (as the case
           may be) or (bb) it is sanctioned by an Extraordinary Resolution of
           the Class A Second Issuer Noteholders and/or the Class B Second
           Issuer Noteholders (as the case may be).

19.  Subject to the provisos to PARAGRAPH 18 and to the provisions of Section
     316(b) of the Trust Indenture Act, any resolution passed at a meeting of
     the Noteholders duly convened and held in accordance with the Second Issuer
     Trust Deed shall be binding upon the Noteholders of all classes whether
     present or not present at such meeting and whether or not voting and each
     of them shall be bound to give effect thereto accordingly and the passing
     of any such resolution shall be conclusive evidence that the circumstances
     justify the passing thereof. Notice of the result of the voting on any
     resolution duly considered by the Noteholders shall be given by the Second
     Issuer to the Noteholders in accordance with CONDITION 14 within 14 days of
     such result being known PROVIDED THAT the non-publication of such notice
     shall not invalidate such result.

20.  (A)  A resolution which in the opinion of the Note Trustee affects the
          interests of the holders of one class only of the Class A Second
          Issuer Notes shall be deemed to have been duly passed if passed at a
          meeting of the holders of the Class A Second Issuer Notes of that
          class.

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                                      235
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     (B)  A resolution which, in the opinion of the Note Trustee, affects the
          interests of the holders of any two or more classes of the Class A
          Second Issuer Notes but does not give rise to a conflict of interest
          between the holders of such two or more classes of the Class A Second
          Issuer Notes, shall be deemed to have been duly passed if passed at a
          single meeting of the holders of such two or more classes series of
          the Class A Second Issuer Notes.

     (C)  A resolution which in the opinion of the Note Trustee affects the
          interests of the holders of any two or more classes of the Class A
          Second Issuer Notes and gives or may give rise to a conflict of
          interest between the holders of such two or more classes of the Class
          A Second Issuer Notes shall be deemed to have been duly passed only
          if, in lieu of being passed at a single meeting of the holders of such
          two or more classes of the Class A Second Issuer Notes, it shall be
          duly passed at separate meetings of the holders of such two or more
          classes of the Class A Second Issuer Notes.

     (D)  In the case of a single meeting of the holders of the two or more
          classes of the Class A Second Issuer Notes which are not all
          denominated in the same currency, the Principal Amount Outstanding of
          any Class A Second Issuer Note denominated in dollars shall be
          converted into sterling at the relevant Dollar Currency Swap Rate and
          the Principal Amount Outstanding of any Class A Second Issuer Note
          denominated in euro shall be converted into sterling at the relevant
          Euro Currency Swap Rate.

21.  (A)  A resolution which, in the opinion of the Note Trustee, affects the
          interests of the holders of one class only of the Class B Second
          Issuer Notes shall be deemed to have been duly passed if passed at a
          meeting of the holders of the Class B Second Issuer Notes of that
          class.

     (B)  A resolution which, in the opinion of the Note Trustee, affects the
          interests of the holders of any two or more classes of the Class B
          Second Issuer Notes but does not give rise to a conflict of interest
          between the holders of such two or more classes of the Class B Second
          Issuer Notes, shall be deemed to have been duly passed if passed at a
          single meeting of the holders of such two or more classes of the Class
          B Second Issuer Notes.

     (C)  A resolution which, in the opinion of the Note Trustee, affects the
          interests of the holders of any two or more classes of the Class B
          Second Issuer Notes and gives or may give rise to a conflict of
          interest between the holders of such two or more classes of the Class
          B Second Issuer Notes, shall be deemed to have been duly passed only
          if, in lieu of being passed at a single meeting of the holders of such
          two or more classes of the Class B Second Issuer Notes, it shall be
          duly passed at separate meetings of the holders of such two or more
          classes of the Class B Second Issuer Notes.

     (D)  In the case of a single meeting of the holders of the two or more
          classes of the Class B Second Issuer Notes which are not all
          denominated in the same currency, the Principal Amount Outstanding of
          any Class B Second Issuer Note denominated in dollars shall be
          converted into sterling at the relevant Dollar Currency Swap Rate.

22.  (A)  A resolution which, in the opinion of the Note Trustee, affects the
          interests of the holders of one class only of the Class C Second
          Issuer Notes shall be deemed to have been duly passed if passed at a
          meeting of the holders of the Class C Second Issuer Notes of that
          class.

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                                      236
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     (B)  A resolution which, in the opinion of the Note Trustee, affects the
          interests of the holders of any two or more classes of the Class C
          Second Issuer Notes but does not give rise to a conflict of interest
          between the holders of such two or more classes of the Class C Second
          Issuer Notes, shall be deemed to have been duly passed if passed at a
          single meeting of the holders of such two or more classes of the Class
          C Second Issuer Notes.

     (C)  A resolution which, in the opinion of the Note Trustee, affects the
          interests of the holders of any two or more classes of the Class C
          Second Issuer Notes and gives or may give rise to a conflict of
          interest between the holders of such two or more classes of the Class
          C Second Issuer Notes, shall be deemed to have been duly passed only
          if, in lieu of being passed at a single meeting of the holders of such
          two or more classes of the Class C Second Issuer Notes, it shall be
          duly passed at separate meetings of the holders of such two or more
          classes of the Class C Second Issuer Notes.

     (D)  In the case of a single meeting of the holders of the two or more
          classes of the Class C Second Issuer Notes which are not all
          denominated in the same currency, the Principal Amount Outstanding of
          any Class C Second Issuer Note denominated in dollars shall be
          converted into sterling at the relevant Dollar Currency Swap Rates.

23.  The expression "EXTRAORDINARY RESOLUTION" when used in the Second Issuer
     Trust Deed means (a) a resolution passed at a meeting of the Noteholders of
     a relevant class of Second Issuer Notes duly convened and held in
     accordance with the provisions of this SCHEDULE 4 by a majority consisting
     of not less than three-fourths of the persons voting thereat upon a show of
     hands or if a poll is duly demanded by a majority consisting of not less
     than three-fourths of the votes cast on such poll or (b) a resolution in
     writing signed by or on behalf of all the Noteholders of a relevant class
     of Second Issuer Notes, which resolution in writing may be contained in one
     document or in several documents in like form each signed by or on behalf
     of one or more of the Noteholders of a relevant class of Second Issuer
     Notes.

24.  Minutes of all resolutions and proceedings at every meeting of the
     Noteholders shall be made and entered in books to be from time to time
     provided for that purpose by the Second Issuer and any such Minutes as
     aforesaid if purporting to be signed by the Chairman of the meeting at
     which such resolutions were passed or proceedings transacted shall be
     conclusive evidence of the matters therein contained and until the contrary
     is proved every such meeting in respect of the proceedings of which Minutes
     have been made shall be deemed to have been duly held and convened and all
     resolutions passed or proceedings transacted thereat to have been duly
     passed or transacted.

25.  Subject to all other provisions of the Second Issuer Trust Deed the Note
     Trustee may without the consent of the Second Issuer or the Noteholders
     prescribe such further regulations regarding the requisitioning and/or the
     holding of meetings of Noteholders and attendance and voting thereat as the
     Note Trustee may in its sole discretion think fit.

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<PAGE>

                             DATED [6TH MARCH], 2003

                         PERMANENT FINANCING (NO. 2) PLC

                                       AND

                         U.S. BANK NATIONAL ASSOCIATION

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

                            SECOND ISSUER TRUST DEED

                                  CONSTITUTING

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

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

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

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

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

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

 (EURO)[1,250,000,000] SERIES 3 CLASS A ASSET BACKED FLOATING RATE SECOND ISSUER
                           NOTES DUE [DECEMBER 2032]

  (EURO)[43,500,000] SERIES 3 CLASS B ASSET BACKED FLOATING RATE SECOND ISSUER
                             NOTES DUE [JUNE 2042]

  (EURO)[43,500,000] SERIES 3 CLASS C ASSET BACKED FLOATING RATE SECOND ISSUER
                             NOTES DUE [JUNE 2042]

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

  (EURO)[56,500,000] SERIES 4 CLASS B ASSET BACKED FLOATING RATE SECOND ISSUER
                             NOTES DUE [JUNE 2042]

  (EURO)[56,500,000] SERIES 4 CLASS C ASSET BACKED FLOATING RATE SECOND ISSUER
                             NOTES DUE [JUNE 2042]

    POUND STERLING[750,000,000] SERIES 5 CLASS A ASSET BACKED FLOATING RATE
                      SECOND ISSUER NOTES DUE [JUNE 2042]

     POUND STERLING[26,000,000] SERIES 5 CLASS B ASSET BACKED FLOATING RATE
                      SECOND ISSUER NOTES DUE [JUNE 2042]

     POUND STERLING[26,000,000] SERIES 5 CLASS C ASSET BACKED FLOATING RATE
                      SECOND ISSUER NOTES DUE [JUNE 2042]

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

                                  ALLEN & OVERY
                                     London

<PAGE>

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                                    CONTENTS
<TABLE>
<CAPTION>
CLAUSE                                                                      PAGE
<S>  <C>                                                                    <C>
1.   Definitions...............................................................1
2.   Covenant to Repay and to pay Interest on Second Issuer Notes..............2
3.   Form and Issue of Second Issuer Notes.....................................5
4.   Replacement of Second Issuer Notes........................................8
5.   Register, Transfer and Exchange of Second Issuer Notes....................8
6.   Fees, Duties and Taxes...................................................11
7.   Covenant of Compliance...................................................11
8.   Cancellation of Second Issuer Notes and Records..........................11
9.   Enforcement..............................................................12
10.  Proceedings, Actions and Indemnification.................................13
11.  Discharge of Payment.....................................................13
12.  Partial Payments.........................................................14
13.  Covenants by the Second Issuer...........................................14
14.  Remuneration and Indemnification of the Note Trustee.....................19
15.  Supplement to Trustee Acts...............................................21
16.  Note Trustee's Liability.................................................28
17.  Note Trustee contracting with the Second Issuer..........................29
18.  Waiver, Authorisation and Determination..................................30
19.  Entitlement to treat Noteholder as Absolute Owner........................31
20.  Currency Indemnity.......................................................31
21.  Eligibility and Disqualification; New Note Trustee.......................32
22.  Note Trustee's Retirement and Removal....................................33
23.  Note Trustee's Powers to be Additional...................................33
24.  Notices..................................................................33
25.  Rights of Third Parties..................................................35
26.  Trust Indenture Act Prevails.............................................35
27.  Certificates and Opinions................................................35
28.  Governing Law............................................................36
29.  Counterparts.............................................................36
30.  Submission to Jurisdiction...............................................36

SCHEDULE

1.   Forms of Global Second Issuer Notes......................................38
2.   Forms of Definitive Second Issuer Notes.................................164
3.   Terms and Conditions of the First Issuer Notes..........................225
4.   Provisions for Meetings of Noteholders..................................226
</TABLE>

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

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